It was never a secret that Booking Holdings (No. 2 on Travel
Weekly's 2018 Power List) was a player in the alternative accommodations space,
but the exact size of that business was unknown until late last month when the
company revealed that 20% of its 2018 revenue, or $2.8 billion, came
from nontraditional accommodations.
Based on some estimates, that means Booking Holdings isn't
far off privately held Airbnb's revenue total, which RBC Capital Markets
believes was between $3 billion and $3.5 billion in 2018.
"Twenty percent of their overall revenue -- that is an
eye-opener," said Henry Harteveldt, founder of Atmosphere Research Group. "That's
a critical mass of their revenue."
Lorraine Sileo, senior vice president of research and
business operations at Phocuswright, said the selling of alternative
accommodations on its established global platform makes Booking "very
formidable" in the marketplace, especially as it has a wider breadth of
options than Airbnb.
"I think the story, if you're looking at Booking, is
really a global story," Sileo said. "It's not really a U.S. story.
They are the most successful global OTA, meaning that they have expanded
globally. They are the leader. Expedia's the leader in the U.S., but globally,
HomeAway, the alternative accommodations brand of Expedia
Group (No. 1 on the 2018 Power List), saw $1.2 billion in revenue in 2018.
Harteveldt said RBC's estimate of Airbnb's revenue was in
line with others he's seen. Booking and Airbnb came from fundamentally
different roots: Booking was an OTA that offered lodging, air, car rentals and
cruises, and it also had alternative accommodations in the mix. From its
beginning, Airbnb's primary products were alternative accommodations, though
they recently have been making inroads in other areas.
Investments in alternative accommodations were one of
Booking Holdings' main focuses in 2018 and will continue to be developed in
2019, CEO Glenn Fogel said last month on the company's most recent earnings
call. As of Dec. 31, there were more than 5.7 million listings of alternative
accommodations on Booking.com. Fogel also announced revenue associated with
Leslie Cafferty, senior vice president and head of global
communications at Booking Holdings, said the company has had homes and
apartments listed on Booking.com for some time, but consumer awareness about
the products lagged.
"We had not done a lot of brand advertising,"
Cafferty said, "so we came to realize that while we're seeing this space
growing immensely, when you're reading the [public relations] and seeing what's
out there, Booking was not being recognized as a leader in homes and
The company is now attempting to raise awareness through
public relations and marketing efforts, she said, but it was important to
stress its position in alternative accommodations with investors, as well,
hence the reveal of revenue numbers.
Booking Holdings has offered homesharing options for more
than 10 years, according to a spokesperson. It has offered European villas "since
around its inception."
Cafferty said the company has not committed to regularly
reporting revenue related to alternative accommodations. Before Booking made
the disclosure, she said, the Wall Street community already knew the company
offered alternative accommodations.
"But I do think people were a bit surprised to see that
it's a fifth of our overall revenue," she said. "I don't think
anybody really assumed it was that big for us."
Consumer demand for alternative accommodations is high. On
Booking's results call, Fogel said 40% of Booking.com's active customers have
booked an alternative accommodation in the past year.
That is part of a larger trend in which travelers want to
stay in both traditional and alternative accommodations, according to Cafferty.
Sileo said the markets for alternative accommodations in
Europe and the U.S. are maturing, and real growth is coming from emerging
markets, especially those with limited inventory. But she said she also sees
consumer demand from all demographics of travelers, including older travelers, even
though initial demand was driven by younger travelers.
Fogel has often said a big advantage for Booking is
that it has offered alternative accommodations alongside hotels from the
beginning. Airbnb in recent years has enabled hotels on its platform, and
Expedia is pushing to integrate HomeAway content in its other brands.
Harteveldt saw that positively, asserting, "Travelers
want to be presented with everything and then select what they want and filter
out what they don't. So I think that, in this case, Booking.com for now has the
edge over Expedia."
Booking's challenge, he said, is attracting more
alternative-accommodation owners to its platform.