Booking.com, the fare aggregator website and metasearch engine, has become a major global player in the travel and tourism sector over recent years.
The online travel agency (OTA) is turning over billions of dollars in annual revenue, with millions of accommodation listings worldwide, and has been growing impressively.
Booking.com connects consumers wishing to make travel reservations with travel service providers around the world through its online platforms, allowing consumers to book a broad array of accommodations (including hotels, motels, resorts, homes, apartments, bed and breakfasts, hostels, and other alternative and traditional accommodations properties) and a flight to their destination; make a car rental reservation or arrange for an airport taxi; make a dinner reservation; or book a vacation package, tour, activity, or cruise.
Consumers can also use Booking.com’s meta-search services to easily compare travel reservation information, such as flight, hotel, and rental car reservations, from hundreds of online travel platforms at once.
In addition, Booking.com offers other services to consumers and partners, such as travel-related insurance products and restaurant management services to restaurants.
And while the numbers are of upmost importance, the power of the brand has a value well beyond that – Booking.com is front-of-mind for many consumers when they sit down to make travel plans and ultimately click through to reserve rooms.
Of course, this is all achieved in large part through marketing strategy, using both digital and traditional channels. While these marketing activities are clever and well executed, they also involve a heavy financial investment on the part of the marketers and management.
Here, we will examine some of the tactics and marketing channels utilized by Booking.com to achieve such a prominent and profitable position in the industry, and look at recent developments within this, as well as some of its major competitors.
How does Booking.com work
Booking.com’s business is supported by multiple systems and platforms designed to emphasize scalability, performance, reliability, redundancy, and security.
These systems and platforms are generally independent among Booking.com’s brands, though some have become more connected or shared over time.
Booking.com’s software systems, platforms, and architecture use a variety of widely-used software tools and database systems.
Booking.com is modernizing its technology by building new applications with modern development tools and application programming interfaces and moving certain systems and data to public cloud infrastructure.
These internal systems and platforms are designed to include open application protocol interfaces that can provide connectivity to vendors in the industries in which Booking.com operates.
These include large global systems, such as accommodation, flight, and rental car reservation systems, financial service providers, and individual accommodation service providers.
Booking.com’s applications utilize digital certificates to help Booking.com conduct secure communications and transactions.
The systems infrastructure and web and database servers of Booking.com’s worldwide operations provide network connectivity, networking infrastructure, and 24-hour monitoring and engineering support typical of hosted data centers.
Booking.com has a multi-brand business model.
Booking.com operates multiple brands, allowing it to offer services that appeal to different consumers, pursue distinct marketing and business strategies, encourage experimentation and innovation, provide numerous service offerings, and focus on specific markets or geographies.
At the same time, Booking.com continues to increase the collaboration, cooperation, and interdependency among its brands to provide consumers with the most comprehensive and value-oriented services.
Booking.com invests resources to support organic growth by brands through increased marketing, geographic expansion, technological innovation, or increased access to accommodations, flights, rental cars, restaurants, or other services.
Service Offerings
Booking.com and Rentalcars.com
Booking.com is the world’s leading brand for booking online accommodation reservations based on room nights booked, with operations worldwide and headquarters in the Netherlands.
In 2021, Booking.com offered accommodation reservation services for approximately 2.4 million properties in over 220 countries and territories and in over 40 languages, consisting of over 400,000 hotels, motels, and resorts and over 1.9 million homes, apartments, and other unique places to stay.
Priceline
Priceline is a discount travel reservation business leader offering online travel reservation services primarily in North America.
Priceline offers consumers hotel, flight, and rental car reservation services and vacation packages, cruises, and hotel distribution services for partners and affiliates.
Agoda
Agoda is a leading online accommodation reservation service catering primarily to consumers in the Asia-Pacific region, with headquarters in Singapore and operations in Bangkok, Thailand, and elsewhere. Agoda also offers flight, ground transportation, and activity reservation services.
KAYAK
KAYAK provides an online price comparison service (often called “meta-search”) that allows consumers to easily search and compare travel itineraries and prices, including airline tickets, accommodation reservations, and rental car reservation information, from hundreds of online travel platforms at once.
KAYAK offers services in over 60 countries, with its largest market in the United States, through various websites, including momondo, Cheapflights, and HotelsCombined.
OpenTable
OpenTable is a leading brand for booking online restaurant reservations.
With significant operations in San Francisco, California, OpenTable provides online restaurant reservation services to consumers and reservation management services to restaurants, primarily in the United States. How does OpenTable make money | Business model
The Business Model
Booking.com is owned and operated by US-based Booking Holdings, although it is headquartered in Amsterdam. In addition to Booking.com,
Booking Holdings owns and operates several other travel fare aggregators and travel fare meta searchengines including Priceline.com, Agoda.com, Kayak.com, Cheapflights, Rentalcars.com, Momondo, and OpenTable.
Booking Holdings reported gross travel bookings during 2017 of a staggering $81.2 billion, a 19% increase compared to 2016, and gross profit of $12.4 billion, a 21% increase. As the largest brand in the group, a significant proportion of that revenue is derived from Booking.com.
As the company itself does not own or operate hotels, and doesn’t even charge customers a booking fee, how does it actually make money?
The answer is by charging the hotels a percentage of the booking price, so they earn money whenever a hotel gets a successful reservation through their platform. That might sound like a bad deal for hoteliers, but it helps them boost bookings and revenues.
A real strength of this model is the consumer’s satisfaction from not paying a fee to complete their reservation, as well as the peace of mind offered by the “best price guarantee” slogan that goes along with the online messaging.
