Skift Take

Booking.com is on track for a strong summer, but Carlo Olejniczak acknowledges his company faces fierce competition from rivals such as Airbnb. He explains his company's strategy in areas such as short-term rentals in the video.

Series: Skift Forum Europe 2022

Skift Forum Europe

Skift Forum Europe was held in London, England on March 24, 2022. Find out about future Skift events through the link below.

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Carlo Olejniczak, Booking.com’s vice president and managing director of Europe, Middle East and Africa, addressed a wide range of topics in a conversation with Skift Executive Editor Dennis Schaal at Skift Forum Europe on March 24.

Like Expedia for Business President Ariane Gorin, Olejniczak expressed optimism that tourism in Europe would have a strong summer as bookings for the season were higher than at the same point in 2019. He also said his company has seen a surge in mobile bookings.

Watch the full video of the conversation, as well as read a transcript of it, below, to hear Olejniczak, among other things, touch on the travel trends he’s observed as well as the importance of short-term rentals to Booking.com.

Schaal: I’m back. Hi, Carlo. Thanks for being here.

Olejniczak: With pleasure. Hi everyone.

Schaal: Hey everybody here and online, please bail me out, put in some questions into the app. I can use all the help I can get. This guy’s a tough interview. That’s what I’ve heard. So you guys had an announcement about Ukraine this week. I think it was earlier this week. What are you guys doing?

Olejniczak: So basically, what we have seen through all this tragedy and these terrible events that we have a lot of partners reaching out to us and we want to help. We have room that we want to give for free. And we knew that many people … We have 3.5 million refugees that are fleeing away from Ukraine and these people need to find a room. So what we have created is to build very quickly a technology platform to be able to have a dedicated section on the website where we can basically help refugees find a room. We have also worked very closely with the United Nations Refugee Committee to make sure that we can provide the support to really those people in need. So we have this product that is live since this Monday, and we have all our teams trying to source free supply or highly discounted rooms for the refugees.

Schaal: So that was a bit of a technical challenge, right? Because you guys do pay at the hotel. Was that part of the …

Olejniczak: Yes, because I mean, in this type of case, if you want to remove all fraudulent cases, you need to do it for booking without a credit card. But basically the idea was to find a quick solution to make it easy for people to find the rooms and to book them. So we even had one of the big chains reaching out to us 10 days ago, [inaudible 00:02:13] we have all this rooms we want to give for free, but now we need to find a way to distribute them. So we said, “Okay, we are building this platform. So you will be able to fill your supply here.” Then the question for them was how to make sure that the rooms reach the right people. So by working with the United Nations Refugee Committee, we’re able to make sure that we provide these rooms to the person in need, I would say.

Schaal: I see some people on booking.com, booking rooms in Ukraine as a way to donate to hosts with without the intention of staying. Are you encouraging that?

Olejniczak: No, we are not. What we’re encouraging, we’re encouraging people to make donations to the Red Cross if they want to help. I’m not an expert, but when you pay for a service that you’re not using, this could lead to some financial [inaudible 00:03:00]. So this is not something that we’re encouraging.

Schaal: Right. And it looked like for a few days or a week or something that you weren’t going to close down operations in Russia and Belarus, but then you did. So what was going on there?

Olejniczak: So basically the situation is moving, has been moving very quickly every day. We have seen that many countries have imposed sanctions to Russia, whether it’s the U.S., the UK, the EU. It’s not always the same sanctions. So this led to many new restrictions, and then it became increasingly complex to do business in Russia. That’s why we decided to suspend our travel services there.

Schaal: And what’s the impact on the company?

Olejniczak: So if you look at these two markets, Russia and Ukraine as a destination, it’s a very low single digit percentage of our business. As a booker market, it’s a low single digit percentage of our business.

Schaal: I got it. So turning to what’s what’s ahead for the summer, summer travel season, I don’t know if you heard Ariane from Expedia before. She was pretty optimistic about the summer travel season. How are you guys seeing it?

