Booking's Big Marketing Bucks

06.12.2023 - 04:37 / skift.com / Srividya Kalyanaraman

Only on Skift: What’s a key part of Booking Holdings‘ strategy to attract hotel and short-term rental guests? The company, which owns brands including Booking.com, Kayak and Priceline, spent around $6 billion on marketing in 2022 — and that was about 35% of its total revenue. A BTIG investor report published last week stated that Booking gets around 50% of its traffic direct; around 20 percent from free search engine listings; roughly 15% from social media, email, display ads and referrals, and 15% from paid search engine marketing — “and it spends billions annually to get that last piece.”

That’s worth repeating: Booking Holdings spent around $6 billion on sales and marketing last year to attract just 15% of visitors to its platform.  But these huge marketing resources are a major reason why property managers and hosts often need to distribute their listings through Booking, Airbnb, Vrbo and others.

Meanwhile, over at rival Expedia Group, its marketing spend was even more top-heavy — around 47% of revenue last year. Airbnb is an outlier in the online travel agency space because around 90% of its customers come directly to its website or app, as well as from free listings in search engines. So Airbnb focuses on limiting its paid search engine marketing on platforms like Google and Bing. Airbnb shelled out a very modest 18% of revenue on marketing in 2022.

But before you leap to the conclusion that Booking’s strategy (35% of revenue on marketing) is dumb, and Airbnb’s approach (just 18%) is valedictorian-worthy, consider that Booking’s profit margin was considerably higher than Airbnb’s or Expedia’s last year.

Booking’s Very Expensive Marketing Piece of the Pie

Puerto Rico’s House of Representatives passed a bill aimed at regulating short-term rentals. However, critics argue that the amendments made to the bill have overlooked important factors connecting short-term rentals to an escalating housing crisis, thus failing to adequately address the issue.

The City of Ottawa in Canada hired Wisconsin-based consultancy firm Place Dynamics to assist in implementing any necessary ordinance changes, and to determine the feasibility and costs associated with allowing short-term rentals downtown. Ottawa received $75,000 from the Research in Illinois to Spur Economic Recovery (RISE) program last year, and now it wants to actively examine short-term rentals in the downtown area. Mayor Robb Hasty emphasized the importance of properly regulating and taxing these rentals and said that the grant could potentially aid developers interested in establishing short-term rental businesses, but that would likely occur in the spring of next year.

Rental housing group Greystar Real Estate Partners acquired the London Olympics