Prompt Cast
The Rise and Success of Booking.com in the Online Travel Agency Industry
TLDR Booking.com, founded in 1996, evolved into one of the first online travel agencies by focusing on acquiring travelers, hotels, and providing customer service. Its agency model, which involved taking a commission from hotels, proved to be superior to its competitors and led to its acquisition by the Priceline Group in 2005. Since then, Booking.com has experienced significant growth and become a dominant player in the industry, booking over half a billion room nights in 2016 and generating $7.8 billion in revenue.
Timestamped Summary
00:00
Drew Patterson, CEO of Jet Setter and Room77, joins the hosts to discuss the 2005 Booking.com acquisition by the Priceline Group.
05:31
Booking.com was founded in 1996 in Amsterdam by Gert Jan Brunzma and initially targeted American travelers looking to book hotels in Europe online.
11:44
Booking.com evolved into one of the first online travel agencies, focusing on acquiring travelers, hotels, and providing customer service, and they built a front end to the GDS systems used by travel agencies for flight and hotel reservations.
17:15
Booking.com evolved into one of the first online travel agencies, focusing on acquiring travelers, hotels, and providing customer service, and they built a front end to the GDS systems used by travel agencies for flight and hotel reservations, which allowed them to have access to the entire long tail of the internet and provide far greater relevancy and conversion rates compared to those relying on just the GDS.
22:56
Booking.com's agency model, which involved taking a commission from hotels based on what they sold, ultimately proved to be superior to Expedia's merchant model because it offered a better consumer proposition and more flexibility for both consumers and hotels.
27:47
Booking.com's agency model proved to be successful and led to its acquisition by a European investor group, which later merged with Active Hotels to become the largest online travel agency in the world.
33:29
Booking.com, after being acquired by the Price Line Group in 2005, experienced significant growth and became a dominant player in the online travel agency industry, booking over half a billion room nights in 2016 and generating $7.8 billion in revenue.
38:27
Booking.com and other online travel agencies have consolidated the industry, making it difficult for new startups to compete, but Airbnb has taken a different approach and found success in the travel industry.
44:19
Booking.com and other online travel agencies have taken different approaches to M&A, with Priceline being a passive investor in early-stage businesses and Expedia buying more established companies to add to their portfolio.
50:14
The discussion shifts to the challenges and perspectives of the OTA business model, with hotel owners realizing that it costs as much to sell through Marriott's direct channel as it does to go through an OTA, and Airbnb's success lies in its ability to unlock a new set of supply and create a whole new class of supply that was previously unavailable.
56:14
The success of Booking.com and Airbnb lies in their ability to acquire and retain customers without relying on Google for search, and the key driver of performance for these companies is the conversion rate and the availability of inventory.
01:01:49
Metasurge, or vertical search, plays a role in the decision-making process of finding accommodations and flights, and its goal is to improve the customer experience by monetizing through advertising and customer acquisition fees from marketplaces.
01:07:42
Booking.com, acquired by Priceline for $130 million, has become a gigantic business and is responsible for a market cap of over $60 billion, making it potentially bigger than Instagram.
01:14:01
Booking.com CEO Drew Patterson discusses his Twitter handle and thanks the hosts for having him on the show.
Categories:
Technology
Business
