After years of impressive growth, online booking sites like Booking.com and Expedia have suffered a slight slowdown in growth and pulled back on online marketing in a search for a more cost-effective way to acquire customers.

Is the bloom off the rose for the giants of online booking? No way, according to the CEO of Booking Holdings.

“One of the things I try to tell people to focus on is the long term and not the short term,” said Glenn Fogel, CEO and president of Booking Holdings at Skift Global Forum on Thursday in New York City.

“I know how Wall Street works. For us, it’s looking at the long-term future of our industry and where are we in that process. This still is a very early stage in a true revolution in how you travel and buy travel,” he said. “We always talk about how we are a single digit market share company, there is so much left for us and the people using technology to transform an analog world into a digital world. Ten years from now, what you see today will be significantly different.”

Booking Holdings has also moved away from search marketing in the last years, focusing more on advertising its brands through traditional media channels instead of online marketing.

“One of the things we like to pride ourselves on is being able to adapt and change, [doing the same thing over and over is] a real bad way to down a path to ruin because the situation changes,” said Fogel. “In certain parts of the world, pay for performance is not the way people are finding ways to buy things. Google’s not in China, so to say we want to be big in China and use Google to get customers, that is not the best way. We want people to come to us directly as much as possible and the art of that is building up that brand marketing.”

When asked for the reasons behind Booking pulling back on its spend on metasearch sites like Trivago and TV advertising, Fogel implied that increased costs and onerous terms have led the company to reduce spend and look elsewhere in the sector for partners that will provide it more value.

“We always want to be cooperative with everybody, that’s how we built our company, but if somebody doesn’t want to be cooperative with us, if someone wants to force us to do something that’s bad for our customers, that’s unfair to us,” said Fogel. “You are allowed to do what you want to do, we’ll just go elsewhere with our business.”

In terms of the Booking.com experience, Fogel sees a convergence between the buying process and the experience during a trip itself. Listings, reviews, and in-destination experiences will coexist together holistically, and the company is running tests on how to best push content to travelers during their trip.

“We want to build a holistic system that makes the end-to-end trip a great experience,” said Fogel. “You go to the hotel, but you want to experience where you’re going and what you want to do. We need to build a platform using all our data about people using all this tech so we can come up with that perfect personalized experience and make it so much easier for the person and frictionless.”

Finally, on the homesharing front, Fogel assured that audience that Booking Holdings will comply with local regulations completely instead of looking for ways to circumvent them to drive growth.

“We will try to do what we think is best for the industry and customers,” said Fogel. “We believe in following the laws. We do not go around thumbing our noses. We don’t go around saying that because we’re digital so we don’t have to follow the law. Our business, in the long run, is better off by being cooperative and understanding all of the stakeholders.”

Read the full Transcript of the Glenn Fogel Interview

Skift: Good morning, New York. Glenn, thanks for being here. Wanted to give you a reminder, please put your questions in Slido.com or the Forum app so we’ll get to them at the end. So, like the artist formerly known as Prince, rest in peace prince, the Priceline Group changed its name this year to Booking Holdings. There’s been a lot of really interesting things going on. Just to bring you up to date, the company appears to be doing very well. The stock price is down a little bit. It went over a $2,200 a share this year. If you want to spend your whole yearly salary on something, go buy 20 or 25 shares of Priceline stock. But the company’s doing well. Profits rose 35 percent. In the second quarter, revenue was up 20 percent. But you’re only projecting six to nine percent room night growth in the second quarter. So, the online travel market is very competitive. Is the bloom off the rose or are the glory days of 25 percent room night growth a thing of the past?

