The high cost of living signals good news for hotel comparison sites that will take advantage of cash-conscious consumers looking for cheaper deals, the head of Trivago has said.
While many businesses may suffer as high inflation strips the savings of UK households, money comparison platforms could see a boom in activity, according to the boss of the accommodation search website.
Axel Hefer, Trivago’s CEO, told the PA news agency that consumers still want to go on vacation, but are more likely to invest time in booking money-saving trips.
The more at stake financially, the more time people are willing to invest in the pursuit of the holiday
Axel Hefer, Trivago’s CEO
While the travel chaos that has hit UK airports in recent months will eventually ease as supply improves to meet demand, he predicted.
“The more at stake financially, the more time people are willing to invest in the pursuit of the holiday,” Hefer told the PA.
“Holiday prices have to go up because hotels and transport companies are not fully staffed, and all the costs that go with providing the service, from food and energy to construction, are rising.
“But as long as there is higher inflation and people are conscious about spending, our business will perform well.
“In fact, our website really took off after the 2008 financial crisis, and what we offered was more relevant than when prices are stable.”
But Hefer was careful not to make predictions based on how well the business was doing 14 years ago.
“We shouldn’t get too excited just because it worked really well in the last recession.”
The boss of Trivago – which compares accommodation across 190 countries – said airlines and travel companies were facing massive staff shortages after jobs were cut during the pandemic as travel was restricted.
Coupled with an increase in people with post-pandemic savings and a desire to travel, the industry is buckling under the weight of demand.
But rising prices will eventually see demand fall and the industry will be able to stabilise, Hefer said.
In terms of the long-term impact of Covid, exotic destinations are more likely to suffer as holidaymakers stick to booking familiar places or places closer to home, he argued.
“New strains of the disease are more effective in the colder months of the year, so it’s possible we’ll see a shift in people heading into the summer months.”
Hefer’s comments come after Trivago reported a 52% jump in year-on-year revenue as Covid restrictions were lifted and pent-up holiday demand was released.
But the company said the uncertain economic environment, rising interest rates and rising inflation had led it to write down an €84.2m (£71.1m) write-down.
The group reported an operating loss of €59.8m (£50.3m) for the second quarter of the year, a significant increase from the €2.9m (£2.45m) loss reported the year before.