Booking Holdings CEO: We’re on the Road Toward Going Full-Service

When the Priceline Group changed its name to Booking Holdings a couple of months ago, the company spun it as better portraying the global nature of its business, and enhancing the alignment of its six major brands, all of which perform bookings.

But behind the scenes, the name change portends a deeper shift that Skift has been pointing to for months. Booking, which became a $102 billion company based largely on its hotel business, is headed toward becoming a full-service online travel agency with some parallels to Expedia Group and Ctrip.

In an interview at Skift headquarters in New York City last week, Booking Holdings CEO Glenn Fogel confirmed the company’s strategic direction.

“That’s what we are driving to, yes,” Fogel said. “What I would say, again, is what we are trying to create is a wholistic system that solves all issues of the trip.”

He added: “I can’t give you a timetable, but I will say, we are on that road.”

This is the first of a two-part series featuring an interview with Booking Holdings CEO Glenn Fogel. Tomorrow’s story will cover a look at his tenure since taking the top job January 1, 2017, including his view on the volatile nature of the online travel agency sector.

Like a travel agent of yesteryear

Fogel pointed to the fact that the company’s largest unit, Booking.com, offers tours and activities post-booking in 40 cities, and that the company is currently testing a restaurants tab, powered by its OpenTable subsidiary, on Booking.com’s homepage. The top of that page already features flights, flights + hotel, car rentals and airport taxis sections, in additions to its core accommodations offering.

He said it’s possible that the company will expand its tours business so attractions can be booked at any point in time, like most competitors do.

Booking has invested in creating a proprietary artificial intelligence application in the form of a chatbot being used for customer service. Fogel thinks that automating parts of customer service for the handful of most frequently asked questions, as well as making smarter recommendations for lodging choices, are both part of the new equation.

“I really believe that we can use technology to recreate the love of that old-time travel agent who knew everything they needed to know to provide you with the best possible trip and be able to do it all in a way that you did not feel that it took forever to do it,” Fogel said. “It was the right one at the right price and — God forbid anything went wrong — there was somebody there who would fit it all for you.”

Fogel didn’t detail precisely how Booking intends to transform itself from primarily a lodging-oriented entity into a full-service online travel agency, but said the transition would be “incremental,” and based on testing and revising.

“As things work, we’ll do more of it, and if things aren’t working so well, we’ll go back to the drawing board and redo it,” Fogel said.

The current Booking Holdings traces its origins to 1998, and the founding of Priceline.com, which began selling airline tickets at deeply discounted prices for customers with flexible plans. But the company really took off and created the bulk of its market value after acquiring the UK’s Active Hotels in 2004 and then Bookings B.V. in Amsterdam in 2005, both of which focused on hotels.

Priceline.com still sells flights, although it ended its Name Your Own Price feature for flights in 2016, and Booking’s Kayak unit does some flight bookings and offers comparison shopping for airline tickets.

“I’ll be super-interested to see how they go about doing air stuff globally,” said Barney Harford, the former CEO of Orbitz Worldwide. “It’s complex, and then the integration of air with hotel and car into packages, and being able to cross-sell adds more complexity, too. Booking.com has been incredibly successful and I’ve often ascribed that to their religion around staying focused on the core use case — buying hotel.”

Harford added that he has “a ton of respect” for Fogel and Booking.com CEO Gillian Tans, so it will be interesting to see how it all plays out.

Asked about Booking’s moves, a TripAdvisor spokesman basically said welcome to the party.

“Online travel agencies have talked about serving consumers throughout the entire travel lifecycle for years,” said TripAdvisor spokesman Brian Hoyt. “It simply makes sense to serve the needs of the traveler at every step of their journey. Since day one, TripAdvisor has been serving consumers throughout the entire travel experience. We are focused on ensuring that TripAdvisor continues to lead, as the recent comScore study reported, by being one of the most important channels that consumers turn to when planning a trip.”

Some would argue that Booking Holdings is almost being forced to change into a more comprehensive online travel agency because Airbnb is on the rise and has added restaurant reservations through Resy as well as “experiences,” and Expedia Inc. and Ctrip have long offered wide-ranging travel services.

“I’m not even going to debate about who did what first and everything,” Fogel said. “Just look at the facts and history. We were doing experiences in 2000 and 2001 off the Priceline.com site. If you look right now Ctrip is doing many, many things.”

Expedia has a much more robust tours and activities offering than Booking, as does TripAdvisor through its Viator unit. In restaurant reservations, Booking beat both TripAdvisor and Airbnb to the table with its acquisition of OpenTable, which turned out to be problematic — so far. Airbnb, meanwhile, does dining reservations through a partnership and not on its own.

On the tours and activities front, Johannes Reck, co-founder and CEO of GetYourGuide, isn’t overly concerned about Booking.com’s moves in the sector.

“It’s been clear for a while that Booking is trying to get into more areas of travel,” Reck said. “They have acquired OpenTable and done a great job growing RentalCars.com. I am not concerned about them going after the travel-activities space. We’re a fast-growing $150 billion market with less than 3 percent market penetration from online intermediaries. For the next 10 years, we’ll be much more focused on growing the total online market than on stealing market share from each other.”

Reck said Booking won’t upset the competitive balance with its moves. “We’ve competed with TripAdvisor, Airbnb and Expedia for years, and it’s barely noticeable,” he said. “Booking won’t change that dynamic.”

Michael Olson, a Piper Jaffray consumer technology and e-commerce analyst, argues that Booking should be able to make gains as a full-service online travel agency.

“We are confident that Booking Holdings will continue its initiatives around becoming a full service OTA (online travel agency),” Olson said. “We expect the company to continue to broaden its offerings in various categories of travel, in both the obvious large categories and also newer growing segments, such as alternative accommodation and tours & attractions. We believe the company is well positioned to leverage its existing relationships with customers and suppliers to grow its footprint in the space.”

Brand Advertising is Part of the Strategy

As Fogel transitions Booking toward becoming more of a full-service online travel agency, he has departed from past practice in that the company is giving more emphasis to TV and brand advertising while downplaying some third party metasearch channels such as Expedia’s Trivago. In 2017, Booking spent $392 million on brand advertising, a 32.4 percent leap over the previous year.

“What is different is we are spending more money than we have in the past on brand marketing because we recognize that there are customers we want to reach and that’s a way to do it,” Fogel said. “But, even more so, we want to really build a tighter direct relationship with our customers. We want them to be coming to us directly.”

Fogel didn’t mention Trivago by name, but said Booking would downplay marketing channels when using them would hurt the company in the short or long term, or when they provide an unsatisfactory customer experience.

“If a partner, an advertising platform, does a change that we believe is significantly detrimental to the customer experience, then we are not going to lean in,” Fogel said. “We are going to lean out.”

Booking took exception to several platform changes that Trivago made in 2017.

However, Fogel said no tactics or strategy are necessarily permanent. “Nothing is ever set in stone,” Fogel said. “That’s so important. You have to always be evolving. If you don’t, if you just stick to what was always good in the past, you’ll end up like all of those other companies that no longer exist.”

That’s why Booking is set on abandoning what got it to this point, and will play at Expedia and Ctrip’s game.

This is the first of a two-part series featuring an interview with Booking Holdings CEO Glenn Fogel. Tomorrow’s story will cover a look at his tenure since taking the top job January 1, 2017, including his view on the volatile nature of the online travel agency sector.