Fogel: Well, there are a couple of things to talk there in that question. Let’s start with, that six to nine percent you gave is what we gave as guidance for room night growth. One of the things I try and tell people to focus on is the long term and not the short term. And I know how Wall Street works, I was on Wall Street for a very long time. But, for us, it’s looking at the long-term future of our industry and where are we in that process? Many years ago, I used an American term — and I could see because we’re a very international company so everybody looked at me strangely — and I said we’re in the early innings. And they’re like, what are you talking about innings? But the truth of the matter is, this is still a very early stage, is a true revolution of how you travel and how you buy travel and how you do things. We always talk about how we are a single digit market share company. There is so much left for us. But for all the people who are doing things digitally online, using technology to transform what was an analog world into a digital world. We’re going to make it so much easier, so much better that 10 years from now, I believe, what you see today will be significantly different.

Skift: It’s really tough to concentrate on the long term as a public company, though.

Fogel: It’s not easy. You have to be able to convince the investors that you’re doing the right thing and making the right investments. At the same time, I don’t think any of us are going to see the revenue numbers that we put out in the last quarter and what we put in the bottom line, I think people were pretty pleased with that. It’s always a balance. You need to produce appropriate returns in the short term and you also need to make the right investments for the long term. I agree, it’s not easy.

Skift: Before we get into more nitty gritty details about the company, let’s talk about the world. We’re seeing a global trend, your company is very much a global company. We’re seeing a global trend towards closed borders, anti-refugee sentiment, autocratic governments. How does this impact the travel industry? How does it impact your company?

Fogel: So we always say our mission is to help people experience the world. We want more people to travel throughout the world and enjoy the pleasure of meeting different people, different cultures. For myself, my family, some of the best experience that we’ve had have been traveling. But I recognize there are changes happening about the world and it’s happening in a very rapid pace, which is very, very upsetting to a lot of people. So we have technology changes. Make people very nervous about their future, their jobs. Is my job going to be automated away. One thing. You’ve changes too in terms of people who are having a bad life and whether it’s war, whether it’s political crisis, whether it’s a climate change that has ruined their crops and they need to go somewhere else. And they see, oh, if I go to this other place, it’s better there. And who doesn’t want to make things better for their family? My grandparents left Eastern Europe because of terrible, terrible problems they were having there, and they went to America because America is a great place. It may not be great for them making that move themselves, but they knew it would be, they weren’t sure about it’d be good for them but they knew it’d be better for their children. And who wouldn’t want to do things that are better for their children. But at the same time, we have the issue where people are moving too, is like wait, we have tremendous number of people coming in here. Maybe they don’t have skills. What’s going to happen to my job and all the … All of these things coming together and then you have politician to use this rhetoric to get votes in a democratic place, or just want to build up support and blaming somebody else. Now you can blame technology for some of this, but blaming technology, technology is an amorphous thing. But if you can blame a person or a group, well now you can start causing all sorts of things to try and build yourself up. It’s a terrible situation going on around the world when you see this and in so many places. Our job is to help lower that by getting people traveling and seeing things. When you spend time with other people and get to know them, I think that lowers that fear of the other person and that’s our job.

Skift: Absolutely. So you’re nearing your second year as CEO, and I remember in the run to who’s going to be the new Booking Holdings or Priceline Group CEO, people were talking you up and saying this is going to be a lot of continuity and Wall Street will love this. But you’ve actually made a lot of strategy changes, which, you know, I think we’ll get into. One of them, and a head-scratching one was Booking.com grew up, Booking Holdings grew up to be a $93 billion company based on largely on search engine marketing. Now all of a sudden, you say you want to reduce your reliance on search engine marketing and your marketing spend has actually slowed in relation to revenue growth. So, what’s going on?

Fogel: So, one of the things that we like to pride ourselves on is being able to adapt and change and not do things the way they’re always done just because that’s how we always did it. That’s a real bad way to go down the path to ruin because the situation’s change, I’ll give you some examples. In certain parts of the world pay for performance is not the way people are finding ways to buy things. Let’s get the easiest, biggest example. Google’s not in China. So, to say, we want to be big in China and try and say, oh, we’ll just use Google to get customers, that really wouldn’t work so well, right? In addition, we also talk about how we think it’s very important that we continue to build out our direct business. We want people to come to us directly as much as possible. Part of the way to do that is build up that brand marketing so people understand who we are, what we are and have them come directly to us, stay with us. That lowers our marketing costs significantly and I think also helps us build a better relationship with that customer long term.

