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, it's Booking."

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 alternative accommodations.

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 apartments."

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.

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