Executive Conversations: Building Resiliency with Axel Hefer, CEO, Trivago

Axel Hefer, Managing Director and CEO of Trivago, joins David Peller, Global Head of AWS Travel and Hospitality, for a broad-ranging discussion about the recent disruption faced by travel and hospitality companies – and his company’s response to that disruption. With just €1.4m initial investment, Trivago has grown to become one of Europe’s most notable unicorns. What was once a website only available in Germany, built by 3 guys in a garage, is now a leading global accommodation search platform reshaping the way travelers search for and compare hotels and alternative accommodations.

This Executive Conversation is one of a series of discussions held with industry leaders, where we seek to learn more about their resiliency, tenacity, and capacity for innovation. The series follows the publication of the AWS Travel and Hospitality E-book: “Building Resilience For The Long Run.” Filled with strategic observations, hints, and tips, the E-book provides guidance for building a more resilient organization, potentially serving as a useful resource as travel and hospitality companies address both current challenges and those yet to come.

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David Peller: While your business is recognized publicly by many, what’s one unique characteristic or feature that is either lesser known or understood about your company?

Axel Hefer: The most common misconception today is about our business model. We are an accommodations meta search platform, not an online travel agency. Our users use trivago to find their best deal by comparing prices of more than 5 million hotels and apartments worldwide. Once they select their best deal, they are redirected to the advertiser’s site, where they can book their accommodation.

DP: Many companies across travel and hospitality have been managing through a period of unprecedented disruption. What have been the biggest challenges you’ve faced during this recent period and how have you managed through them?

AH: When the Western world went into lockdown and global travel activity came to a halt, we were facing multiple challenges at once. First of all, we had to stop all global marketing activity to preserve cash and not promote traveling when it would not be right to travel. Second, we had to protect our employees and moved to a fully remote setup – as a company that is basically run globally out of one office, heavily relying on unstructured, informal communication a huge challenge. Thirdly, we had to adjust our focus and organizational setup to prepare for the new normal in travel. By end of April, we had completed our new organizational structure and shifted our focus on more local travel. We are now seeing the crisis as a catalyst to constantly reassess how we adapt and go to market with our product, what will be the new needs of the customer and the new normal of travel for a period of time.

DP: As we all prepare for the next phase of traveler or guest demand, what are some of the changes your company has taken (or plans on taking) to adjust to the current operating environment?

AH: We realized that there will be a shift from long-distance travel to local trips for some time. As a result, we put a greater emphasis on domestic travel and built a product, currently in beta testing, that allows users to search for deals close to them. This is fundamentally different from our traditional offering where users have a specific destination in mind when they land on our website. Instead, our new domestic travel product is geared towards travelers who are looking for a trip where they can access nature, or the beach, but don’t have an exact location in mind.

DP: In the face of the current disruption to the travel and hospitality industry, we’ve observed incredible innovations coming from across the industry. How has your company innovated through these challenging times and what are you most proud of?

AH: We’ve used the time to focus on what we think the right thing to do is at this time and how we can use our product to help. We’ve engaged in several new initiatives in the past few months, including a recent partnership with management consultancy McKinsey & Company, where we jointly analyze search data and trends that are used throughout the industry to better understand customers. We also teamed up with Booking.com and others to develop the COVID Travel Alliance, launching a free database providing the industry with a consolidated source for updates on travel restrictions across geographies. In addition, we enhanced our product to offer more filter options and side-by-side comparisons of all hotel deals, including hotels versus apartment rentals, since we know the latter is an increasingly popular option. We are the only accommodations meta search site that allows for this kind of comparison.

Finally, to help kickstart local travel, we have offered local destination marketing organizations (DMOs) free promotional space on our platform to allow for direct communication of existing offers in a destination.

DP: The travel and hospitality industry is incredibly resilient. As you look toward recovery, what role does technology play for your company moving forward? How do you see technology enhancing the customer experience and improving operational efficiency?

AH: Technology is central to our identity and we are leveraging this to continually adapt our product for what the traveler of tomorrow will look for. The domestic travel product update I mentioned earlier is one example. This will enhance the traveler experience by adding an element of discovery to their searches and suggestions that are closer in proximity. Technology and data are the only means by which we can identify these new traveler trends and make the right adjustment to the product.

DP: There’s much talk at the moment about how the travel and hospitality experience has changed and there will be a “new normal” going forward. What does this “new normal” look like to you and how do you think the travel experience will look three years from now?

AH: We are currently observing three key trends and believe that all will have an impact on the travel market for the years to come. First of all, there is a significant drop in demand for city trips. Despite some early recovery in those destinations, the reality is that the reason people travel to big cities is because of the activities they will find there, such as trendy restaurants, the opera, museums, etc. With many of these attractions currently restricted or not open at all, there is much less incentive to travel. While over time attractions will come back, large-scale events will not come back that quickly and overall reduce the attractiveness of metropolitan cities. Secondly, we do observe that summer vacations are sought-after domestically, or at least within driving distance. Travelers are insecure about the health situation in the destination countries, the certainty of return, and many other factors. While a vaccine will ease some of these concerns, we believe that the trust in international travel has suffered and will take time to rebuild. Thirdly, business travel is currently almost fully replaced by remote meetings. While an improved health situation will enable more business travel, we do believe that the shift towards remote work overall will permanently reduce the amount of business travel, replacing transactional meetings with remote setups and greater focus on relationship building.

DP: What makes you excited for the future of travel and hospitality? As a traveler or guest, where are you looking forward to visiting next?

AH: After the complete halt of global travel activity in March, we saw a strong recovery of travel activity in May. People do want to travel and they are looking for new experiences, and even more importantly, for the very special moments that travel is providing to all of us with those who matter most. This is the core of our purpose and it is very exciting to see the value that we bring in such a tangible way, in such a difficult time. Personally, I am looking forward to our winter family vacation in Austria. We are visiting every year the same small family run hotel, with great food and awesome skiing.

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Learn more about the new Travel and Hospitality E-book: “Building Resilience For The Long Run.”

See more Executive Conversations and industry insights on the AWS Travel and Hospitality Blog.

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Axel Hefer was appointed as a managing director of the company in 2016. Prior to joining trivago, Mr. Hefer was CFO and COO of Home24 AG, an online home furniture and decor company, and managing director of One Equity Partners, the Private Equity Division of J.P. Morgan Chase. Mr. Hefer holds a diploma in management from Leipzig Graduate School of Management (HHL) and an M.B.A. from INSEAD.