Priceline’s annual results published this week leave us much to speculate about regarding Netherlands-based booking.com and it’s strategy going forward.
Booking.com has been tipped for rapid expansion around the world including Europe although new markets including Asia Pacific and North and South America are growing faster than core Western European markets.
The brand will be used to further develop worldwide operations – details on how are sketchy and booking.com is tight-lipped.
Here’s what we know so far:
- International brands are a hefty contributor to the group withÂ 78% of gross bookings and about 88% of consolidated operating income Â generated primarily through booking.com for the year ended December 31 2011.
- Booking.com works with more than 195,000 properties, a figure which has seen rapid growth in the past year.
- Figures from Eurostat show 1.6 billion nights were spent in hotel and similar accommodation in EU member states in 2011.
From the Eurostat number analyst Herman Leung at Susquehanna International Group deduces that Booking.com’s share of the European hotel market may be only about 6% based on its model of about 98 million room nights in Europe.
That shows booking.com European penetration, albeit in a highly fragmented market with many independent hotels, is quite low and the potential to go out and grab more share.
Current economic uncertainty won’t help growth but there are other elements which will, such as the group’s ongoing investment in online advertising.
- Priceline expects to devote a higher proportion of gross profit to online advertising internationally.
- Investment in online promotion for 2011 was $919 million, 29.8% of gross profit and an increase of more than 66% year-on-year.
- Offline advertising by contrast was 1.2% of gross profit.
Booking.com could also grow by acquisition, what if it went after an accommodation business in Russia, for example, where one in four bookings are expected to be transacted online this year.
What Priceline says is that it hopes booking.com will over time be ‘able to drive a significant, purely, in-country business’ via domestic travellers.
Staying ahead of the game in terms of innovation will also be a focus as under Dutch Innovation Box Tax the company can reduce its tax liability if it is carrying out innovative activities.
Whatever direction booking.com takes to strengthen its position, it won’t be plain sailing andÂ Priceline acknowledges threats from every quarter including Google Flight Search, Room Key and just about every online and offline travel company you can think of.