Serviced ApartmentsCompany will work on increasing supply outside of Europe in the year ahead.

Booking Holdings breaks down private accommodation revenues for first time, now at 20% of total

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bookingcom 190304
Photo Credit: Booking Holdings.
bookingcom 190304

The company says this business, which includes homes, apartments and other unique places to stay, captured $2.8 billion in revenue in 2018, represented 20% of the company’s overall revenue for the year and grew faster than the company’s consolidated growth rate.

For the first time, Booking Holdings is releasing details on Booking.com’s alternative accommodations business as part of its financial report.

The company says this business, which includes homes, apartments and other unique places to stay, captured $2.8 billion in revenue in 2018, represented 20% of the company’s overall revenue for the year and grew faster than the company’s consolidated growth rate.

The number of these listings on the site - 5.7 million as of the end of 2018 - grew 18% year-over-year. And in a call with analysts to discuss the financial report, CEO Glenn Fogel says in the coming year, it will work to add more supply, particularly outside Europe.

“We know we are a European-centric company, and we do very well in the capital cities in the alternative accommodations. In other parts of the world, in the U.S. in particular, we need to increase our properties, particularly a certain type - that is a single home that is in the beach locations, some of the ski locations,” he says.

“That is something we are doing, that is part of the things we invest in. I look at it as a glass half full - this is a great opportunity for us to increase and … really grow our business.”

The company also disclosed that 40% of Booking.com’s active customer base booked an alternative accommodation property at some point within the past 12 months, which Fogel says supports his belief that offering both hotels and homes on one platform is the best way to serve customers.

Overall, Booking Holdings reported revenue up 17% for 2018 to $14.5 billion and adjusted EBITDA up about the same, 18%, to $5.7 billion.

In the fourth quarter, revenue came in at $3.2 billion, up 16% from the fourth quarter of 2017, adjusted EBITDA was $1.3 billion (up 17%) and gross travel bookings were $19.6 billion, 9% better than a year earlier.

Three-prong approach
Along with the growth in the alternative accommodations business, Fogel cited two other areas where the company is investing to “drive long-term growth.”

One of those areas is in branding and customer acquisition programs. Fogel says investments in this area are helping to drive greater loyalty and higher repeat rates for direct bookings, which now account for more than 50% of the booked room nights on Booking.com.

Booking Holdings spent $509 million on brand marketing in 2018, up from $435 million in 2017. Fogel says he expects the new brand advertising campaign that launched this week in the U.S. will drive even greater awareness. And he says the company will boost brand campaigns, both online and offline, across additional primary markets.

“These marketing programmes are taking on a greater importance because many of our performance marketing partners are experiencing slower customer growth,” Fogel says.

A third focus for the coming year will be the continued rollout of Booking.com’s payment platform, which processed about 10% of the gross bookings on the site in 2018. Fogel says the platform provides more merchandising opportunities, a broader range of payment options and will “facilitate our transport and location attractions business.”

Booking Holdings chief financial officer David Goulden told analysts investments in the coming year are intended to drive growth and customer acquisition and will be “a step up in spend from normal level,” which will reduce the company’s EBITDA growth rate to drop by a few percentage points in 2019.

“You’ll see an impact in our financials in brand, in revenue via merchandising as well as customer acquisition and incentive programs, and you’ll also see it in personnel to support these initiatives,” Goulden says.

Looking ahead
Turning to 2019, Fogel acknowledges it has been a slow start in terms of bookings, primarily in the European markets, where he says “overall macroeconomic” factors are causing a slowdown. Goulden says bookings were down a bit in November and December compared to October and then dropped even more in January, with a slight bounce back in February.

The company expects hotel room nights booked will increase just 6% to 8% in the first quarter of 2019 and adjusted revenue growth will be between -1% and 1%.

But Fogel says he remains optimistic about the company’s future.

“We believe that areas of slowdown can be great opportunities to gain share, develop loyalty, increase your value to your supplier partners. When things start getting a little bit slower, our hotel partners are looking for getting demand wherever they can - they are looking for that incremental - and they want to be able to say, ‘Can you supply somebody in this bed?’" Fogel says.

“I’ve had the fortune of going through some of these in the past. I’ve been with the company now more than 19 years. So we’ve been through this before, and we’ve been able to add value in the past. I suspect if things do slow down a bit that we can position ourselves in a way that as we come out, we’ll be even stronger.”


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