Shallow business model under pressure as OTAs pull back, switch tack and focus on brand.

Candour at last! In a remarkably transparent appraisal of its business model and operating environment, hotel meta-search engine Trivago has revealed 79% of its mostly click-based revenue comes from just two customers, online travel agents owned by either Priceline Group (45% share) or Expedia (34%).

Now Trivago, and TripAdvisor, are paying the price for putting all their eggs in a single basket with Priceline and Expedia cutting back on their their meta-search spend. This is having an immediate impact on the meta-search bottom line, forcing Trivago in particular to reassess its business model.

“Towards the end of the third quarter 2017, we have seen increased testing activity on our marketplace by several large advertisers (and) a decline in the concentration of revenue generated by our largest advertisers during the first weeks of the fourth quarter of 2017.,” said Trivago.

“These developments have had a negative impact on our revenues and profitability.

“We assume that these impacts will make it challenging for us to grow in the first six months of 2018 and expect to return to a positive growth trajectory in the second half of 2018.

Read the full article here.