Priceline Counts on Site Little-Known in U.S. to Battle Airbnbby
Booking.com has 7 million rooms available in private homes
Airbnb and HomeAway are far ahead in major U.S. cities
For years, Priceline Group Inc. has dealt with the boom in home-sharing by layering in private residential listings along with hotel properties. But as interim Chief Executive Officer Jeffery Boyd has watched Airbnb Inc.’s meteoric rise since 2008, he has decided Priceline has a way to go in the U.S. travel market.
Boyd’s battle plans rely on continuing a marketing push for the largest of Priceline Group’s travel sites, Booking.com, in the U.S. with TV and online ads. Although Booking.com is popular in Europe for hotel and vacation rentals, the website is little-known in the U.S.
“Booking.com is still relatively new here in the United States and there’s no question we have work to do to build awareness,” Boyd said.
Airbnb far outstrips the number of rental properties Booking.com has in U.S. cities such as New York, Los Angeles, Chicago and San Francisco, while Expedia Inc.’s HomeAway has the lead in vacation destinations like Aspen, Colorado and Florida, according to data from travel research firms Phocuswright and Transparent.
The rise of Airbnb has accelerated the growth of non-hotel accommodation. In 2015, a third of U.S. travelers stayed in private accommodation of some sort, up from 10 percent in 2010, according to Phocuswright. Priceline’s main rival, Expedia, stepped into the space with its $3.9 billion acquisition of HomeAway last year.
Seeking More Offerings
The deal left Priceline without a way to buy itself more heft in the non-hotel accommodation space, so Boyd has worked to make sure the company isn’t being left out in that market.
In an interview at Bloomberg’s headquarters in New York, Boyd, 60, said there are almost half a million full vacation rental properties on Booking.com and more than 7 million bookable rooms in private residences. Airbnb said it had 2.3 million rooms available in July and usually hosts more than 1 million people a night. The San Francisco-based startup has raised more than $3.2 billion to fund its expansion, and was valued in July at $30 billion, about half Priceline’s $72 billion market capitalization.
But Airbnb is growing fast and Priceline plans to use Booking.com, which it acquired in 2005, to get a larger piece of the in-home market. Boyd said Booking.com has an advantage over Airbnb in that travelers can have a choice between hotel rooms or private residences, and he plans to press deeper into home-sharing and vacation rentals. The number of residences on Priceline’s platforms is growing more than 30 percent a year and the company has thousands of employees around the world focused on bringing more inventory onto Booking.com and its other sites, he said.
“We don’t charge the consumer a fee, and Airbnb does,” Boyd said. “All of our properties are instantly bookable, versus going online, indicating you’re interested in staying in a place and waiting for the property owner to come back and confirm.”
Airbnb’s rapid growth has given it better brand-recognition as the place to book something other than a hotel, especially among U.S. consumers who are still new to Booking.com, said Douglas Quinby, vice president of research at Phocuswright. The ability to look at hotels and apartment rentals on the same site sets Priceline apart though, he said.
“They’re the only platform that has integrated rental accommodation with other forms of accommodation,” he said.
Boyd said the non-hotel market is large enough for Airbnb, Expedia and Priceline to grow and he hasn’t seen any evidence of Airbnb materially pushing down prices for traditional hotels.
In the Monday interview, Boyd declined to comment on whether Priceline would be interested in making a bid for Edinburgh, Scotland-based travel booking website Skyscanner Ltd., which is exploring a possible sale or initial public offering, people familiar with the situation told Bloomberg.
The online travel industry has seen a wave of consolidation in the last several years, with Priceline striking out into restaurant booking with its $2.6-billion purchase of OpenTable in 2014 and Expedia expanding its footprint by buying Orbitz.com and HomeAway.
“There’s just fewer large businesses that are left,” Boyd said. “But online travel is a very deal-driven space. There’s still a lot of competitors out there that are private companies that are looking for opportunities to monetize.”