Skift: And you say about 50 percent of customers come to you direct already.

Fogel: The term used was roughly 50 percent was what was used.

Skift: Right. One interesting thing is you say that you want to put more emphasis into brand marketing, whether it’s TV or WeChat or whatever. But you said recently that it’s been going slower than you expected. So, tell us what’s going on behind the scenes. What is the difficulty? I can imagine there was a cultural revolt and you’ve been known for A/B testing and performance marketing and here now you want to do more TV. So why has that been a slower go than you thought?

Fogel: So it’s interesting, they actually go together because we do have a testing ethos. Our DNA is test, test, test, test. And if things aren’t going well, you don’t do it. Or if things are taking longer to get done, you just don’t, well, let’s just throw the money at it anyway and don’t worry about doing the testing. That’s not the right way to go. Yes, I said we wanted to spend more money than we’ve done so far, but I’m also very happy that we’re not a company that says, ah, what the heck, just spend a couple more million dollars. We are very, very frugal executives. We do not want to waste. So, better to take more time to get it right than rush and do something wrong.

Skift: Is it a matter of the ad quality not being good?

Fogel: There are many things that went through and I can give a whole list of them, everything from small things like working with partners in online video where some of the testing tools may not have been ready to things of getting a sum of the execution on some of the brand campaigns. Now, there are many different things that happened or not liking the way the results were coming in for some of the initial stuff we put out. All different reasons. But again, short term, long term. Think long term. Don’t worry. Oh, it took her a couple more weeks or months for them to spend this amount of money. That is irrelevant. And again, I go back to my Wall Street days. You’d see people, portfolio managers and everybody, all they cared about was the next quarter or the next week or the next day trading people. I mean, come on. That is not the way to build a lasting franchise. The way to build a lasting franchise, to build value for your customers. And if it takes you a little bit more time to do the right thing, spend the time.

Skift: Glenn, you seem to be a personal, pretty affable guy, but when it comes to metasearch, you’ve been playing pretty rough with some of the platforms. How do you spell Trivago? Booking Holdings reduced its spend in Trivago. The company is suffering. They’re relying on just a couple of major advertisers. And you say that some of the players that you’re working with are cooperating and some aren’t. So translate that for us. What does that mean?

Fogel: I’m so tempted to ask which word’s the hard one. Look, I am an affable guy and people in our company are nice people. We very much always want to be cooperative with everybody. That’s the way we have built our company by being pleasant and good cooperating people. But if somebody doesn’t want to be cooperative with us, if somebody wants to force us to do things that are first bad for our customers, bad for the customer, it’s very unfair to us. We’ll say, okay, you’re allowed to do what you want to do. That’s fine. We’ll just take our business elsewhere. If I go to a restaurant and they give me crappy service and the food sucks and is too overpriced, I’m not going back, it’s that simple. Now, if they provide good food, good service, reasonable price, I’ll eat there all the time. That’s the answer.

Skift: Is there any metasearch platform that you can tell us is serving good food?

Fogel: I don’t believe it’s appropriate to bring out anybody’s particular bad meals.

Skift: I see. I remember asking Dara from Expedia if Airbnb is going to eat his lunch and he said he’s very well-fed. So with that transition, let’s talk about Airbnb and alternative accommodations.

Fogel: I say you can go to OpenTable actually.

Skift: Well, we’re going to talk about that. So, it’s pretty much of an open secret that probably the one company that Airbnb fears most might be a Booking.com. You’ve been making a big push in alternative accommodations. So, they’re a private company. They might do an IPO soon. Do you have any more clarity into who’s winning this game at this point?

