Skift Take
As part of its “linked journey” and loyalty method, Reservation Holdings argued it can encourage hotels and other partners to provide considerable discount rates and advantages, and this would spur incremental bookings. However do hotels really want to be a cog in building the Booking.com brand?
Dennis Schaal
Reservation Holdings Chief Financial Officer David Goulden stated it twice: The company is focused on attaining “industry-leading” profit margins in 2023 or when Covid recedes, and the world gets back to a form of “typical.”
That’s rather of an obstacle to Airbnb, which had an excellent 2021. In his comments, Goulden did not discuss Airbnb specifically. In 2021, Reservation Holdings had the adjusted EBITDA (profits prior to interest, taxes, devaluation, and amortization) edge.
Leaving out stock-based settlement for both business, Scheduling had the greater adjusted EBITDA margin at 29.9 percent compared to Airbnb’s at 26.6 percent.
When including stock-based settlement for both companies, the gap was even broader: Booking’s was 26.5 percent compared with Airbnb’s at 11.6 percent.
On a GAAP (generally accepted accounting concepts) basis on net income margin, Booking (10.6 percent) had a broad lead over Airbnb (-5.9 percent).
In essence, authorities from Booking Holdings, which has overtaken Airbnb in market cap $101 billion to $95 billion, were saying what’s all the fuss about Airbnb being the hit business of the minute? We are building a juggernaut, too.
“Looking beyond 2022, we continue to stay focused on investing to construct a bigger and faster-growing organization with more products than we had pre-Covid that provides more EBITDA dollars and more incomes per show industry-leading EBITDA margins,” Goulden stated.
Booking Holdings CEO Glenn Fogel chimed in during the business’s fourth quarter and full-year 2021 revenues call along the very same lines, and both executives detailed what they are doing to attain these objectives.
“And we are focused on developing a larger and faster-growing organization with more products that create some more earnings after the complete recovery and for the long term,” Fogel said.
Goulden stated he would not specify what the company’s post-Covid adjusted EBITDA margins might be.
Marketing costs will have a significant effect on whether Reservation Holdings will increase its EBITA margins in 2023 and beyond.
“Marketing cost, which is an extremely variable expenditure line, decreased 2 percent versus Q4 2019,” Goulden said. “Marketing expense as a percentage of gross reservations increased a little versus 2019, in line with our expectations. The marketing Return of investments were a little lower than our expectations due to the unfavorable effect of cancellations late in the quarter, and this was offset by a higher-than-expected mix of direct organization.”
Structure Verticals
Both Fogel and Goulden tied the technique into several components of the business’s “linked trip strategy,” which is fixated its mobile app, and aims to supply greater value and service across every step of a trip.
“Step one,” Fogel said, “is build out the verticals,” specifically flights and activities, two areas that flagship brand Booking.com is still relatively in the early days of crafting. Although Reservation Holdings $1.2 billion acquisition of hotel wholesaler Getaroom closed in December, Booking’s $1.8 billion purchase of eTraveli is still pending.
However, eTraveli and Booking.com have actually partnered to construct a flights service over the previous 2 years, and Booking.com now uses flights in 34 nations.
“On our linked journey vision, we made development in 2021 as we work to develop a robust flight platform on Booking.com,” Fogel stated. “This flight platform gives us the capability to engage with possible consumers who choose their flight options early in their discovery process and allows us an opportunity to cross-sell our accommodation and other services to these flight bookers.”
On the attractions front since of collaborations with Tripadvisor’s Viator and TUI’s Musement, Booking.com now uses tours and activities to pair with about 50 percent of its accommodations’ reservations, up from 10 percent in 2020, Fogel said.
Goulden described how the linked journey method includes driving more commitment, paying easier, and adding worth to stir repeat service and accelerate Reservation’s growth.
“We believe that there’s additional development for us in the lodging organization, both on a geographic perspective, expanding our offering into alternative accommodations and including onto that all the benefits from the connected journey, what we can do on top of that because of payments because of the reality we offer a more complete offering, considering more targeted ways to tailor a complete option for our clients, our rates, payments, customer service,” Golden stated.
The company stated it was seeing positive trends, particularly for summer travel reservations in Europe, although a lot of these can be cancelled at some point if geopolitical stress such as Russia and Ukraine or Covid intervene.
Booking.com, on the other hand, has been making strides in grabbing market share in the United States.
Web measurement company Similarweb discovered that Booking.com now draws in 10 percent of its site traffic from the United States, up from 7 percent in January 2019. “Reservation’s U.S. market penetration is growing due to focused marketing and expansion efforts,” a spokesperson said.
Booking said it would lean into brand name marketing in the U.S. in 2022, and social networks, although the latter is presently at a low level.
The Numbers
Reservation Holdings beat analysts’ expectations on both profits per share and income in the fourth quarter, but its stock cost was down about 5 percent in after-hours trading Wednesday. Bloomberg reported that “room night bookings on the online travel company’s platforms fell far except expectations during the vacation duration as the omicron alternative continued to interfere with worldwide travel.”
Booking Holdings notched earnings of $618 million in the fourth quarter compared with red ink of $165 million a year earlier. Income leapt 141 percent to $3 billion.
Correction: When Skift initially reported the adjusted EBITDA margins of Booking Holdings versus Airbnb for 2021, we compared Booking’s margin post-stock-based payment at 26.5 percent compared with Airbnb’s pre-stock-based payment at 26.6 percent. Excluding stock-based payment for both companies, Reserving had the higher margin at 29.9 percent compared to Airbnb’s at 26.6 percent. When we consisted of stock-based settlement for both companies, Booking’s adjusted EBITDA margin is much greater at 26.5 percent compared with Airbnb’s at 11.6 percent.