For the first time, Booking Holdings is releasing details on Booking.com’s
alternative accommodations business as part of its financial report.
The company says this business, which includes homes,
apartments and other unique places to stay, captured $2.8 billion in revenue in
2018, represented 20% of the company’s overall revenue for the year and grew
faster than the company’s consolidated growth rate.
The number of these listings on the site - 5.7 million as of
the end of 2018 - grew 18% year-over-year. And in a call with analysts to
discuss the financial report, CEO Glenn Fogel says in the coming year, it will
work to add more supply, particularly outside Europe.
“We know we are a European-centric company, and we do very
well in the capital cities in the alternative accommodations. In other parts of
the world, in the U.S. in particular, we need to increase our properties,
particularly a certain type - that is a single home that is in the beach
locations, some of the ski locations,” he says.
“That is something we are doing, that is part of the things
we invest in. I look at it as a glass half full - this is a great opportunity
for us to increase and … really grow our business.”
The company also disclosed that 40% of Booking.com’s active
customer base booked an alternative accommodation property at some point within
the past 12 months, which Fogel says supports his belief that offering both
hotels and homes on one platform is the best way to serve customers.
Overall, Booking Holdings reported revenue up 17% for 2018 to
$14.5 billion and adjusted EBITDA up about the same, 18%, to $5.7 billion.
Subscribe to our newsletter below
For the full year 2018, gross travel bookings were $92.7
billion, a 14% increase over 2017.
In the fourth quarter, revenue came in at $3.2 billion, up 16%
from the fourth quarter of 2017, adjusted EBITDA was $1.3 billion (up 17%) and
gross travel bookings were $19.6 billion, 9% better than a year earlier.
Along with the growth in the alternative accommodations
business, Fogel cited two other areas where the company is investing to “drive
One of those areas is in branding and customer acquisition
programs. Fogel says investments in this area are helping to drive greater
loyalty and higher repeat rates for direct bookings, which now account for more
than 50% of the booked room nights on Booking.com.
Booking Holdings spent $509 million on brand marketing in 2018, up from $435 million in 2017. Fogel says he expects the new brand advertising campaign
that launched this week in the U.S. will drive even greater awareness. And he
says the company will boost brand campaigns, both online and offline, across additional
“These marketing programs are taking on a greater importance
because many of our performance marketing partners are experiencing slower customer
growth,” Fogel says.
A third focus for the coming year will be the continued rollout
of Booking.com’s payment platform, which processed about 10% of the gross
bookings on the site in 2018. Fogel says the platform provides more merchandising
opportunities, a broader range of payment options and will “facilitate our
transport and location attractions business.”
Booking Holdings chief financial officer David Goulden told
analysts investments in the coming year are intended to drive growth and customer
acquisition and will be “a step up in spend from normal level,” which will
reduce the company’s EBITDA growth rate to drop by a few percentage points in
“You’ll see an impact in our financials in brand, in revenue
via merchandising as well as customer acquisition and incentive programs, and
you’ll also see it in personnel to support these initiatives,” Goulden says.
Turning to 2019, Fogel acknowledges it has been a slow start
in terms of bookings, primarily in the European markets, where he says “overall
macroeconomic” factors are causing a slowdown. Goulden says bookings were down
a bit in November and December compared to October and then dropped even more
in January, with a slight bounce back in February.
The company expects hotel room nights booked will increase
just 6% to 8% in the first quarter of 2019 and adjusted revenue growth will be
between -1% and 1%.
But Fogel says he remains optimistic about the company’s future.
“We believe that areas of slowdown can be great opportunities
to gain share, develop loyalty, increase your value to your supplier partners.
When things start getting a little bit slower, our hotel partners are looking for
getting demand wherever they can - they are looking for that incremental - and
they want to be able to say, ‘Can you supply somebody in this bed?’" Fogel says.
“I’ve had the fortune of going through some of these in the past.
I’ve been with the company now more than 19 years. So we’ve been through this before,
and we’ve been able to add value in the past. I suspect if things do slow down a
bit that we can position ourselves in a way that as we come out, we’ll be even