Fogel: A couple things. One, I don’t believe in this who’s winning. Again, this idea we bring long-term business into short-term sports events. Who’s winning? What’s the score? Who’s up, who’s down? Not the way to do things. This whole idea of alternative accommodations is an enormous opportunity for so many people to have a great business and provide a great service that really, it existed before there was a digitalization but it wasn’t very efficient, it was very hard. When you want it to get the condo on the beach or you want a place to go skiing, you want to get an actual house, it was complicated, hard, going back and forth, looking for how do I find the right one. Now it’s much easier and everybody is better off because of this. We believe that it’s important to provide all the accommodations to our customers and we think we have a real winning a model because when people come to us, they can see everything right up front, look at the reviews, look at what it’s going to cost them and it’s all that on Booking.com instantly confirmable, so there’s not the back and forth, back and forth, and the price you see when you first came on, that’s the price. You’re not going to get hit with a travelers fee at the end or a cleaning fee. It’s a different model that we believe is better.

Skift: Which brings me to my next question. So, Airbnb announced, I think it was yesterday, that they have a deal with a boutique hotel association in Thailand. They’re going to be putting those hotels on the Airbnb platform. Now, Airbnb charges hotels and hosts roughly three to five percent. For argument’s sake, you might charge them 15 percent or maybe for smaller hotels, more than that, I don’t know. So won’t this put pressure on your commission levels at some point? Won’t hotels start flocking to Airbnb instead of Booking.com?

Fogel: So there are a couple ways to think about this and I don’t want to get into a whole math game here about the fact that you hit yes, the supplier to pay one certain percent and then you hit the consumer at the end with the traveler fee at the end. It ends up being the same amount of money being taken out of the price that was paid by the consumer at the end of the day and you end up kind of in the same place. The more important thing actually is to look at the demand side, because we believe we are one of the lowest commission takers in the market, really do. When we go and talk to some of our partners, our suppliers, and we say, gee, you’re handing out 25, 30, 35, 40 percent to XYZ wholesale or whatever. Why are you doing that? We’re charging much, much less. Why don’t just give us all the business. And they’re like, because we’re not 100 percent filled. And so, it’s better to give 40 percent to that guy over there who gets that person to fill up because the marginal cost of us filling that bed is significantly lower than the 60 percent revenue we got to keep. If you have demand, when you have demand, suppliers will want to do business with you. We believe we are providing a very fair price building a good long-term friendly relationship. I don’t worry too much about somebody trying to do some sort of game. Well, we’ll charge three percent here, or 15 percent there. Not going to worry about that.

Skift: Does it end up meaning anything regarding the price that the end-consumer eventually pays, those two different models?

Fogel: Price is so critical. Consumers, when you see the exact same product and one is cheaper, generally that’s the one they would prefer to buy from. So, being able to provide the lowest price is very important. But it’s not the only thing by the way. Many times convenience matters. Customer service matters. The fact that we do everything in 40-something languages, when you have a problem, maybe you speak a second language, let’s say English is your second language and you can get by on it, but you happen to speak Catalan as your primary language and you’ve got customer service in Catalan, you would spend a little bit more because that makes it so much more convenient, easy if something were to go wrong. That’s one of the things and having that 47 languages 24/7.

Skift: So how’s the regulatory environment shaping up with alternative accommodations? Airbnb recently sued New York City over the requirement that they have to share host information with New York City. Are you guys sharing that kind of host information with New York?

Fogel: The law’s not effective yet, you know that, right? I think it comes whenever January 1, I don’t remember that. It’s not in place yet and there is a lawsuit going on right now. Here’s our philosophy on all areas in the world of regulation. We will lobby, we will try and do what we think is best for the industry and for customers and partners, what we think is the best way to, and we will talk with all the people in government and try and do that. We are cognizant, though, that it’s important to do what the regulations are. We believe in following the laws. We do not go around and just thumbing our nose and say, yeah, we know it’s a democratic process there and I know you elected those people and those people put the law in there, but you know, we don’t like that law because we’re whatever, we’re digital so we don’t have to obey the law. Wrong. That’s not the way to do it. Work to get the laws the way you want them, do what you can, but when the law comes out, you follow the law. It’s that simple. I believe that our business in the long run is better off by being cooperative and understanding all of the stakeholders, all of them, all our stakeholders. Stakeholders are not only our customers, our shareholders, our employees, the regulators and the people who live in the neighborhood. You have to take them all into account when you’re trying to be a good corporate citizen.

