Expedia's Uphill Climb Must Meet Booking.com's Structural Advantages
Skift Take
One of Expedia's answers to Booking.com is the Expedia Traveler Preference Program, giving consumers the choice to prepay for a hotel (merchant model) or pay at the hotel (an agency model like Booking.com's). Booking.com's sole use of the agency model gives it a speed advantage as the merchant model is more complicated when signing on and retaining hotels.
Expedia Inc. CEO Dara Khosrowshahi talked last week about how his company was making progress in its European hotel business, but acknowledged "we can do better."
"As you know," Khosrowshahi said last week during Expedia's third quarter earnings call, "Booking.com is quite strong in Europe. So we've got an uphill climb, but the direction, at least, is positive for us."
An equity research report from Evercore claims that Booking.com's conversions of lookers to bookers is two to three times the industry average, and it attributes much of its success over online travel agency rivals such as Expedia to "a structural advantage."
In sum, the Evercore report says Booking.com's paid-search efforts are destination-based while its rivals' organizations are origination-based.
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