Skift Take

Booking is placing a new emphasis on discounting versus its traditional reliance mostly on marketing. Expect more fintech and loyalty offerings.

Dennis Schaal

Booking Holdings estimates that its Booking.com unit commands about 25 percent of its customers’ overall travel budgets on average, and it is using everything from discounting and a nascent introduction of fintech-oriented products to capture a larger share of their wallets.

In fact, while the company expects its marketing spending as a percentage of gross bookings to remain stable in 2022, an increase in “merchandising,” — namely discounting and providing various incentives to high-value customers — is among the factors that will negatively impact its “take rate,” or commissions this year.

The other reasons its take rate is projected to fall to the mid-14 percent range, which is lower than in 2019 and less than it projected several months ago, is because of a higher mix of flights and a negative impact from foreign currency exchange rates.

This was one of the highlights of Booking Holdings’ second quarter earnings call with financial analysts Wednesday.

Much of Booking Holdings’ strategy revolves around its home-grown payments platform, which attracted 38 percent of Booking.com’s gross bookings in the second quarter, up four percentage points from the first quarter.

Throughout most of Booking.com’s history, it didn’t accept payments on its own as customers paid for their rooms once they arrived at a hotel. But Booking.com is now taking payments for many prepaid hotel bookings, short-term rental stay where the host might not have the ability to process payments, and for flights, for example.

Booking.com is Booking Holdings’ flagship brand, and development of its own payment system furthers the company’s connected trip strategy, which is geared to make the entire trip more seamless and to give Booking more control in terms of the things it can offer both customers and supplier partners.

There are a variety of ways Booking.com is increasing its merchandising, or discounting.

For one, it is currently testing a foreign currency exchange option for customers through its own payment systems, as well as a buy now pay later feature, both of which the company said it intends to introduce more widely next year. Its Genius loyalty program is another means to provide incentives to repeat customers.

“Another example is our testing discounted transportation from the airport to the hotel for, say, a high-value accommodation customer,” CEO Glenn Fogel said during the call. “And the ground transportation supplier might in the future be providing a discounted price that is specific for our customer because we are able to provide incremental business.”

He said even in Booking’s core hospitality business, “we believe there are opportunities to improve our share of (customer) spend over time.”

In the second quarter, Booking Holdings saw the number of room nights it book increase 16 percent over the same period in 2019, the first time it surpassed a pre-pandemic number. However, Booking Holdings’ room night growth in the second quarter amounted to a major deceleration of growth compared with the first quarter of 2022.

In the second quarter, Booking Holdings’ net income was $857 million versus a $167 million net loss a year earlier. Revenue in the second quarter increased 99 percent to $4.3 billion.

The company expects record revenue in the third quarter, although bookings growth slowed in July, the first month of the quarter, versus June.

“And while it is extremely difficult to accurately predict the near-term economic environment, I am as confident as ever in consumers’ strong desire to travel, the attractive long-term growth profile of the travel industry and our improving longer-term competitive position,” Fogel said.

Skift Take

Booking is placing a new emphasis on discounting versus its traditional reliance mostly on marketing. Expect more fintech and loyalty offerings.

Dennis Schaal

Booking Holdings estimates that its Booking.com unit commands about 25 percent of its customers’ overall travel budgets on average, and it is using everything from discounting and a nascent introduction of fintech-oriented products to capture a larger share of their wallets.

In fact, while the company expects its marketing spending as a percentage of gross bookings to remain stable in 2022, an increase in “merchandising,” — namely discounting and providing various incentives to high-value customers — is among the factors that will negatively impact its “take rate,” or commissions this year.

The other reasons its take rate is projected to fall to the mid-14 percent range, which is lower than in 2019 and less than it projected several months ago, is because of a higher mix of flights and a negative impact from foreign currency exchange rates.

This was one of the highlights of Booking Holdings’ second quarter earnings call with financial analysts Wednesday.

Much of Booking Holdings’ strategy revolves around its home-grown payments platform, which attracted 38 percent of Booking.com’s gross bookings in the second quarter, up four percentage points from the first quarter.

Throughout most of Booking.com’s history, it didn’t accept payments on its own as customers paid for their rooms once they arrived at a hotel. But Booking.com is now taking payments for many prepaid hotel bookings, short-term rental stay where the host might not have the ability to process payments, and for flights, for example.

Booking.com is Booking Holdings’ flagship brand, and development of its own payment system furthers the company’s connected trip strategy, which is geared to make the entire trip more seamless and to give Booking more control in terms of the things it can offer both customers and supplier partners.

There are a variety of ways Booking.com is increasing its merchandising, or discounting.

For one, it is currently testing a foreign currency exchange option for customers through its own payment systems, as well as a buy now pay later feature, both of which the company said it intends to introduce more widely next year. Its Genius loyalty program is another means to provide incentives to repeat customers.

“Another example is our testing discounted transportation from the airport to the hotel for, say, a high-value accommodation customer,” CEO Glenn Fogel said during the call. “And the ground transportation supplier might in the future be providing a discounted price that is specific for our customer because we are able to provide incremental business.”

He said even in Booking’s core hospitality business, “we believe there are opportunities to improve our share of (customer) spend over time.”

In the second quarter, Booking Holdings saw the number of room nights it book increase 16 percent over the same period in 2019, the first time it surpassed a pre-pandemic number. However, Booking Holdings’ room night growth in the second quarter amounted to a major deceleration of growth compared with the first quarter of 2022.

In the second quarter, Booking Holdings’ net income was $857 million versus a $167 million net loss a year earlier. Revenue in the second quarter increased 99 percent to $4.3 billion.

The company expects record revenue in the third quarter, although bookings growth slowed in July, the first month of the quarter, versus June.

“And while it is extremely difficult to accurately predict the near-term economic environment, I am as confident as ever in consumers’ strong desire to travel, the attractive long-term growth profile of the travel industry and our improving longer-term competitive position,” Fogel said.