If there’s one thing the Priceline Group, including Booking.com, seemingly knows how to do, it’s building its supply of available properties, which stood at 1.2 million at the end of March.
But when it comes to alternative accommodations, including vacation rentals, apartment hotels and apartments, Booking.com would seem to be behind Airbnb’s three million, and HomeAway’s roughly 1.4 million listings.
Of these 1.2 million hotels and alternative accommodations on Booking.com at the end of the first quarter, some 640,000 were vacation rentals and apartment hotels, and that was a 51 percent jump compared with the same period in 2016.
In roughly the same timespan, Airbnb grew its listings around 20 percent to three million. Meanwhile, HomeAway, seemingly absorbed in getting its house in order during its first year under Expedia ownership, saw its vacation-rental-listings ranks tick upward 16.6 percent to 1.4 million in the first quarter.
But it’s really difficult to assess the weight of the supply of the various players because there are few apples to apples comparisons.
For example, although Priceline Group CEO Glenn Fogel said during the company’s earnings call Tuesday that “some of our competitors” have more alternative accommodations properties than Booking.com, a spokeswoman claimed Wednesday morning that the Group actually has more vacation rental properties than Airbnb.
According to the Priceline Group spokeswoman, Airbnb’s touted three million listings are actually units — not properties — and the Priceline Group offers eight million individual units.
Airbnb didn’t immediately respond to a request for comment.
At the same, the Priceline Group’s definition of alternative accommodations, with that 8 million unit count, is open to interpretation. Those alternative accommodations would include every non-hotel category on the site, including multi-room “apartment hotels,” some of which more closely resemble hotels than homeshares.
Meanwhile, Priceline Group CEO Glenn Fogel said Tuesday during the company’s first quarter earnings call with analysts that growing its breadth of supply, including alternative accommodations, is a key part of its strategy and offers a major opportunity.
Conceding that Booking.com’s vacation rental business isn’t as well known as others’ — and that’s something the company intends to address — Fogel said the fact that Booking.com doesn’t charge travelers a booking fee and that 100 percent of its properties are instantly bookable, with no waiting period for a confirmation, will reap benefits.
“We think that’s an advantage,” Fogel said.
He said proof of that model’s merits is the fact that both Airbnb and HomeAway are scurrying to make their properties instantly bookable. A HomeAway spokesman said recently that its 1.4 million listings translate into some “two million unique places to stay,” and about half offer instant confirmations with no waiting period.
“We think in the long run this will be the winner,” Fogel said, referring to his company’s instantly bookable vacation rentals with no extra booking fee for consumers.
In the mid-2000s, Booking.com figured out a model to onboard hotels and convert lookers into bookers at a much faster rate than competitors like Expedia, which was focusing on the much more cumbersome merchant model.
Vacation rentals could be a different challenge, though.
While vacation rental property managers responsible for large numbers of listings may be the low hanging fruit ripe for picking for Booking.com, vacation rentals owned by individuals are a substantial segment and many resent the prospect of instantly confirmable bookings. So the model could be a much tougher sell.
Fogel isn’t really focused on whether property managers — or owners, for that matter — are comfortable with instant booking versus potential guests making inquiries to managers and owners.
When asked about that issue during the analyst call, Fogel said:
“I haven’t spoken to enough property managers to be able to answer that accurately or not. I think, we have to just look at the data, and the data is that we have lots of property managers who are willing to put their properties on our system. And as you can see from some of our competitors and what they have said, you can see that’s happening in their businesses too.
“So from that data, I would make the assumption that people are becoming comfortable, or are comfortable, or always were comfortable if there was a system to do it easily. That’s the best I think I can answer on that. And I just would reiterate that we are pleased with the growth of our supply in that area, and it is something that we are very focused on.”
Speaking about growth opportunities for the overall business, and not just vacation rentals, Fogel said the company will follow the “same formula” that’s been so successful, namely having the the breadth of properties, offering the best prices, easing the way customers navigate around its sites, and enabling them to book in the manner they please such as either pay at the hotel or pre-pay for a room, for instance.
“We’ll continue to crank out the same formula we have had in the past,” Fogel said.
But will the same formula work when it comes to vacation rentals?
And Airbnb has a brand advantage in alternative accommodations, particularly outside Europe, so Booking.com will have to do plenty of TV advertising and other marketing to bridge the awareness gap.
Taking Share From Expedia
Both Fogel and CFO Daniel Finnegan, who announced he will be retiring after 14 years at the Priceline Group, said the company is taking share from competitors. They didn’t specifically name Expedia as an online travel agency that is losing share but they clearly were referring to Expedia.
In the first quarter, the Priceline Group saw its room nights sold jump 27.4 percent to 173.9 million. In the same period, Expedia’s room nights rose just 12 percent to 64 million. That means Expedia’s number of room nights sold was a little more than one third the size of the Priceline Group’s.
In the first quarter, Priceline saw its net income increase 22 percent to $456 million on $2.4 billion in revenue, a 12.6 percent jump.
Finnegan said some of the Group’s brands, including Kayak and Agoda, are tilting more toward TV advertising and discounting, which leads to return on investment pressure. He doesn’t see that trend improving in the near term.