Anyone thinking that Airbnb’s ambitious growth plans would prove to be a major distraction for OTAs may have woken up disappointed this morning.
During an interview with Phocuswright’s Philip C. Wolf at the ITB exhibition in Berlin, Booking.com’s chief Gillian Tans came out fighting on all fronts.
She explained that Airbnb’s plans to expand wouldn’t put her off going after the homestay market. In fact, Booking.com was “in it to win” that category.
“Booking.com has had apartments in Amsterdam forever. But you see customers more and more want to choose that accommodation,” she said. “Supply is much more important to customers and that keeps growing. That’s one of the main reasons Booking.com is more active in the category and in it to win it.”
A healthy mix
But that doesn’t mean any change to Booking.com’s approach to the hotel market either. Despite Airbnb’s recently announced partnership with hotel distribution platform (and Triptease partner) SiteMinder, it appears to be business as usual for Booking.com.
“Already we see that hotels have a large distribution network. If we had a problem with that, we would have had a problem for a long time. It’s healthy that hotels have a distribution mix,” Tans told the hundreds of delegates in the audience.
When asked about hotels’ book direct campaigns, specifically Hilton’s well-known Stop Clicking Around promo, Tans was again unperturbed.
“Eventually it’s all about customers. We think about customers and how they travel nowadays and use mobile more and more. Customers and technology changes really fast. Here I think Booking.com can play an even bigger role, so we are focused on this element.
“Most customers Booking.com delivers to properties are new and companies need companies like Booking.com to get customers through their doors.”
However, there was a hint that the Direct Booking Movement and Booking.com’s hotel partners’ involvement in it had slightly gotten under her skin. After watching the Hilton film, she commented: “It’s pretty strange in this industry that this happens. If you look at retail and other industries this doesn’t happen.”
Business as usual
So what’s the takeaway for hoteliers? Well, it’s clear from Airbnb’s bold new stance that Booking.com and its rival Expedia will have a lot more to contend with competition-wise going forward, both in relation to homesharing and hotel rooms. But there is no indication that Booking.com will be prioritising one market over the other, or that it will let itself get sucked into an energy-sapping battle with Airbnb.
So while it’s business as usual for Booking.com, it should also be business as usual for hotels. In other words, being vigilant about how third parties like OTAs are selling your rates and doing everything you can to maintain price parity. (You can find out more on how to do that here.) We know that your online conversion rate is on average 31% higher when your prices are in parity with OTAs compared to when they’re undercut, so it’s well worth the effort.
At the same time, you should take a look at Airbnb and the possibility of listing on the platform. Our analysis into the costs of distribution through three channels — OTAs, Airbnb and direct — suggests that selling rooms on Airbnb could be a much cheaper option for hotels than OTAs. (Direct bookings still leave hotels with the most revenue.) Airbnb’s lower commissions, provided it reaches the right level of volume, could even put pressure on OTAs to shrink their own. Tans does not seem to be thinking about cutting Booking.com’s commissions any time soon, so that could be crucial.
The power of testing
During her ITB interview, Tans also gave an insight into how Booking.com is leveraging its data and constantly innovating. Each new idea is rigorously tested. In fact, testing is so ingrained in the company that at any one time there are 1000 different versions of the Booking.com website operating. One colleague even tested a completely blue homepage.
Booking.com obviously sees testing as a major contributor to its success, which should serve as a lesson to the industry. Most of us will never be able to test on such a scale, but Booking.com's performance online shows there is clearly value in it and we should attempt to incorporate it wherever possible.
ITB remains in full flow in Berlin and we’ll be bringing you more of our thoughts on the key moments of the event right here on the blog and in our weekly newsletter. (You can sign up for the newsletter here.)
If you’re in Germany for the exhibition, remember to pay a visit to our stand — we’re no 100 in hall 8.1. There are some treats in store for you there, including some top swag and some indispensable direct booking advice.
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