Trivago, Etraveli Group and Hopper believe a focus on helping consumers find the right deals will stand them in good stead
Phocuswright Europe: Intermediaries focus on value proposition as recession threat looms
Travel intermediaries are confident that their models will hold up if the world plunges into a recessionary period following the COVID crisis.
A panel including hotel price comparison site trivago, booking.com-owned Etraveli Group and Hopper, discussed prospects at this week’s Phocuswright Europe conference in Amsterdam.
Axel Hefer, chief executive of Trivago, said “it does not feel like a world in balance right now” with global supply shortages, rising prices and interest rates going up.
“We feel that the economy will come down to an extent,” he said, but added: “What does that mean for someone helping people to compare prices? That’s not necessarily a bad thing.”
Lisa Katsouraki, senior vice president corporate development and strategic partnerships for Etraveli, said:
“We are headed into something we would probably like to avoid after two-and-a-half years of COVID. Things are going to be more difficult going forward.
“But we are on a path to growth. There is more and more we are rolling out with booking.com and we are way past 2019 levels.
“There are a number of areas we have invested in within flights and we remain focussed on what we are delivering in our core product.”
Dakota Smith, Hopper chief strategy officer, said recruitment freezes among big tech firms already anticipating a recession, are helping it to find talent.
And he said market conditions mean firms are having to prioritise profit over growth and that raising money may not be as easy as it was prior to 2020.
“A lot of tech companies are starting to anticipate a recession and giving warnings on earnings even though they have not seen any evidence of that yet.
“We have to adapt to market conditions and the market is saying profitability matters a lot and growth matters a little bit less.”
Smith said as an intermediary Hopper can focus on developing products that offer customer value and it must continue to invest on behalf if its customers to capture market share.
“We have over 300 developers and we release a new update to our app every single week. It’s difficult for suppliers to match that update cadence.”
Hefer added: “Users always want to save money so I a way we don’t need to innovate around the fundamental value proposition.
“As an intermediary we have a definite dynamic around value proposition. You need to have new features or a twist on an original idea and work with partners to come up with a product.”
Smith said: “It’s not necessarily smart to believe you can build everything inhouse. Focus on the core value proposition you bring to market. That’s where you are building enterprise value.
“For the non-fundamental things you have to buy not build. That’s something you have to combine to scale up. If you can’t be the best in the world at something, you should not do it.”
Katsouraki described the €1.6 billion deal that brought Etraveli into the Booking Holdings family last November as a “natural evolution” of an existing partnership with he global OTA.
“Nothing much has changed. We continue to work together in growing flights within booking.com,” she said.
Asked about the environment for M&A activity in travel, Hefer said: “It’s actually an interesting topic because it’s tempting when things are going well, you have funds and feel more powerful.
“But the price you pay is not only the purchase price but the increase in complexity.
“If you are buying something you can do yourself it’s not worth the complexity, it’s better to do it yourself.”
Katsouraki added: “You have to make sure that the overlap is as small as possible to make sure you are not destroying any value.”