The State of Texas filed a lawsuit against Booking Holdings, alleging that it violates state law by marketing hotel rates in a deceptive manner because it doesn’t include a variety of fees when it initially displays room prices.
25.08.2023 - 13:27 / skift.com / Dennis Schaal
The traditional knock on Expedia Group in its matchup against rival Booking Holdings is that Booking has been way more profitable. And Booking can take those profits, plow them back into marketing, and win more market share.
In a research report last week entitled, “EXPE 101: A Deep Dive on the Business, Industry & Model,” Jake Fuller and Kevin Dolan of BTIG argued that Expedia is on the cusp of narrowing that profit gap.
The report looks at the profit question in terms of EBITDA (earnings before interest, taxes, depreciation and amortization) margin. In 2022, Expedia’s EBITDA margin was 11.9% versus 31.3% at Booking Holdings. BTIG said Expedia is on track to boost its margin to more than 23% in the 2024 to 2025 timeframe.
The primary factor in the gap between the two companies’ EBITDA margins, BTIG said, is their respective take rates, or commissions and fees per booking.
Looking at their respective take rates in pre-pandemic 2019, BTIG notes that Expedia’s was much lower than Booking’s (11% versus 16%), and BTIG attributed that to Expedia’s heavier U.S. focus, where hotel chain commissions are lower than in a more independent hotel-minded Europe, which is Booking.com’s core market. Booking.com is Booking Holdings’ largest business and its flagship brand. Other brands include Priceline.com, Kayak, Agoda and OpenTable.
Expedia’s revenue in 2022 was heavily weighted toward lodging, as shown in this graphic from BTIG.
There is a historical irony to Booking having higher take rates than Expedia today. In the years after the Priceline Group, the former name of Booking Holdings, acquired Booking.com in 2005 and through around 2012, Booking.com took a ton of market share precisely because it was charging hotel commissions in the 10% neighborhood versus perhaps 20-30% for Expedia. That’s because Expedia was focused on the higher commission prepay hotel model while Booking.com solely did the lower-commission pay at the hotel model.
Today, both companies offer both models.
Since the pandemic, Expedia “reduced fixed costs while Booking is pushing into the U.S. and air, all of which should lead to a narrowing of the margin delta over time,” BTIG said.
Booking.com, traditionally focused in Europe, has been making market share gains in the U.S., and has been focused on expanding its flights business — where commissions for large online travel agencies may be in the 2-3% range — after years of offering accommodations only, with their higher commissions.
So these are among the reasons the margin gap between the two companies is tightening, according to BTIG.
Expedia Group’s share price closed at $110.48, on Friday. BTIG has a “buy” rating on the stock, and a price target of $150. That’s based on “high
The State of Texas filed a lawsuit against Booking Holdings, alleging that it violates state law by marketing hotel rates in a deceptive manner because it doesn’t include a variety of fees when it initially displays room prices.
UnderTheDoormat Group CEO Merilee Karr said her company’s new technology and distribution agreement with Visit Oman can be a novel approach to short-term regulation — one where technology can spur governments to embrace the sector rather than shun it.
Good morning from Skift. It’s Tuesday, January 17. Here’s what you need to know about the business of travel today.
Travelers booking flights and hotels from Expedia in a co-branded feature in the Afterpay app can now choose to pay in four interest-free payments over six weeks, Expedia announced.
Booking Holdings has an answer to critics, who over the last few years mused that its best days were behind it, and that online travel agencies generally would be hard-pressed to rekindle the growth of yesteryear.
The old boys network in online travel — yes, let’s call it what it is — has reunited again to accomplish a formidable goal that has frustrated numerous startups in the past. The aim is to disrupt online cruise booking.
A research report found that Expedia Group has lost global hotel market share since the onset of the pandemic, and all of it has come from plunging business at non-core brands, such as Hotwire, eBookers, Orbitz and Travelocity.
It’s tough for a National Football League team to make a return trip in two consecutive years to the Super Bowl, but online travel company Booking.com will be doing just that with a fourth quarter advertisement during the telecast.
Good morning from Skift. It’s Tuesday, February 21. Here’s what you need to know about the business of travel today.
Can you imagine an easier application for generative AI than creating travel itineraries and in-destination tour plans, in particular? One way or another, Tripadvisor will have to deal with this emerging technology because it runs square into the company’s evolving turnaround strategy.
Booking Holdings officials have spoken for years about their aim to take market share in rival Expedia Group’s stronghold, namely the U.S., and Booking appears to be delivering on that goal.
What percentage of tech employees at Booking Holdings are women? How has the company’s total return compared over the last five years to its internet peers? Booking detailed information about these issues and others in a half dozen charts in its recent annual financial disclosure.