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Staff shortages are holding back the travel rebound, says Trivago’s CFO

February 14, 2022, 11:22 AM UTC

Good morning,

Staff shortages in the hospitality industry are a “hot topic,” says Matthias Tillmann, CFO of Trivago, a search site for travel deals that offers price comparisons. 

“Right now, if we talk to all partners, you hear [about] it everywhere,” Tillmann says. “The main reason is that temporary workers are not coming back to the same extent. Some found other jobs in 2020 during the pandemic.” 

Tillmann experienced that firsthand during a winter ski trip. “In my hotel, they didn’t serve any lunch, they reduced the breakfast options, and even some of the ski lifts were not operating,” he says. Hotel chains may partially open properties or not open at all, resulting in an uptick in prices, which the company has already seen on its platform, Tillmann says. “It’s a wide range, volatile and varies by city and destination, but the direction of the trend is very clear,” he says. 

Hotels in the U.S. are projected to end 2022 down 166,000 workers, a 7% decrease compared to pre-pandemic 2019 levels, an analysis conducted for the American Hotel & Lodging Association by Oxford Economics found. Meanwhile, occupancy rates and room revenue are projected to approach 2019 levels, according to the report released in January. 

Trivago, a Dusseldorf, Germany-based company that trades on the Nasdaq under the ticker TRVG, is seeing travel bounce back—but it’s uneven. In Europe and North America, “we’ve already seen that demand, in general, is higher right now than same time last year,” Tillmann says. However, “[travel demand] in Asia, as a region, is significantly down compared to 2019,” he explains. And even segments like international or business travel haven’t fully bounced back yet, he says. “But selectively, for certain destinations, during certain periods of time, we do think that we can see, or even exceed 2019 levels this year,” he says.

When Tillmann and I had our first conversation almost a year ago, the industry was emerging from a “long and very difficult winter,” he told me. As full lockdown or travel bans aren’t at the same extent compared to the onset of the pandemic, things may begin to turn the corner for Trivago. The company released its Q4 2021 earnings report last week. Cutting back on planned advertising and marketing activities (a large portion of its costs), lowering headcount, and reducing office space, led to a 22% adjusted EBITDA margin in 2021, he says. It’s the highest margin since becoming a public company in 2016, Tillmann says. 

For 2021, revenue increased 176% year over year to 89.1 million euros (about $101.54 million). In 2019, its revenue was 155.5 million euros (about $176.5 million). Globally, qualified referrals and referral revenue increased 54% and 184% year over year, respectively. Trivago received a payment of 12 million euros (about $13.68 million) from the German government in Q4 as part of a COVID subsidy program, Tillmann says.

“The labor shortage, I think, is actually a positive for us because it makes our product and value proposition even more valuable,” Tillmann says. “In a situation where prices are going up, and you have a shortage of supply, you’ll need more transparency.” 

See you tomorrow.

Sheryl Estrada

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Big deal

A Feb. 11 report by Donnelley Financial Solutions (NYSE: DFIN), a risk and compliance company, gauges how key decision-makers in finance, HR, marketing, legal, and sustainability in the U.S. and U.K. have seen ESG evolve. In the past two years, about 75% of respondents said their company’s ESG focus has greatly increased. In the next three years, social and governance issues may slightly outweigh environmental issues, the respondents said. About 90% of respondents agreed that increasing investment in ESG can drive bottom-line value for the business, the report found. One hundred respondents are based in the U.S. and 100 in the U.K. 

Courtesy of DFIN

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