Trivago, the German hotel search site that went public in December, isn’t concerned about competitive threats from rivals TripAdvisor and Priceline Group, as the market is still big enough for everyone to grow.
Sales are expected to increase 45 percent to around 1.1 billion euros ($1.2 billion) in 2017, the Dusseldorf, Germany-based company said Friday, sending shares up as much as 4.8 percent in New York. Trivago spent 136.7 million euros on marketing in the fourth quarter, the majority of the 169.2 million it made in total revenue.
“We’re just in the early stage of the market,” Chief Executive Officer Rolf Schromgens said in a phone interview. “Competition doesn’t play that big of a role. We are not Pepsi and Coca-Cola.”
Online hotel bookings still account for only about a third of the overall market, he said. Yet Priceline’s $550 million purchase of Momondo and TripAdvisor’s aggressive advertising plans prompted Cowen and Co. analyst Kevin Kopelman to lower his recommendation on Trivago’s stock to the equivalent of a sell this week. While Kopelman views Trivago’s future as largely positive, he warned in a note about the “risk to the company’s margin expansion plans as it fends off increasing competitive challenges.”
