In a year since Gremillon joined the company from Airbnb where he spent the last five years, the division recorded $2.8 billion in revenue in 2018, representing 20% of overall revenue for the year, growing faster than the company’s consolidated growth rate. It also reached the milestone of over $1 billion in revenues in Q3 2018 alone.
He’s not taking all the credit of course. “A lot of the work had already been done by the time I joined the company. There were already a lot of listings and revenues, it’s just that people didn’t realise it because it wasn’t necessarily consolidated,” he said.
A little bit of history – the company launched Villas.com in May 2014 as a testing ground for what the company called alternative accommodation (homes, apartments, villas, and other unique places to stay). In late 2016, its shut down Villas.com and transitioned its alternative accommodations inventory onto the Booking.com platform.
Since then, inventory growth has exploded, the fact that Booking.com does not charge a traveller fee has obviously helped. It ended the year with 5.7 million reported listings, up 18% year-over-year, which it said is more than any other player in the homes/apartments space.
The company also disclosed that 40% of Booking.com’s active customer base booked an alternative accommodation property at some point within the past 12 months, reiterating consumer appetite for everything from hotels to homes on one platform.
Gremillon called it a “winning formula” – to put all types of accommodation on the same platform. “We realise that is what the consumer is looking for, they want everything on the same platform.”
While there are those who maintain that hotels needed to be kept apart from alternative accommodation, this is clearly not Booking.com’s belief. Said Gremillon, “People want more choices and the more we can shorten the number of websites they have to look at, the better. Going to one website and finding what you’re looking for is a plus for the consumer.”
He said a similar approach was being taken “beyond accommodation where we are looking at bringing everything into one platform”.
Using this argument though, would it stand to reason that consumers would then wish to book everything on the super apps, such as transportation or food delivery players, which were bundling everything into their ecosystem, I asked.
“On the travel side, it is true that people want to book flights, accommodation, experiences on one platform but on the super apps, that’s what I am not sure about. Although it may make sense but for people to do and buy everything, from food transportation, food delivery, travel, messaging on one platform, that’s a bit of a reach. But time will tell.”
It’s a formula that seems to be working for Booking Holdings which reported overall revenue up 17% for 2018 to $14.5 billion and adjusted EBITDA up about the same, 18%, to $5.7 billion.
For the full year 2018, gross travel bookings were $92.7 billion, a 14% increase over 2017. In the fourth quarter, revenue came in at $3.2 billion, up 16% from the fourth quarter of 2017, adjusted EBITDA was $1.3 billion (up 17%) and gross travel bookings were $19.6 billion, 9% better than a year earlier.
On the alternative accommodation front, Gremillon said that while Booking.com is a European-centric company and a big chunk of its business is in Europe, it is seeing a lot of growth in Asia “whether it is villas in Bali, ryokans in Japan or beach houses in New South Wales. There are lots of different markets and we have 37 offices focused on the region”.
Asked to identify interesting markets, he cited Japan, with the advent of the Olympics next year, Australia which has always been a big driver both as bookers and as a destination and Bali. “China is always a big focus for us,” he said.
Citing a survey Booking.com had done to ask travellers how inclined they were to book alternative accommodation in the next 12 months, he said the global average was 30% but the numbers were higher in Asia – 46% for Indonesia, 38% for Singapore and 35% of Korea, Malaysia and Thailand each.
Given the high demand in Asia, he said that Booking.com had invested in more mobile-centric products for the region. “The Chinese app for instance is quite different from our main app, it’s localised for the market, and in general, we have lighter apps for the Asian region.”
The growth in the alternative accommodation segment has of course also attracted interest of hotel companies, some of whom have invested in the sector. Asked to comment on the inevitability that the majority of hotel companies will have to get into the space, Gremillon said hotel companies remain divided over the issue.
“Some say, we will never be there, while some say it’s a trend. All of them see the consumer trend and some want to be a part of it, but say it’s not part of our DNA and that it’s confusing for the consumers to book an apartment while searching for a hotel.”
One trump card hotel companies say play in their favour is the issue of trust and assurance which they offer over the more fragmented alternative accommodation sector. Asked how Booking.com approaches the trust factor, Gremillon said, “First there are different types of private accommodation – from single homes to apartments that are very well managed. We teach our partners how to offer consumer care and have programmes to educate consumers on how to be good guests so that there is trust on both sides of the marketplace.”
One key challenge remains local regulations of course and Gremillon said the sector was maturing and Booking.com respected and worked within local regulations where they are in place.
“Do we agree (with all the regulations?). Not necessarily but governments are getting smarter at it and are putting together better regulation, that it’s not black and white.”
As for which travel competitors or potential disruptors he watches, he said, “We watch all players – the travel players. the global tech companies, country-specific or regional. Asia is pretty interesting here, there are strong Chinese players starting to expand in the region. We watch everybody and we meet a lot of them. We’re going into a period of consolidation and the next few years will not be like the frenzy of the last 10 years where players were popping up here and there. Now people see the value of scale and size, and so we will see fewer players.”
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