Olejniczak: Yeah, we see that people … And that’s the positive things. And I think Wouter mentioned that as well. There’s a lot of pent up demand. People just can’t wait to travel. There is a very strong appetite to travel. As soon as lockdown disappears, restrictions are removed, people just book, very ready. So we have had very strong trends since the beginning of the year, since the very beginning of January for the summer. And when we currently look at the volume of bookings we have today on the books for the summer, we are higher than what it was in 2019. In Europe, it’s a double digit growth versus 2019.

Schaal: Wow.

Olejniczak: Mainly France, UK, and Germany driving that growth. We see some nice travel corridors also developing. It’s mainly country-to-country routes in Europe. The traditional ones, the Brits going to France or to Spain, or to Italy, the Germans to France and to Italy. And this is developing quite, quite fast. And what we have seen for the first time is it started in Q3 last year. We see international bookings going up during the crisis was mainly domestic. In Q3 and Q4 last year, the share of international bookings reached 33 percent. During Omicron in December, it went down to 23, back up to 40 percent in February, which was the highest share of international bookings that we have experienced since the beginning of the pandemic. And normally international mix is about over 50 percent.

Schaal: So I know in the beginning of the pandemic, Airbnb was talking about how the world of travel has changed for the long-term. Travel and living are blending. Glenn of Booking Holdings and Peter Kern of Expedia. Steve Kaufer of Tripadvisor. They were all arguing that things will back revert to “normal” eventually. Cities will come back. So are you seeing any these trends like work from anywhere or domestic travel or whatever? Are you still seeing this and do you think they will last?

Olejniczak: Yes. I think the … And this is something we were discussing with Remi, with the room yesterday. We see that some of the consumer behaviors have been accelerating by this crisis. So things maybe would’ve happened in 10 years from now, but they have changed. And the big change is the use of tech, of the mobile device. Today people … You can consume from your apartment. You can go to the cinema and still stay at your place. You can order your meal in a restaurant and you can make bookings. So we see a very strong move towards the use of technology. Mobile, the share of mobile bookings is increasing a lot. In Q3, the share of mobile bookings were two-third of our total business, which is huge. When I joined Booking seven years ago, the mobile team was 10, 15 people. Today we’re a mobile first company. So whatever we build is mobile first.

So this digitalization of let’s say the consumer behaviors, of the travel behaviors is something that will last. Also, we see that people tend to go for longer stays. We have consumers, they are telling us that 50, 52 percent of consumers say that they want to basically extend a leisure trip into a business trip, into a leisure trip, or when they go on vacation, maybe they will book the place for one or two more weeks basically to work from the holiday place. We also see that people now, because you have done a lot of pleasure, sometime people, when they take a break, they also want to take a full break and do not work when they relax. So these are the changes that we see happening. Yes.

Schaal: So that surge in mobile bookings, that’s good for Booking.com in terms of direct bookings, right? Because hopefully a lot of those are going through your app. You don’t have to rely on your good friend Google as much?

Olejniczak: I mean, yeah. Like every company, we always try to drive direct business and reduce the cost of acquisition. Also, I mean our app in Q3 of this year, for the first time, has reached 100 million monthly active users, which is huge. It was a great achievement for us. We have been, in 2021, we have the first downloaded OTA app. And that’s good because, that’s very important because this is a good way to drive loyalty. Also to improve the level of service we deliver to our customers. If we know they’re on the app, we have editors, we have [inaudible] editors, it’s easy for us to involve [inaudible] from their travel experience.

Schaal: You mentioned while we were waiting that your employees are starting to return to the office in Amsterdam to a certain extent. So no more work from home?

Olejniczak: It’ll be basically, it’s going to be a hybrid way. So it’s funny because traditional companies work from almost clearly a no-go for many companies in the travel industry. This crisis has really changed the mindset. We have seen that we can operate our business having 10,000 people working from home. And so we will not go back to basically pre Covid way of working. There is also, we see that you have emerging needs, new expectations from our employees where hybrid work environment, more flexible working patterns. And we are going to be doing in ’22, a pilot, a hybrid work pilot at Booking where we will start … Basically create a hybrid way of working. So we will, as we always do at Booking, we’ll test and learn. So we don’t think that we will come up with the right solution from day one, but we will test, we will test the new things, but bringing more flexibility to the workforce. Yes.

