Does Booking Have What It Takes to Compete Against Airbnb?

Online Travel This Week

Imagine you are Glenn Fogel, the CEO of both Booking Holdings and Booking.com, and on December 9 your company was the clear market leader in online travel with an $86 billion market cap. The next day Airbnb burst onto Nasdaq and its stock at one point that day reached a $109 billion valuation, and flirted with $100 billion all day.

OK, at market close Tuesday, the two rivals’ valuations were a dead heat — $89.6 billion for Booking Holdings and $88.6 billion for Airbnb. Stock prices go up and down, but the point is that Wall Street thinks Airbnb will be a formidable competitor for Booking, or might even claim the top leadership rung.

That raises the question: Does Booking have what it takes to compete with Airbnb in short-term rentals?

Or perhaps, the question might more appropriately be: Does Airbnb have what’s required to challenge Booking as a well-rounded lodging-booking company, let alone a full-service online travel agency?

Booking, which prided itself for years on having an ample but mostly under-the-radar short-term rental business, primarily in the form of European apartment-hotels and similar inventory at the time, clearly trails Airbnb in short-term rentals today by an order of magnitude.

Dan Wasiolek, a Morningstar analyst, estimated that Airbnb did $37.7 billion in gross bookings in short-term rentals in 2019 versus around $20 billion for Booking.

“Airbnb remains the clear leader in alternative accommodations’ bookings and unique individual owner content, but Booking is a worthy competitive and number two in that market,” Wasiolek said.

Anecdotally, I recently searched for two-month stays in Puerto Rico from mid-January to mid-March, and Airbnb had a wealth of viable deals at quality properties. Expedia’s Vrbo had much higher rates geared for whole families, and Booking lacked inventory. Although Airbnb’s listings already displayed discounts of 15-35 percent for monthly rentals, lockdown-ravaged hosts were willing to send me “special offers” knocking the rates down further.

Long-term staying coming out of the pandemic are hot for digital nomads, other remote workers, students, and  ex-pats, and Airbnb emphasized them starting early in the Covid crisis. But in a sign of Booking lagging in the sector, when I searched for two-month stays in Puerto Rico or Seattle, Booking.com produced a message, “Sorry, reservations for more than 30 nights are not possible.”

The issue for Booking is probably not as much technical or regulatory in nature, but is one of vision and speed. Why can’t travelers book stays of 30 days or more on Booking.com in January 2021 when Airbnb began emphasizing long-term stays in April — more than nine months ago?

But help is on the way. Gianbattista Vespucci, Booking.com’s commercial director, partner services, wrote in late August that the brand was introducing weekly and monthly rates, and had a pilot going in “select cities” to enable stays of longer than 30 nights.

But for a company, namely Booking.com, that prides itself on being nimble, although it laid off 25 percent of its employees in 2020, the lag time in enabling the more than 30-day feature is cringe-worthy.

“Over the last year, we’ve seen demand for stays of several weeks up to several months increase strongly,” said Alexander Limpert, co-founder and CEO at vacation rental management company GuestReady, with properties in Europe, Asia and the Middle East. “At GuestReady, we believe that this trend will continue post-Covid. With remote work possible for an increasing number of people, we see the lines between living and travelling blurring.”

Most of GuestReady’s longer-term bookings have come through its own brand, Airbnb, and mid-term rental sites such as Homelike or Uniplaces, Limpert said.

“Other strong short-term rental channels like Booking.com seem to not yet have tapped into stays above 30 nights, but with trials on their side going on there seems to be an opportunity opening up,” Limpert added.

In other areas of weakness, Booking.com has been talking for two years about having a shortfall of listings from individual owners, a vital host segment, particularly in the United States, compared with competitors’ portfolios. That would take a lot of heavy lifting and perhaps acquisitions over an extended period to close the gap.

The Other Ways of Looking At It

But there are other ways of looking at the Airbnb versus Booking rivalry.

First, online travel in general and short-term rentals in particular are not a zero-sum game — there is enough room for both companies to thrive.

Second, Airbnb vastly under-indexes Booking in hotels, not to mention flights, cars, vacation packages, cruise, and other sectors. Both companies offer experiences, which can be a very challenging market. Neither is a leading player there.

Wasiolek of Morningstar pointed out that economy hotels — not Airbnb’s forte — within U.S. drive destinations actually outperformed short-term rentals, which are having a moment, in the early stages of the recovery. That points to the advantages of an online travel agency having a wide breadth of inventory.

Airbnb acquired HotelTonight in 2019 and paused hotel investment early last year. Airbnb post-IPO will likely reengage, and it will be a multiyear effort to get respectable in hotel offerings.

“We continue to see Booking Holdings as having the most complete network in the industry,” Wasiolek said.

In Brief

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Travel booking platforms Changi Recommends, GlobalTix, Traveloka, Trip.com and Klook have been offering Singaporeans vouchers for hotels, attractions and tours, and they booked $27 million worth in vouchers and payments as of January 1, according to the Singapore Tourism Board. There’s nothing like a deal. The Straits Times

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