Travel

Trivago CEO says travel costs are rising despite inflation – interview

Will Feuer

According to Trivago NV CEO Axel Hefer, people are sticking to their summer travel plans even as inflation rises.

Mr Hefer said the travel booking platform had yet to see any signs of easing demand until early July. “Early bookings are being booked as usual,” Mr. Hefer said. “If you’re really looking forward to summer, you’ve already booked.”

Beyond that, he sees some signs of caution. Inflation can force travelers to forego booking last-minute trips as they scrutinize their budget. And autumn travel demand could weaken as travelers fear their travel plans will be derailed by a possible resurgence of Covid-19 cases.

Inflation in the US is hovering near a four-decade high, with consumer prices up 8.3% overall in April from a year earlier. As the prices of everything from food to fuel rise, consumers are seeing their discretionary budgets for things like entertainment and travel dwindle, and companies are struggling to adapt.

Trivago, which primarily appeals to low- and middle-income consumers, offers shopping comparison tools that can help travelers manage their budget. Mr Hefer said consumers of all income groups are prioritizing summer travel and cutting spending elsewhere. “There are a significant number of trips that are simply necessary because otherwise you would go crazy, or your kids would go crazy, or both,” he said.

Americans plan to travel more, according to a Morning Consult survey commissioned by the American Hotel and Lodging Association, with 60% saying they plan to take more vacations this year than during the pandemic. Inflation is currently a concern for 90% of respondents, while 78% said the rate of Covid-19 infection matters.

Travelers are returning to some destinations that have been hit hard by the pandemic, Mr Hefer said, with visits to urban destinations such as New York, Las Vegas, London and Paris, among others. “By now, people are confident that they will have a classic urban experience with food, drink, entertainment, clubs and everything that different people look for when they travel.”

At the same time, travel across the continent is difficult, and the Russian war in Ukraine has eroded demand for travel to much of Eastern Europe, including Germany, Mr Hefer said. Trivago noticed a decline in travel demand across Europe at the start of the war, he said, but the situation in Western Europe has since returned to normal.

Trivago said earlier this month that with Covid-19 restrictions all but lifted, it is going on the offensive to make the most of this summer season. The company said it is planning a big marketing move to highlight its price comparison tools.

Trivago is already seeing a rebound in sales. Revenue in the first quarter was 101.6 million euros ($109.5 million), up 166% from a year earlier. The company reported losses, primarily related to litigation in Australia.

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