Priceline Group CFO Daniel Finnegan said Tuesday that alternative accommodations have been a big part of Priceline’s success over the past few years, and that the company will continue to look to grow that area of business.
Speaking at the Bank of America Merrill Lynch 2016 Consumer & Retail Technology Conference, Finnegan also addressed Airbnb specifically.
Airbnb has had lots of word-of-mouth traction, Finnegan said, because the company has created something “very new, very innovative.”
“My hat’s off to them for what they’ve invented out of thin air,” he said.
Finnegan described Airbnb’s impact on the overall industry as “incremental” thus far.
For instance, he said, travelers increasingly turn to alternative accommodations like those on Airbnb during large events like New Year’s Eve in New York City or the Super Bowl. Travelers looking for a traditional hotel room might find that none are available or that those that are bookable carry a high price tag.
“Now you’ve got all this new supply that’s come online through Airbnb, and I think that’s expanded the number of people that travel during those periods,” he said.
Finnegan also addressed his beliefs around the shared-stay concept, in which travelers and property owners share common space, like someone offering their couch or spare room on Airbnb.
“I think that’s going to be a limited addressable market,” he said. “There’s some friction to that. I don’t think the broad universe is going to be comfortable with it.”
Prompted by a question, Finnegan did speculate that Airbnb might attempt to add more hotels to their inventory in the future, “even though they say currently that’s not their intention.” However, the company would have to figure out how that works, he said, pointing out that Airbnb currently charges properties a 3% fee, with guests shouldering a service fee of 6% to 12%.
Alternative accommodations will continue to be an asset to Priceline, he said.
Currently, Priceline has vacation rental rooms available on its Villas.com and Booking.com websites, Finnegan said. While the “vast majority” of bookings come via Bookings.com, Villas.com provides Priceline “a platform we can experiment on” as it is more geared toward vacation rentals specifically.
Vacation rentals have “been a big part of our success over the last couple of years,” he said. “It’s been a growth initiative to build the vacation rental selection on our website.”
Finnegan also said Priceline believes it’s important to ensure properties like shared-stays and vacation rentals can be booked in real time.
“We’ve found that, over time, that’s been really important to conversion,” he said.
Finnegan echoed the words of Priceline CEO Darren Huston during the company’s most recent financial report last month. Huston said Priceline was working to expand its vacation rental and non-hotel properties.
“We strongly believe that this fee-free, experience-centric model which makes booking homes and apartments as easy and trustworthy as booking a hotel will be the winning model long term,” Huston had said.