Skift: Let’s talk experiences, aka tours and activities. I think about a year ago you guys, maybe it’s longer ago, you started putting a link to Kayak flights on Booking.com and I thought that was a signal that you’d be selling flights by now. But it seems like …

Fogel: We do sell flights. Priceline sells a lot of flights.

Skift: Right. I was talking about Booking.com.

Fogel: Kayak sells a lot of flights.

Skift: Yeah, but it’s metasearch mostly. Anyway, it seems like …

Fogel: We’re still testing on Booking, too, you know.

Skift: Okay. So when are we going to see it?

Fogel: We’re testing right now. We’re testing. The last question about testing, we test, we test, we test.

Skift: Anyway, you’re going towards more full service. Seems to being carried out in the realm of experiences. You’re doing ground transport, you’re doing tours and activities. Interestingly, you’re doing for some travelers shopping as in Louis Vuitton discounts. Did you get yours yet?

Fogel: I have not gotten mine yet. Maybe my wife took it.

Skift: What’s your view about that space? We’re going to talk to TripAdvisor’s Steve Kaufer later. He talks about experiences in the context of the hotel business two decades ago. How big do you think this can become and how are you going to scale it up?

Fogel: I don’t like the term full service so much. We want to try and build this holistic system that really makes the end to end trip a wonderful experience. Now, when you go traveling, you don’t go to a hotel to sit in the hotel. Nobody does that. You go to the hotel, have a little maybe something’s there, but you want to experience where you’re going what you’re going to do. So we need to build a system, a platform using all the data that we have about people and all the things they’ve told us and using all the technology, all this wonderful Ai, all the machine learning that we’re getting so we can come up with that perfect personalized, personalized type experience and making it so much easier for the person. And on top of that, lay on top of that the frictionless. How many people here use Uber? Raise your hand please. OK. Isn’t that wonderful, easy? In the car, out the car. You don’t look for your cash. You don’t think how much should I tip or not. It’s wonderful. Now, think about last time you were in Vegas in a hotel and you checked in and how long did it take you to check, how long was that line that made the TSA line looks short? And you’re thinking, why is this? They have all that data. I booked it. They know who I am, they got the credit card, everything. Why is it? And then, you want to check out. And you’re like, why do I have to wait to check out, why? Some people say, I don’t check out, I just leave. So, that’s just the start. There’s so many other things that there’s still so much friction in this travel experience. And I’ll tell you, I’m going to waste time to tell you this wonderful thing that we just had and it boosted my brand. And this is why I’m here is to boost the brand. So my wife and my kids, we went to Europe in the summer in August, and we went on a bike trip thing and we ended up at Salzburg. And my wife made the bookings and she did appropriately used Booking.com. I thanked her for doing that. It was very important that she does that. She does that and she got an email after we booked about don’t forget about all the great things to do in Salzburg from Booking.com. She has the app. We arrived in Salzburg in there and there, another message about things to do. And we’re looking, we’re going to go see this castle up at the top of the mountain, if you’ve been in Salzburg, you know what I’m talking about. And right there on the app, click, QR code comes up. We don’t have to wait in line to get onto the funicular to go up the mountain. We just … and it was cheaper because Booking.com got a good deal. So it’s cheaper, faster, easier. All you do is show this. You know, I got the other Americans in the long line, they’re looking for their euros, trying to figure out how much it is in dollars and all that. And we’re just going right up. We want to do that everywhere.

