Even though Booking Holdings has just delivered its highest quarterly tally of travel planning in the company’s history, it’s racing to fill a specific hole in its stable of flight, hotel, car rental and other vacation and leisure reservation offerings: alternative accommodations.
While the company said investors and the traveling public should be pleased to see the record $27 billion of travel bookings the Connecticut-based owner of booking.com, Priceline, KAYAK and others sites achieved in Q1, it was moving aggressively to appeal to property owners to list cottages, country homes and cabins on their site, where it is trying to close the gap against category leaders Airbnb and Expedia Group’s VRBO.
“In the alternative accommodations area where we think we are not as well-positioned as some of our competitors — stating the fact — particularly in the U.S.,” Booking Holding CEO Glenn Fogel told analysts on the company’s earnings call Weds (May 4) afternoon, before describing the two-sided effort underway to convince property owners and the traveling public that Booking is a viable alternative in the travel industry’s hottest niche category.
“So we absolutely need to go out and first make sure we’ve got a product that people who own properties want to put them on our platform,” Fogel said, pointing to not insignificant details such as offering liability insurance or a payment system that works well. “But then we have to make people aware of this,” he added, noting the company’s new marketing campaign launched this week and continued investment in the alternative accommodation space.
The Snowball Effect
As Fogel explains it, if you’re going to take on Airbnb or VRBO you have to have supply first, then you can begin to make customers aware of it.
“We actually have individuals talking with the big owners of multiple, multiple properties, making sure they understand what we can bring to them,” he said, before pointing to the early gains the company saw in Q1 in this arena where it has long sought to become a contender.
“It’s obviously something that I’ve been talking about for a long time and I’m sure people are getting a little tired of me saying it, but this is where we’re going,” Fogel said, while expressing his pleasure with last quarter’s small but actual net increase in alternative accommodation bookings.
“We are gonna keep on building this and it will build on itself. This is one of those things where it’s like a snowball, you need to get it rolling and then it will build more and more, faster and faster,” Fogel said. “It’s gonna take some time but I’m pleased with where it is at.”
The Connected Trip
While the $85 Billion company that turns 25-years-old this year works to get its alternative accommodation snowball rolling, it is also looking down the road to build out the tech infrastructure needed to support what it calls the “connected trip” experience that is run through the company’s mobile app.
“Connected Trip is a long-term vision, and it’s going to take some time before we get to where I believe we need to be in terms of a truly step-functional change for the way people are currently, buying, exploring, going through travel,” Fogel said, pointing to the well-known frictions that plague travel bookings.
“I think we all know how difficult it is and we all know that it should be better, so that’s the goal down the road in 2023, so we’re still pretty early in this,” he added.
In the meantime, the Booking.com chief was cautiously optimistic about the burst of business it saw in Q1 and the continued momentum that carried on into April, but cautioned investors of the high level of uncertainty and unforeseen disruptions that have occurred over the past two years and prior two quarters with the emergence of war in Ukraine and Omicron late last year.
“I’m encouraged by the strong gross bookings already recorded for the summer period, which are over 15% higher than at this same point in 2019,” Fogel said on the call, pointing to U.S. and Western Europe bookings for the summer that are over 30% ahead of pre-pandemic levels.
“But I note, a high percentage of these bookings are cancelable,” Fogel cautioned, but said so far that fear has not materialized.
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