Trivago = Trade Desk Meets Tripadvisor

The main IPO of interest scheduled for this week is Trivago (Nasdaq: TRVG). The $400M deal is being led by JP Morgan, Goldman and Morgan Stanley with 7 co-mangers tacked on for good measure. Our Quick IV points to a share price of $35 versus the $14 midpoint of the proposed range. Post-IPO Expedia (Nasdaq: EXPE) will remain the largest shareholder and effectively control the company.

At first glance, Trivago looks like yet another online travel company. Priceline (NYSE: PCLN) is the 800-lb gorilla but Google matters quite a bit, and they have morphed their acquisition of OTA into Google Flights.

After a few pivots, Trivago has focused on hotels. There are a number of interesting things about the company and the IPO but the first one is that hotels matter more than flights and rental cars. One of our favorite comedians said, "I'd fly on the back of bird if it was $3 cheaper."

Flights matter and rental cars matter but in those cases,  price tends to dominate. We all know that the flight will be short and a car is pretty much a commodity so we want to get them as cheaply as possible. Flights are often more about schedules than price and quality.

For most vacations the bulk of your time and quality of experience will depend on your accommodation. AirBnB has exploited this to great effect but Trivago is helping consumers who want a hotel that matches their desires but also with a price that creates extra value. If you are a fancy type you might compare the Park Hyatt with the Four Seasons and a few other select hotels to get the best price on a luxury. If you are mid-market you might tend toward a Marriott or Holiday Inn but a boutique might offer better rooms and lower rates.

Trivago is also trying to go more deeply vertical in understanding travel preferences. It smacks more of story-telling than actual delivery but at least they understand the opportunity versus Priceline, TripAdvisor (NASDAQ: TRIP) and Google.

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Disclosure: We do not have any vested interest in the shares of this stock at the time of writing and publication. We may however take a position post publication and are not under any obligation to ...

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Trivafly 3 years ago Member's comment

Did you know that now, there is also a trivago for flights? The new trivago for flights is trivafly! trivago flights

Bruce Powers 3 years ago Member's comment

Is Trivafly owned by Trivago? $TRVG

Trivafly 3 years ago Member's comment

Not for now, Trivafly is an independent company.

Charles Howard 3 years ago Member's comment

Thanks for covering all the basics on the #Trivago #IPO. I've had my eye on this company. $TRVG