Skift: We’re running out of time. Before we get to audience questions, I got to ask you about China. You just mentioned Uber. You’re a big investor in Didi, the ride-sharing company in China, $500 million. You invested $450 million dollars in Meituan? You’re a big minority investor in Ctrip. Some of these investments are larger than the acquisitions, much larger than the acquisitions you made this year of FareHarbor and HotelsCombined.

Fogel: China’s a big place.

Skift: Big focus for you. Didi, explain that. Why invest in a ride-sharing company?

Fogel: So, China is an incredible opportunity for everybody. I always talk about being the locomotive that’s pulling the travel train. We need to have a presence there, to do well there. We’ve been there for a long time. We have almost a thousand employees there. We have, I don’t remember how many, 12, 14 offices, I’m not sure right now how many we have. We do a lot of business there with our own brand. Great. We also have partners. Ctrip, big investment there. We supply outbound inventory to them, we work together with inbound, we do all sorts things together. Meituan, Meituan. Very big, very fast-growing company. Just went public a couple of days ago there. I think it’s around a $50 to $60 billion valuation right now there. They have many different things they do. One of them is travel. We’re working with them. We have our own business and Didi also enormous. It’s like Uber of China. Does a lot more rides than Uber does, by the way. Everybody knows Didi. So we thought, OK, let’s think about this. We want to improve our brand. Didi has a heck of a lot of people. Let’s work together in something because we also know every single one of our customers who comes to China does not drive a car in China. That doesn’t happen. They got to get around somehow on the ground. What are they going to use? Didi. Now until recently by the way, DiDi only had a Chinese app. Kind of hard for most of the people who go to China to use it. Recently now, they have an English language one. But still, we have a lot of customers, English isn’t their language, right? So what we’ve done is this deal is so wonderful. One, our customers, they go onto the Booking.com or they go to the app and you’ll be able to get that ground transportation from Didi app in the language that they were doing the work with Booking or Agoda. Really good. Nice, seamless, frictionless thing. Second thing is, we’re going to work with them so we can help make sure all those Didi customers know about Booking.com and Agoda. You need a place to stay, that’s where you can go and get a great deal, a great service in Chinese. And the third thing is, I always, always think about this too. We want to make some money on the investment too.

Skift: Right. And you made a lot of money on Ctrip I believe.

Fogel: Meituan, we invested at a $30 billion valuation a year ago and internally it’s $50 to $60. That’s OK.

Skift: I want to get to a couple of audience questions. One of the changes you made was you’ve always siloed the brands and let them compete and they have talented teams, let them do their thing. You’ve changed some of that. So, for example, he OpenTable leadership now reports to the Kayak leadership. So the question is, why has OpenTable’s marketing and product been consolidated under Kayak? It doesn’t seem like you’re taking good advantage of OpenTable’s power. Why not?

Fogel: We have not done everything I wanted to do when we did the deal with OpenTable yet. We are making substantial progress and I’ve seen some stuff which unfortunately I can’t talk about here, but they’ll roll out in the not-so-distant future that I think are going to be pretty nifty. But I’ll talk a little bit about the concepts of things I’ve always talked about and it goes back to this idea of all the experiences. When I go traveling in a city, I don’t generally know what those restaurants are, which ones I should use or not. And absolutely, we should be able to do something between the power of OpenTable, the power of our hotel brands and be able to do it so it’s better for the customer. When I, a person, goes, when I go to London and I’m staying in a fancy hotel in Mayfair, lots of restaurants there would like to get my business because they know he’s staying at an expensive Mayfair hotel, he’s probably going to buy an expensive bottle of wine. We need to do a better job of combining these things so that I person traveling gets these great offers because those restaurants want me. So whether it’s a free dessert or maybe just a special better table, who knows what, but be able to do that. So again, the customer is better off, the restaurant has a good way to reach out to valuable customers. Everybody wins. We need to do that.

Skift: Glenn, I will get no free dessert unless we get offstage now because we’re out of time. So thank you.

Fogel: Thank you.

Photo Credit: Booking Holdings CEO Glenn Fogel, right, at Skift Global Forum 2018. Erika Adams / Skift