This Is a Pivotal Moment for Booking Site Marketing Strategies

It was almost as if they flipped a switch. Although the trend started to take shape a year or so earlier, in the second quarter five publicly traded online travel agencies — headquartered in the United States, India and Argentina — all shrunk their marketing spend as a percentage of revenue. For years, online travel agencies' direct marketing spend in outlets such as Google outpaced their revenue growth, and critics wondered whether this spending bonanza was sustainable. But in the quarter ending June 30, the two largest travel-marketing spenders, Booking Holdings and Expedia Group, which each devoted about $1.26 billion to direct marketing, recalibrated their marketing spend to decline as a percentage of revenue. The turnabout is a watershed moment, although it's unclear whether this is the new "normal" or a trend that will get upended before long. Among the two spending titans, Booking Holdings saw the largest marketing-spending drop, 660 basis points to 35.8 percent of revenue, while Expedia's marketing spend fell a more modest 279 basis points to 43.9 percent of revenue. (See the chart below.) Online Travel Agency Marketing Spend as a Percentage of Revenue Online Travel Agency Q2 2018 Sales & Marketing Percent Change Versus Q2 2017 Percent of Revenue Q2 2017 Percent of Revenue Q2 2018 Percent Change MakeMyTrip* $149 million 4.6 percent 100.8 percent 87.6 percent -(1,322) basis points Booking Holdings $1.26 billion -(1.25 percent) 42.3 percent 35.8 percent -(660 basis points) TripAdvisor $217 million -(5.2 percent) 54 p