Schaal: When it came to adapting to the long term stays, I felt like Booking.com was relatively slow to adapt to it. Airbnb was due doing it … long term stays. You could book for 30 days or more, maybe six months before Booking.com got to doing it. I tried to book a 30 day stay. I couldn’t do it on Booking.com. Why did it take so long to adapt to that changing trend?

Olejniczak: So I was in charge of the recovery plan for booking, so when this crisis started. And what we have seen that many consumer behaviors changed, and we had to adjust our platform to basically be able to adapt to all these new changes. So it was much more hyper local travel. It was much more domestic. People were looking for … They were running away from urban centers, looking for beach, natural destinations. They wanted to have work friendly environments. And we also identified the trend for long stage. So basically we had to make all these changes at the same time and basically testing, learning, trying to understand what was working for the consumers. And this is how we have evolved our offering, I would say.

Schaal: Let’s take an audience question here from [Ruud 00:11:23]. I don’t know if I’m pronouncing that right. With Booking.com losing their best price guarantee option in countries like Switzerland due to changes in laws, will this be the end of the dominant role of Booking.com? Are your days numbered?

Olejniczak: I mean, yeah. I mean, the regulations in Europe change very fast. Whatever happens in Switzerland or in any country will always adapt to the changing legislation, adapt to it and try to keep delivering, I would say, the best value for our customers and for our partners.

Schaal: So speaking of regulations, so the EU is considering a digital markets act and the EU regulatories are … A year ago, or so she mentioned Booking.com and Google as potentially being labeled gatekeepers. And presumably there would be some regulatory curbs on Booking.com. So how do you view that? You of course agree that you’re a gatekeeper for the hotel industry in Europe?

Olejniczak: No, we don’t see us as a gatekeeper. And the reason why is that there is a lot of competition happening in Europe, currently. When a European consumer is making a booking, normally they will be using a dozen of websites to search and book their accommodation. Our partners, [inaudible 00:12:54] in Europe on average will use six or seven different distribution channels. And even the more sophisticated, the bigger property even use more than that. We have numbered up to 130 travel websites in Europe. And if you look at our market share, then you will ask me, “What is your market share?”

Schaal: What is your market share?

Olejniczak: Yeah, that’s a good question. Our market share in Europe is about 13 percent of hotel revenues.

Schaal: Right. But you do have a certain amount of power over hotel commissions and the hotel industry. There is a certain influence.

Olejniczak: I mean, we are a big contributor to the industry. Our commission over the past 20 years has remained flat in every market. So we think that … I mean, we’re not against this regulation. We think that it should really focus more on the bigger players, and it should address competitive abuses. I think the key element as a gatekeeper is a company that monopolizes the access to a critical number of users. And we think that this is what the regulation should focus on.

Schaal: Sure. Here’s a good audience question from Brett. Some European cities are looking to spread tourism away from city centers due to overcrowding and environmental impacts. Is Booking.com, actively working on product strategies to drive users to properties and experiences away from the city? I know Airbnb has done this with their flexible search. So what are you guys doing?

Olejniczak: Yeah, this is something that is embedded in the way we provide supply to our consumers. So for instance, what we have seen during the beginning of this crisis, we all assume that we will not have any issues in terms of availability, that the issue was the lack of demand. And the very smart data scientist decided to shrunk a little bit … To crunch the data and was looking at where do we have a short of supply and where we have a lot of demand? And at that time, we realized that there was a lot … The demand shifted to non so popular destinations, like beach destinations in the north of Germany or in the Netherlands. So basically we have started trying to better understand the intent of the consumer and show them the type of properties that are meeting their needs. So basically going away from the city center. So this is built in our product offering.

