Good morning from Skift. It’s Thursday, September 14. Here’s what you need to know about the business of travel today.
25.08.2023 - 14:00 / skift.com / Dennis Schaal / Brand Marketing
In the perennial quest to turn bargaining-hunting travelers with little brand loyalty into customers making bookings and generating revenue through paid advertising, Airbnb widened its already substantial advantage in 2022 over rivals Booking Holdings and Expedia Group.
The first accompanying chart depicts each company’s sales and marketing spend as a percent of revenue in 2022. Airbnb spent just 18.04 percent, Booking Holdings allocated 45.7 percent, and Expedia Group shelled out 52.3 percent last year.
Sales and Marketing Spend as a Percent of Revenue 2022
The second chart details these companies’ sales and marketing spend as a percentage of revenue in 2021. It’s thus clear that Airbnb in 2022 expanded the mammoth edge in sales and marketing as a percent of revenue that it already had in 2021.
Sales and Marketing Spend as a Percent of Revenue 2021
For example, Booking Holdings’ sales and marketing spend as a percent of revenue was 4.75 percentage points higher than Airbnb’s in 2022 than the prior year; Expedia Group’s was 4.95 percentage points greater than Airbnb’s last year versus 2021.
These comparisons have their limitations; the three are very different companies, have strengths in different geographies, and have varied marketing goals. While Airbnb focuses on short-term rentals and does considerable marketing to attract new hosts, both Booking and Expedia market short-term rentals, but hotels and flights, as well.
Marketing spend as a percentage of revenue isn’t the holy grail in companies’ performance and there are disagreements on approach, but it speaks to online travel agencies’ efficiencies and deficiencies in attracting customers who may not find them through free Google search results or go directly to their websites and apps when looking to travel.
Still, Airbnb, which attracts customers through public relations, as well as brand and digital marketing on search engines, and elsewhere, repeatedly hammers home the point that it attracts around 90 percent of its traffic from unpaid search results and visitors who come direct. Hence the very small sales and marketing spend as a percent of revenue.
All three companies notched net income in 2022: Booking Holdings produced $3.1 billion, Airbnb generated its first full-year profit at $1.9 billion, and Expedia Group $352 million. Still, Airbnb had a higher adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) margin, a measure of profitability, in 2022: 34.6 percent for Airbnb versus 31 percent at Booking Holdings.
However, the adjusted EBITDA figures are not readily comparable. Airbnb excludes stock-based compensation, which was $899 million in 2022, from its adjusted EBITDA figures while Booking Holdings
Good morning from Skift. It’s Thursday, September 14. Here’s what you need to know about the business of travel today.
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