Booking's Big Marketing Bucks

Only on Skift: What's a key part of Booking Holdings' strategy to attract hotel and short-term rental guests? The company, which owns brands including Booking.com, Kayak and Priceline, spent around $6 billion on marketing in 2022 — and that was about 35% of its total revenue. A BTIG investor report published last week stated that Booking gets around 50% of its traffic direct; around 20 percent from free search engine listings; roughly 15% from social media, email, display ads and referrals, and 15% from paid search engine marketing — “and it spends billions annually to get that last piece.”

That’s worth repeating: Booking Holdings spent around $6 billion on sales and marketing last year to attract just 15% of visitors to its platform.  But these huge marketing resources are a major reason why property managers and hosts often need to distribute their listings through Booking, Airbnb, Vrbo and others.

Meanwhile, over at rival Expedia Group, its marketing spend was even more top-heavy — around 47% of revenue last year. Airbnb is an outlier in the online travel agency space because around 90% of its customers come directly to its website or app, as well as from free listings in search engines. So Airbnb focuses on limiting its paid search engine marketing on platforms like Google and Bing. Airbnb shelled out a very modest 18% of revenue on marketing in 2022.

But before you leap to the conclusion that Booking’s strategy (35% of revenue on marketing) is dumb, and Airbnb’s approach (just 18%) is valedictorian-worthy, consider that Booking’s profit margin was considerably higher than Airbnb’s or Expedia’s last year.

Booking’s Very Expensive Marketing Piece of the Pie

Around the World

Puerto Rico’s House of Representatives passed a bill aimed at regulating short-term rentals. However, critics argue that the amendments made to the bill have overlooked important factors connecting short-term rentals to an escalating housing crisis, thus failing to adequately address the issue.

The City of Ottawa in Canada hired Wisconsin-based consultancy firm Place Dynamics to assist in implementing any necessary ordinance changes, and to determine the feasibility and costs associated with allowing short-term rentals downtown. Ottawa received $75,000 from the Research in Illinois to Spur Economic Recovery (RISE) program last year, and now it wants to actively examine short-term rentals in the downtown area. Mayor Robb Hasty emphasized the importance of properly regulating and taxing these rentals and said that the grant could potentially aid developers interested in establishing short-term rental businesses, but that would likely occur in the spring of next year.

Rental housing group Greystar Real Estate Partners acquired the London Olympics site for £20 Million ($25 million) for a built-to-rent project. The Stratford Mill site in east London is an acquisition from UK-based real estate group Lifestory — marking Greystar’s latest step in its prosperous expansion plan within the UK. Situated in the central area of the Pudding Mill masterplan, the Stratford Mill site, already granted planning consent, would bring forth 245 new residential units. The construction is scheduled to commence in the second quarter of 2024, and the project is expected to be completed by 2026. 

In Case You Missed It

The Poconos Association of Vacation Rental Owners announced its formation. It is a non profit trade association created in response to the growing interest in advancing the interests of vacation rental owners in Poconos area of Pennsylvania. The association aims to be the voice for the vacation home and short-term rental industry in the region, supporting responsible regulation, advocating for individual owners, and promoting good practices while discouraging bad ones. Membership options include Charter Membership for $150 and affiliate membership for $500.

The City Council in West Hollywood, California aims to crack down on illegal short-term vacation rentals. The proposed changes would impact the zoning ordinance and associated regulations, and they will be discussed in a forthcoming public hearing. The ordinance's objective is to ensure that platforms and users can be held responsible for using fraudulent West Hollywood addresses in their rental listings.

Personnel Moves

Eric Feldman, who served as head of federal and international affairs for Airbnb for the past two years, has moved on to General Motors. In his new role, Feldman will serve as General Motors' top Democratic lobbyist. Prior to his time at Airbnb, Feldman accumulated nearly two decades of experience working on the Hill and with the House Democrats' campaign arm. Notably, he served as chief of staff to Gary Peters during Peters' tenure in the House and initial election to the Senate.

Elsewhere on Skift

One of the most influential players among boutique hotels, Eagle Point Hotel Partners, didn’t set out in 2010 to sidestep the major global hotel brands. 

“Our first deal, six months after we started, was buying all of the debt on the Mondrian Soho — it was a $155 million deal,” said Stephen Chan, co-founder of Eagle Point Hotel Partners. Chan runs an investment company focusing on hotel real estate, along with co-founder Erik Warner.

They eventually took it over, and four years later sold the 270-room property for $205 million. Chan and Warner soon learned, though, that investing in big, branded hotels wasn’t their company’s mission.

“We realized that we didn’t want just to buy Hampton Inns and Courtyards, and all this stuff,” Chan said. “We were younger guys in our 30s, and we were looking for something different.”

But crafting a new playbook for each property is time-consuming. Can his team master the art of master-branding? 

They’re Top Players in Boutique Hotels. They See Power in Brands – and Hostels.

Skift Short-Term Rental Reporter Srividya Kalyanaraman writes the Skift Short-Term Rental Report. Send news tips to sk@skift.com.