But I would like to insist on sustainability. I think sustainability, it has been mentioned this morning, is a key trend. And we feel that as a travel leader, we have a key role to play there. And when we ask our customers, “Are sustainabilities important for you?” 69 percent of our travelers are saying that they expect the industry to help them travel in a more sustainable way, or be able to book sustainable trips. 53 percent say that they will be willing to travel more sustainably moving forward.

So what we have done, what is our role in the marketplace, we have created a total sustainability program, which basically aggregates 30 official certifications and equal levels, plus 32 best practices to guide our consumers, but also our partners make more sustainable choices. And these 32 best practices cover five key elements, which are waste management, water management, environmental protection, energy consumption, and the support to local communities. All of this, the objective is to have a virtual circle where our bookers can book more and more sustainable properties, which will also increase the focus from our partners to invest more beyond sustainability. So this, we see something very key trend moving forward, and a key expectation from our travelers.

Schaal: So you’re headquartered in Amsterdam. Amsterdam before the pandemic had a big over tourism problem. So would you ever consider, “Okay, we’re not going to take bookings in Amsterdam anymore because it’s overcrowded.”

Olejniczak: No, but what we have to offer, by expanding the supply that we have, we have 28 million listings on our platform. And over 6 million are basically short-term rental solutions. And this helps spread the tourism flows, the bookings, to basically less crowded areas. And so that’s the type of role that we can play. Yes.

Schaal: Another good audience question, why didn’t I think of this? From Richard, what effect do you expect from Google’s most recent changes, more visibility for organic search results on Google maps, lowering the cost of listing on the platform, allowing more local information to be listed? Is the challenge intensifying?

Olejniczak: As I was explaining, we are in a very competitive market, so we have to adjust and this is part of it.

Schaal: So you were talking about trying to point demand to … Or demand is going to beach destination, and mountain locations and stuff like that. So how does your short-term rental strategy fit into those trends?

Olejniczak: So basically it’s something that has been part of our strategy almost from the beginning. So today the vacation rentals is within about one third of our business, it’s one fourth of our supply. So basically really the objective is to … We feel that this is a long-term trend. So this will continue to be very attractive to consumers. But we also feel that our bookers will skip booking hotels. They’re just meeting different needs and different objectives. So basically developing this software is a way for us to grow our supply and to increase the attractiveness of our platform. At some point, if you want to drive … What we did pre pandemic, we are generating 1.5 million room nights on the platform every day. So if we want to keep developing this volume, you need to have the right offering, the right product offering for your customers. And I would say STR vacation rental is a key component of strategy.

What we want to do is we have managed to develop a very strong accommodation booking engine, but we feel that the travel experience is still very fragmented. It’s not seamless. So our objective is at some point to integrate all the other verticals of the trip, like the accommodation, but also the transportation, the transfer, the attractions, all of this. And not basically just packaging them, the idea is to connect … To create a chain with links across all these components to make it easy for every consumer to travel and to book. And this is what we call … the internally inter connected trip it’s really to connect all the [crosstalk 00:19:59] key components-

Schaal: And externally.

Olejniczak: And externally. Yes. And to connect all the key elements of the travel, all of this facilitated by our app, our payment solution, and also supported by customized intelligence. What we see also is that artificial intelligence, machine learning moving forward will be physically important because it’s a key enabler of hyper personalization, which we know is also a key customer expectation.

Schaal: Can Airbnb take comfort in the fact that you have so much going on? You’re not just focused on short-term rentals, you’re expanding flights, you’re expanding attractions, you’re in the middle of a couple of acquisitions. I mean, where does short-term rentals fit on your priority list?

Olejniczak: It’s one of the top priorities. It’s one of the … Yeah. I mean, we have key priorities which are going in the U.S. At the moment, maximizing demand and the recovery for our partners. I think that’s very important, building the connected trip. But we see that the key component or the key foundational element of the connected trip is first the accommodation piece. And here the strategy is to have the widest selection, which is why STR element is a key component of the strategy or a key priority, I would say.

