OTAs look to longer-term value for marketing dollars

Booking Holdings and Expedia Group are continuing on strategies to encourage direct bookings and increase loyalty to their brands.

In their third quarter earnings, both online travel agencies increased marketing spend, but the message was clear that direct relationships, beefing up loyalty programs and driving app usage are the ways forward.

Booking Holdings' marketing expenses for Q3 2022 were $1.8 billion, up from $1.4 billion year-on-year.

The company’s CEO, Glenn Fogel, said Booking aims to increase “loyalty, frequency, spend and direct relationships over time."

He adds: “Our goal over time is to further increase our direct mix through several initiatives, including continued efforts to enhance the benefits of our Genius loyalty program, further building out our connected trip vision to increase engagement with our customers and driving more of our customers to download and utilize the mobile app. The mobile app is an important platform as it allows us more opportunities to engage directly with travelers. And ultimately, we see it as the center of our connected trip vision. About 45% of our room nights were booked through our apps in the third quarter, which is just over 10 percentage points higher than in 2019.”

The message from Peter Kern, CEO of Expedia Group, was not wildly different.

“Our goal is to use great product innovation and unmatched membership benefits to drive more engagement with our customers and ultimately higher lifetime value from those customers. And the two biggest drivers of lifetime value are improving loyalty, membership and app usage.”

He adds that active loyalty members overtook 2019 levels in the third quarter and that new Expedia customers that became loyalty members in the quarter increased almost 50% compared with Q3 2019.

Earlier this year, Expedia Group announced the launch of a unified loyalty program called One Key, which enables members to earn and burn across the group’s brands for any travel product. Kern said it on track for rollout next year.

Total selling and marketing expenses, direct and indirect, for Expedia were $1.7 billion for Q3, up from $1.3 billion year-on-year, with the company attributing the increase to an increase in B2B partner commissions, as well as increased spend in retail marketing channels.

Overall, Kern said the company is “shifting toward longer-term channels including downloads and other methods to capture traveler intent outside of classic performance channels.”

Newly appointed chief financial officer Julie Whalen added that that company is putting more marketing dollars towards “channels that have a longer-term return profile, such as brand awareness, loyalty and paid app installs.”

Sales and marketing expenses for Airbnb in Q3 came in at $380 million, up from $290 million year-on-year with chief financial officer Dave Stephenson saying the spend for 2022 versus 2021 would be relatively flat.

Brian Chesky, CEO of Airbnb, added that the company continues to attract more than 90% of its traffic direct and doesn’t “think of marketing as a way to buy customers.”

“And so the main thing is we take a full funnel approach to marketing. And actually the top of the funnel is PR and communication. And we think that one of the biggest drivers of our traffic is PR. And then brand marketing is actually important. And actually, we think a bit more like product marketing. We want to educate people about our new features.”

Chesky said that currently Airbnb is educating people about Airbnb Categories and AirCover.