Anyone following the private accommodations space will have noticed a ramp-up in activity recently from Booking.com and Airbnb.

The two rivals, as they’re increasingly positioned, both released numbers asserting their (perceived) dominance in the sector, with Booking.com reporting 5.7 million alternative accommodations listings - accounting for $2.8 billion in revenue, or 20% of the company’s overall revenue - in 2018.

Shortly after, Airbnb swung back, claiming six million listings and more than half a billion guest arrivals since 2008. (As a privately held company, Airbnb has not disclosed how much revenue its Homes product has generated, but it did report $1 billion in total revenue for the first time in November.)

Right on cue, Booking.com countered by reporting that in roughly the same time frame, since 2007, it’s counted a higher figure of 748,000 guest arrivals.

The race is no doubt on, with Airbnb setting the stage for an eventual IPO. But what’s in it for Booking?

Breaking it down

Booking.com’s decision to publicly break down its private accommodation revenue, as well as to tout its listings and arrivals numbers, has been a strategic move to clear up confusion around its business and to defend its position as a top player in the space, says Leslie Cafferty, Booking.com senior vice president and head of global communications.

“We’ve been quite aggressive in the [private accommodation] space for quite a long time, but we weren’t that vocal about it,” she says.

“What we started to see, especially in the media, is that we were getting compared to Airbnb, but they were comparing our property count to their listing count.”

An apartment building, for example, would be counted as one property, even if the building had multiple units - or listings - available.

“What we decided to do, just to help out the industry - not just media, but analysts - was to disclose our listing count,” which Booking.com started doing in 2016.

“I don’t know if [the 5.7 million metric] is an apples-to-apples metric [with other companies] because other competitors will include hotels or boutique hotels in their count, and we obviously are not counting those.”

Booking.com did, however, include hotel-adjacent listings in previous reports. In Q1 2017, for example, the company said there were eight million “bookable rooms in our homes, apartments, villas and other non-hotel categories,” though Cafferty admits that figure included some properties such as apartment-hotels and boutique hotels.

There’s since been a “reclassification,” she continues: “The category we have today we call ‘alternative’ because it includes things like boat houses or igloos [but not boutique hotels].

“That’s what we think is most comparable to the homes and apartment space, and that has been growing over time. There hasn’t been [a drop in the number of listings]; it’s just a reclassification.”

Growth strategy

Because 2018 was the first time Booking.com released numbers on its alternative accommodations business, there are no year-on-year metrics to track, but Cafferty says the segment is growing faster than traditional hotels.

Driving that growth: Consumer demand. And helping fuel that consumer demand: Booking.com’s marketing investments.

“We’ve been a little more aggressive in the PR strategy to make sure people know and understand [private accommodation] is there,” Cafferty says.

“If you look at a market like Europe, where Booking was born, we have a lot of home and apartment inventory there, and people have been booking it for years. … But if you look at a market like the United States, Booking didn’t really enter this market until a few years ago, and there wasn’t a lot of differentiation of product in our marketing strategy.”

Booking.com has invested in making sure it’s meeting consumer needs through everything from search functionality to filter options, and machine learning is aiding on the personalization front, Cafferty continues.

No consumer fees - which “has been key to our DNA since day one” - and having an instantly bookable product have also helped Booking.com differentiate in the space.

“There are a lot of competitors, and there’s room for growth across the board. … For us, it’s just about making sure consumers know they can find [what they’re looking for] on Booking.”

The Google question

Google, though not as obvious a competitor as Airbnb, poses another threat in the sector.

The search giant recently announced the rollout of its vacation rentals search worldwide, but Booking.com is notably absent from the list of partners.

“It’s a complex relationship,” Cafferty says of how Booking.com views Google. “To some extent we’ve grown our businesses together. … We’ve been one of their biggest advertisers historically, and obviously they generate a lot of demand for us.” (Booking Holdings, Booking.com’s parent company, spent $4.5 billion on performance marketing in 2018.)

“It’s a very productive, effective relationship for us. The companies are quite close. We learn from each other, but obviously any big digital platform can be a threat in our space.”

Crucially missing from Google’s product, Cafferty says, is the relationship-building Booking.com invests in with property owners.

“That relationship is critical to make sure [property owners] understand the software, handling customer service. We have 10,000 employees alone in customer service bridging 43 languages,” she says.

“If you’re buying diapers on Amazon, and your box comes ripped, it’s disappointing but it’s not the end of the world. If your family vacation is ruined, that’s a pretty big deal, so things like customer service and partner services are really core parts to the business that consume a lot of investment for us.

“It will be interesting to see how Google will look to play out their business, but they’re not investing in those pieces yet.”