Schaal: Wouter talked before about … Wouter, you, that there wasn’t a lot of discounting going on in the industry. So here’s an audience question. And they’re saying the current situation is causing huge pricing increases across the board. Will these pricing increases cause a panic in consumer confidence? Are people are going to sit home because the rates have gone up?

Olejniczak: No, basically what we have seen is that, I mean, there is a strong appetite for travel. It’s a good poin that [inaudible 00:21:46] was saying is before, and people just can’t wait, but to book. And yes, we have seen an increase in the prices because I mean, the hoteliers and their revenue management system see the demand that is happening, they have forecasting tool, even if it’s difficult to make a forecast today for the next six months. But basically, this is driving an inflation on the pricing, yes.

Schaal: So in recent years within Booking Holdings, which used to be called the Priceline Group, all we hear about is Booking.com, Booking.com, Booking.com. But Booking Holdings recently acquired Get A Room, and it’s really going to be used for Priceline, for the Priceline partner network.

Olejniczak: Yeah

Schaal: So what’s going on with that? Is that a potential to be a big business?

Olejniczak: I mean, yeah, basically the Get A Room integration is underway. It will be integrated within Priceline. And the objective is to grow our business in the U.S. and to help Priceline develop its B2B strategy partnership business, I would say,

Schaal: How do you see the competitive landscape in Europe? Is Airbnb gaining ground on you in Europe? Or is it too soon to tell because Europe is just opening up? And what about Hotel Direct? That seems to be going pretty strong. You’re getting involved in flights, eDreams is growing at a fast pace.

Olejniczak: No, as I was saying, you have two things, you have a lot of competition happening. And in a way it’s good because then we have to challenge ourself. We have to always come up with new products, new solutions basically, to [inaudible 00:23:26] in on top or to beat up our competition. And in parallel, we see a very appetite from consumers, a lot of demand. And this demand we see, even though demand is currently higher than what it was in 2019. So this is very promising. And so, and our job is to basically keep capturing or maximizing our ability to get that demand. And by providing basically the connected trip … The idea is really to … the main objective is to lead to customer delight or customer satisfaction by removing all frictions.

And this is what [inaudible 00:24:01] is doing when they operate their properties. If you make the experience seamless, you create repeat usage, repeat booking, you create loyalty. And what we’re trying to do, and this is how we are going to breakthrough, is really by solving or removing all the frictions from the travel experience. We’re not the only one trying to do so. I mean, major players are trying to do the same. So it’s a little bit of race. But this is our vision, and we believe that this is going to help us maintain a competitive advantage. And also basically creating more value for the customers, but in the marketplace, not only the customer is important. It’s also the partners. So by doing so, we can also create more value for the partners. So it’s not one against the other. It’s that we firmly believe that if we can more value for our partners, for the hoteliers, for all the accommodations, we can also create … This will create more value for the customers and will make our platform stronger.

Schaal: Maybe you could explain this question to me. In the service department segment, Booking.com is showing the difference between private and professionals … I didn’t know you did that … facilitating a messaging option between guests and accommodations. Does Booking.com want to be Airbnb?

Olejniczak: That’s a good question. I did not know about this, as well. I didn’t know we were doing that.

Schaal: Oh, OK.

Olejniczak: It could be also that we do a thousand AB test every day on Booking, to understand what is really in line with what is meeting the customer needs. So it could be a test that is happening. But again, our objective is also to open up our STR supply. And at some point looking for what are the needs of a casual host versus a professional agency. They are not the same. And we are also looking into adapting our offering for this entrepreneur, for this [inaudible 00:25:51] also, I would say.

Schaal: Excellent. Thank you, Carlo.

Olejniczak: Thank you very much.

Schaal: Awesome.

Olejniczak: Thank you, Dennis.

Schaal: Thank you.

Olejniczak: Thank you.

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Photo credit: Carlo Olejniczak with Skift Executive Editor Dennis Schaal