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Trivago Turns to AI as Travelers Increasingly Book Directly

tripl purchase follows aggressive advertising moves in Europe

September 28, 2017

This week hotel booking site Trivago announced it had purchased tripl, a personalization technology firm, in a move that could help the service remain competitive in a sector where sales appear to be slowing.

Founded in 2015 in Hamburg, Germany, tripl developed an algorithm that provides tailored travel recommendations by drawing data from users’ social media.

In a press statement, Trivago said that tripl’s artificial intelligence-driven technology “imitates the way a travel agent would recommend hotel experiences relevant to the customer and combines it with the ease of online services.”

tripl’s technology could be helpful in reigniting Trivago’s business in regions such as Europe and Asia-Pacific, where the share of hotel lodging sales made by online travel agents (OTAs) might have peaked.

In Europe, OTAs have consistently captured at least 70% of digital hotel and lodging sales in each of the last several years, according to estimates by UBS. But that share has been slipping very slowly, as travelers increasingly favor direct bookings with brands.

Hotel and Lodging Industry Digital Sales Share in Europe, Brands vs. Digital Travel Agencies, 2013-2020 (% of total)

The Asia-Pacific region will follow a similar downward trajectory, with third-party digital players—which have captured close to 70% of the digital hotel booking business in recent years—seeing their share drop slowly.

Accommodations providers aren’t the only ones feeling the pinch. eMarketer expects growth in worldwide digital travel sales for leisure and unmanaged business travel overall to slow to 11.7% this year, down from 13.6% in 2016. That growth rate is projected to slacken to 7.6% by 2021.

Looking more specifically at digital travel agencies, UBS predicts worldwide sales growth will slow to 10.9% this year—vs. an 11.5% gain in 2016—and slip below 10% starting in 2019.

In the face of such declines, Trivago has been dedicating significant funds to ad spending. In its home market of Germany, for example, the company was the largest digital travel advertiser last year, with investment of nearly €90 million ($100 million), according to Nielsen data cited by Verband Internet Reisevertrieb (VIR).

Top 10 Digital Travel Advertisers in Germany, Ranked by Ad Spending Share, 2016 (millions of € and % of total)

Similarly, it was the third largest tourism industry advertiser overall in France in 2016, with ad outlays of €41.4 million ($45.8 million), behind only OTA Expedia and train ticket site

But Trivago may have overreached in its advertising blitz in the UK, where it’s been targeting London Underground riders with a systemwide campaign launched in August. The campaign has made the face of its Australian spokesperson so ubiquitous in subway stations that some commuters have compared the experience to being stalked.

—Cliff Annicelli


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