Rising inflation is a negative factor for many companies because it increases the cost of doing business. When raw materials or labor become more expensive, profit margins tend to fall.

But one travel search service company has seen a side benefit from rapidly rising prices, particularly for hotels. Trivago (ticker: TRVG), has seen an increase in demand for its services as high prices encourage travelers to look for bargains.

Trivago is a so-called metasearch company that aggregates listings from hotels, resorts and other online travel companies. With it, people can compare the cost of staying in different hotels based on the amenities and prices they are looking for.

People can use the regular search when travel is inexpensive, they need to rely on comparison sites like Trivago when prices go up. Part of the company’s revenue comes from commissions, which are based on the amount people spend, so they grow in line with the value of customers’ bookings.

And investors don’t seem confident that Trivago can make a comeback, despite the revival in the travel industry. While Booking Holdings (BKNG), the largest online travel agency, is now trading above 2019 levels, Trivago stock remains depressed.

People can book trips directly on Booking, so its business is different from Trivago’s commission-based model. But the more significant difference after the pandemic has been that Trivago is pursuing different business goals. While some online travel companies have increased sales, Trivago’s sales remain below pre-pandemic levels.

One major reason is that Trivago has cut its advertising budget and other spending to improve profitability. Last year, its sales may have been below 2019 levels, but its operating income was more than 50 percent higher.

From our perspective, the stock is undervalued. That’s why we did a stock buyback at the end of last year… I think we need to keep working to improve profitability and grow with the market. And if we do that, I think at some point the multiple will also grow