Booking Holdings' Push Into Homesharing Feels Like a Return to Its Roots
Skift Take
The hotel business was never an easy one for online travel companies. Far from it. But compared with the complexities of alternative accommodations, executives at Booking Holdings may come to regard the hotel business as a relative cakewalk.
Everything eventually comes full circle, right?
Alternative accommodations is a large and complex opportunity for Booking Holdings, and it's ironic that in one sense the company's homesharing push is turning its business model back toward what it was during the first dozen years of its existence.
That's because beginning last year and into the first six months of 2019, Booking Holdings reversed a seven-year trend that saw its merchant model sales declining as a percentage of total revenue. Under the merchant model, Booking.com is the merchant of record for the transaction and consumers must pay the company the full price of the stay at the time of the booking. Under the agency model, the property accepts payment at the time of the stay, and pays Booking.com a commission after the guest checks out.
Booking Holdings is ramping up its pre-pay alternative lodging business through its online payment system because many hosts, particularly owners with one or two properties, may not have the ability to accept credit cards, e-checks and a variety of other payment systems from WeChat Pay to Alipay. Serving as the merchant of record enables Booking to accelerate signing up new properties, and provide more flexible payment options to guests.
Since 2018, Booking Holdings' pre-pay merchant model sales have been climbing, rising 40 percent in 2018, and 26.4 percent in the first half of 2019. (See chart below.)
From its initial
