Youzhan.com takes on Ctrip and Qunar in battle for China’s online travel market
In China, where companies like Ctrip and Qunar lead the competitive online travel market, US-listed Trivago believes that there is still space for an “independent player” to compete, according to a high-level executive.
The company, which is headquartered in Düsseldorf, Germany, launched the Chinese version of its accommodations search website called “Youzhan” in 2014.
But unlike the big players in China’s online travel space, Trivago does not sell rooms on behalf of hotels – it is a metasearch engine, which means that it aggregates pricing information from different platforms to show users a variety of prices.
Trivago chief executive Rolf Schrömgens said that China is still largely in a “testing phase”, although he is “positive” that the Trivago will be eventually be able to scale up its business and position itself as a unique player in the market.
“The larger the market, the longer you need to get to the stage to scale it up,” said Schrömgens, adding that companies expanding into China often splash out a lot of money very quickly in a bid to expand and capture the market.
“For Trivago, we never go with a big boom into a new country – we go in there with little budgets, to find out what people want, which channels they use and how we can build up our brand,” he said in an interview with the Post on the sidelines of the RISE conference in Hong Kong on Tuesday.
“Basically, we’ve seen no market where we were not able to scale up in the end, and I don’t think China is different [for us] in that regard.”
For Trivago’s accommodation metasearch, the company makes money on a cost-per-click basis, charging booking sites and hotels every time a Trivago user clicks on their link. In contrast, online travel agencies may choose to promote or feature a hotel that it has an agreement or partnership with.
“[Trivago] is super agnostic, we don’t care where you book your hotel room, we just want to give you the best price,” Schrömgens said.
Trivago gaining traction in the Chinese market is something that he says will take some time. But eventually, Schrömgens believes that Chinese consumers will eventually demand a platform that delivers “neutral” information.
The company is also making use of the massive amounts of data it collects to personalise the experience for its consumers, via algorithms and machine learning. The idea is to match a user based on their profile or previous bookings to the ideal hotel within their budget.
“[At this point], why should people read [hotel] reviews to find the hotel they want? Shouldn’t an algorithm be able to do that for them?” asked Schrömgens.
“Technically there is only one hotel out of the thousands out there that can give you the best experience, based on your budget and your requirements. And that’s what Trivago wants to find for you,” he said.
“It’s very clear that this can be done with the technology that we have today, and we want to be the one that does this the best.”
Trivago went public on Nasdaq last December, and currently has a market value of US$5 billion. The stock price has climbed 80 per cent this year.
But Schrömgens emphasised that the company’s focus was on its users, rather than catering to the whims of investors. For the next five to 10 years, Trivago will stay focused on improving its platform rather than diversify into other travel verticals, he said.
“We want to create the best user experience... and hopefully commercialisation will follow,” he said. “We are always going to go for the long-term value creation.”