After the global travel giant revealed statistics on its non-hotel business, Lee Hayhurst spoke to booking.com’s vice president global segments Olivier Grémillon
Booking.com’s Olivier Grémillon insists the global travel giant’s strategy for growth in the fast-expanding alternative accommodation segment is about quality over quality.
Having made the switch from rival Airbnb just over a year ago, you might expect him not to want to get into a numbers game with his former employer and one of travel’s most high-profile disruptors.
However, the sheer numbers stack up in favour of Booking.com, which has revealed specific figures for the segment for the first time as it seeks to claim an established position in the sector.
As Airbnb announced it had hit 500 million guest arrivals, booking.com revealed that since 2007 it has had 784 million guest arrivals in homes and apartments, 50% more than Airbnb.
Grémillon said a mixture of trust and ease of booking are fuelling growth in alternative accommodation, and not just among the millennial consumers normally associated with the sector.
“One thing we have done this year is focus more on quality. It’s good to have lots of choice, but the main point is what you book offers great quality and great hospitality.
“There’s a trade-off between having growth for the sake of growth. We still grew the number of listings by 18% in 2018. We could have grown much more but we are careful to have great quality.”
Booking.com conducts annual surveys of its customers, the latest barometer of opinion finding 40% would be willing to opt for non-hotel accommodation within the next 12 months.
And a drill down to the demographics revealed that not only was this a popular option among the 18 to 36-yeard-old cohort and young families, but also among the over-65s.
“A lot of that is due to trust and also that it’s as quick and easy to book now as it is a hotel. There’s no requesting availability, so it’s very easy.
“When we survey our users they like the fact that we have customer support in their language 24/7. That’s we have got penetration in that customer segment. The trust aspect is very important.
“They want to book that kind of accommodation through the website and get instant confirmation. That’s the main USP and why we resonate with customers in general.”
Last year booking.com disclosed it had over 28 million accommodation listings in total, 5.7 million of which are homes or apartments. Airbnb has six million.
The segment generated $2.8 billion in revenue in 2018, representing 20% of the company’s entire revenue for the year. In the third quarter of 2013 alone it booked over $1 billion in revenue.
Where booking.com believes it has the edge over Airbnb is that on its site alternative accommodation types can be researched and compared against conventional hotel rooms.
This, Grémillon believes, is what consumers want – the ability to assess their options on a single platform they trust and then book instantly.
Although this requirement potentially limits the number of properties because there will always be owners who want to screen guests, it is not exactly holding booking.com back.
Particularly strong in its home markets in Europe, booking.com is focussing on growth in the US and in APAC where the properties mix tends to lean more towards large full homes or villas.
Grémillon said specific staying product like Riads in Marrakesh, B&Bs and homestays southeast Asia will be targeted to make sure booking.com is providing the right sort of experiences to its users.
“We are just trying to slice and dice the supply base to make the experience better,” he said.
Booking.com’s strategy of having all accommodation types on one platform means it is learning all the time how customers like to compare and shop and what experiences they are looking for.
The site allows hosts to provide an Airbnb-style service, or booking.com can do that itself with its tickets and activities product and even hotels are encouraged to recommend local attractions.
And the integration of Rentalcars means it is working on the clear opportunity of increasing the ground transportation attachment rate to alternative accommodation bookings.
Grémillon said the overall approach is to take a consumer-centric view and to provide as much information in search results as possible to help customers make a fully informed choice.
“We always look at things through the eyes of the consumer. You see the world in a slightly different way when you do that.
“What we do want to do is have everything on the same platform but make sure that the customer knows what they are booking as well.
“People don’t necessarily know up front if they want a hotel room or an apartment. What we do is make all different types of accommodation comparable.
“You can compare apples and pears, but at the same time the suppliers’ job is to differentiate themselves. We let them do that by having different pictures and services etc.
“The goal for us is to make things comparable, give options and allow partners to stand out from the crowd because of the unique products and services they offer. We think that’s a winning formula.”
For alternative accommodation, there is potentially much more detailed information required and many more questions from consumers than for a conventional hotel room.
So booking.com is looking to structure product data to make it available, including providing room plans, it is also collecting data on frequently asked questions so it can answer these efficiently.
Grémillon said chat is capable of answering up to 50% or 60% of questions automatically because the answer is in its data, but where it isn’t the customer will be directed to a contact centre.
Research shows 29% of people are comfortable having a computer plan a trip based on past behaviour and 50% do not mind dealing with a computer as long as their question is answered, he said.
Artificial intelligence will increasingly provide a more personalised experience for web visitors by bringing the information they are looking for to the fore on the product landing page.
“The more we know about our guests like how many people are in the party or whether they are travelling for business or leisure, we can actually show them different things in a different way.
“If you use people’s data in a way to make their lives easier they will let you use their data. We can take away all the complexity of having 28 million listings and 38 different property types.”
Tailoring the site to the end customer is one thing, but booking.com has another important set of customers too – its hotel partners – to keep on side.
So how do they feel about such an important global sales channel pushing alternative accommodation so successfully?
“If you look back six or seven years ago they was this feeling these new suppliers were going to eat their lunch,” said Grémillon.
“But people have realised it’s not that cannibalistic and that hotels have specific assets that they should leverage because there’s some stuff that’s better in hotels than in the home.
“The debate today is a little less passionate. People know the alternative accommodation sector is not going to go away and the fact it is comparable means people can make an informed choice.
“The lines are becoming blurred between what is a home sharing, a chain hotel and everything in between.”
Grémillon said the rise of alternative accommodation was “a little bit of a wake-up call” for some hotels and many have upgraded their product as a result.
“The big winner is the consumer,” he said. “A few years ago, I was speaking to a hotel association event and they gave me a pretty hard time on stage.
“But people came to me afterwards and said having this kind of accommodation is a good way to push people to improve and also, for us providing a good service, to differentiate ourselves.”
Looking ahead to the rest of this year, Grémillon said booking.com will continue to grow is alternative accommodation offering but “in a more surgical way”.
“We will look at it country by country and property type by property type and see what the needs are. We are starting to be more refined on displaying specific assets of a property.
“That’s where it starts to be quite tricky because although you become more relevant for specific property types you risk becoming confusing for consumers if you offer too much information.
“Our goal is to make sure property managers know how to connect to our platform in the right way. There is education in place to make sure they know how to use our platform.”