It’s an effective approach, but in such a competitive sector, winning marketing strategies are required first and foremost to bring in the customers.
Booking.com classifies its revenue streams as “agency” revenues, “merchant” revenues, and “advertising and other” revenues.
Agency revenues are derived from travel-related transactions where Booking.com does not facilitate payments from travelers for the services provided.
Agency revenues consist almost entirely of travel reservation commissions from Booking.com’s accommodation, rental car, and airline reservation services.
Agency and merchant revenues increased in 2021 compared to 2020 due primarily to the significant improvement in travel demand trends since the second quarter of 2020, which was severely impacted by the COVID-19 pandemic.
Merchant revenues are derived from transactions where Booking.com facilitates payments from travelers for the services provided, generally at the time of booking.
Merchant revenues include travel reservation commissions and transaction net revenues (i.e., the amount charged to travelers less the amount owed to travel service providers); credit card processing rebates and customer processing fees; and ancillary fees, including travel-related insurance revenues.
Merchant revenues in 2021 increased more year-over-year than agency revenues due to the expansion of merchant accommodation reservation services at Booking.com.
Advertising and other revenues are derived primarily from (a) revenues earned by KAYAK for sending referrals to online travel companies (“OTCs”) and travel service providers and for advertising placements on its platforms and (b) revenues earned by OpenTable for its restaurant reservation services and subscription fees for restaurant management services.
Advertising and other revenues increased in 2021 compared to 2020 due primarily to the significant improvement in travel and restaurant demand trends since the second quarter of 2020, which was severely impacted by the COVID-19 pandemic
Marketing Strategy of Booking.com
The marketing strategy of Booking.com relies on marketing channels to generate a significant amount of traffic to its platforms and grow business.
Maintaining and strengthening the brands are important aspects of Booking.com’s marketing strategy to attract and retain customers.
Booking.com have invested considerable resources in establishing and maintaining its brands.
Booking.com intends to continue investing resources in marketing and other brand-building efforts to preserve and enhance consumer awareness of its brands when and to the extent Booking.com deems appropriate.
Booking.com’s marketing spend is influenced by the marketing spend of the competitors as it seeks to maintain and increase brand recognition and maintain and grow traffic to its platforms through performance marketing channels.
Search Marketing Strategy
Booking.com, along with it sister companies, spends heavily on pay-per-click (PPC) advertising through Google Ads. That means billions of dollars! Booking.com and its sister companies were the top spender in the travel and tourism category for Google Ads in 2016.
Even from the lay consumer perspective, the scale of the investment here becomes obvious – a quick Google search for common travel and tourism keywords and phrases often brings the site up as the number 1 result.
By searching for terms such as ‘Hotel London’, ‘Hotel Paris’ and ‘Find Hotels’, Booking.com came in the top spot each time. See the Booking.com result for ‘Hotel London’ in the screenshot below, followed by Trivago:
So, Booking.com has a massive focus on driving traffic through paid search, which is perfectly logical, given that so many people conduct their research and make bookings with Google as their starting point.
This is not so much concerned with spreading the brand message, rather it is generating traffic based on keywords and phrases which already show intent, i.e. these consumers are making travel plans and are likely to book.
They also utilize organic search very well, with search engine optimization (SEO) specialists working on the website’s content and design to ensure it brings in high volumes of traffic, again with a big emphasis on the most important keywords.
From a design perspective, Booking.com is strong on user experience (UX), as it has a simple interface for carrying out multiple searches quickly, and is visually appealing, with images displayed for accommodation throughout. It is actually a comprehensive search engine in its own right.
Content Marketing and Social Media
Despite the effectiveness of their search marketing activities in driving traffic, PPC comes with one major caveat – it costs a lot of money! As well as that, it does not necessarily serve to build brand loyalty, another key marketing goal.
Therefore, rather than relying on search marketing too heavily, Booking.com are also now turning their focus to other areas to increase brand recognition and loyalty.
This can of course boost revenue, while also driving down their customer acquisition cost (CAC). Over the last couple of years, they have been striving to build more brand emotion with customers through content, social media channels, and TV advertising.
They publish regular articles on their website, piquing the interest of those researching their next holiday, and providing useful information and tips for those who may be closer to a purchasing decision.
Here is a sample display of some of their recent articles:
This theme continues on Booking.com’s social channels. Their Facebook page, with a following of over 14 million, often posts these articles, which again helps to bring more traffic back to the site.
Their YouTube channel features an extensive bank of relatively short travel videos, and they are also building up their profile on Instagram, with close to a million followers.
The pivotal role of content creation and distribution is certainly not ignored by the marketing team at Booking.com. Permeating through all of this content, on the website itself and on the social channels, is a consistent brand tone, which we will look at next.
Bringing It All Together
Having built much of its traffic and revenue on the strength of paid search marketing, Booking.com enjoys a very healthy market position, sitting among the elite global players in the travel industry.
The website itself offers customers a great UX, good value, and an enormous selection of accommodation.
On top of this, they have invested heavily and made much progress in building a brand which is well trusted, interesting, and globally recognized. They have achieved this through a comprehensive content strategy and strong TV advertising campaigns.
Travel and tourism is a very competitive industry, particularly in the digital space. Expedia and other major players also have a huge global presence, and Airbnb is a massive disruptor with a presence all over the world.
However, with ongoing strategies and campaigns that are hitting the right tones, Booking.com looks like it’s going nowhere for some time to come.
