Booking Holdings Inc. (NASDAQ:BKNG) J.P. Morgan Global Technology, Media and Communications Conference May 14, 2019 10:00 AM ET

Company Participants

David Goulden – Executive Vice President and Chief Financial Officer

Conference Call Participants

Doug Anmuth – JP Morgan

Doug Anmuth

Good morning, everybody. We’re going to go ahead and get started. My name is Doug Anmuth. I’m the Internet analyst at JP Morgan. It’s our pleasure to have David Goulden EVP and CFO of Booking Holdings. So Booking is the world’s leading provider of online travel and related services, operating in more than 220 countries in 40 plus languages through six primary brands.

Booking did about $93 billion in gross bookings last year. And a number that kind of always staggers me is 200 million-plus room nights in this most recent quarter. So David joined Booking about a year ago, I think March of 2018, prior to that he held numerous senior executive positions at EMC and then also Dell. So welcome David.

David Goulden

Thank you. Great to be here.

Doug Anmuth

So as I mentioned you’ve been at Booking for just a little bit more than a year now. What surprised you most during this first year?

David Goulden

Yeah, Doug that’s a great question. Obviously, when you join a company you learn a lot very quickly which is a good thing. I think in terms of what surprised me most and you really can figure this out more when you get on the inside it’s hard to tell on the outside. It’s really the size and scale of the operation and all the things that come with that. So last year 750 million room nights booked. That’s just a phenomenal number of room nights over two million properties 25,000 people over 200 locations around the world. And then net-net is what I’m saying is what we do isn’t easy. It’s much more sophisticated that people might realize from the outside. That I think is the biggest single thing.

Doug Anmuth

Okay. So let’s talk about the current state of online travel. Online travel clearly becoming more penetrated, yet when you look at the overall landscape you’re still a small part of overall travel. How do you think about taking more share? What’s most exciting to you about the potential growth opportunities over a three to five year period?

David Goulden

Yeah. We think about travel in total because – just because we participated in online the total available market is also getting people to transition from offline to online. So we think that travel in total when you think about the fact that travel market has historically grown faster than GDP growth and we believe that trend will continue. And our goal continues to be to grow meaningfully faster than the travel marketplace, so we kind of look at it from a macro sense.

Within the core key segments, within the core accommodations business when we kind of measure our share, we always have a single digit share of all the rooms potentially available across the properties just on our platform. So that does not include rooms that – or things that aren’t on the platform. So that way there’s a ton of headroom in the core business. And outside of accommodations when we look at the strategy around our – the connected trip we think that can, a propel growth by bringing together things that we are already playing like dining or rental cars but also opens up new verticals for us like experiences. So a lot of headroom early stages, so much potential.

Doug Anmuth

Okay. Just thinking about near-term macro, you saw a slow start to the year in Europe. TripAdvisor we actually just talked to a little while ago kind of talked about the same – sluggish Europe. You guys have had similar comments. What’s driving that? What are you seeing in terms of trends now?

David Goulden

Yeah. I think first thing just to clarify is that what we’ve said and what we’ve talked about in Europe last week. It wasn’t really dissimilar from what we said in February. What we’re really saying is that the macro in Europe is sluggish. Doesn’t mean to say, it is in a decline it’s just sluggish. It’s growing the GDP growth is low in other parts of the world. And there’s more uncertainty over there than other parts of the world. You’ve got things like Brexit happening, the weakness of the euro that obviously impacts the European travel in terms of how far their money will go abroad et cetera. So that really is the commentary about the environment.

Doug Anmuth

Okay. So let’s kind of move that into some of the recent top line metrics, room nights grew 10% in 1Q. So two percentage points faster than the high-end of your guide. Europe was let’s use sluggish kind of the first two months of the quarter. But your trends in March it seems like were better than anticipated. Can you talk about what drove that to start?

David Goulden

Yeah. So a commentary about Europe was actually particularly in the first month of the quarter in January. We said there was a big step down from December. Then we said, there’s a step back up again in February. But obviously compared to what we guided though simply Europe to now to be stronger than we expected in March which is good, because the macro didn’t change. So our beat was mainly in Europe. But when we kind of look to the rest of the world it’s also a little stronger than we expected as well. So it wasn’t just Europe, but mainly Europe.

Doug Anmuth

Okay. So how does that kind of inform how you’re thinking about 2Q, the 6% to 8% growth in room nights? You did however talk about April being toward the high end of that guide. Can you help us understand just some of the factors that bridge kind of what you saw in April and the guide that you’re providing?

David Goulden

Yeah. Sure. I think it’s important to emphasize our approach to guidance hasn’t changed. So every time we guide we looked at many factors. And I mentioned obviously there’s some volatilities, there’s some uncertainty in the macro. And that really informed our guide for our Q2.

Doug Anmuth

Okay. So you disclosed some metrics on alternative accommodations recently talked about almost $3 billion in revenue in 2018 around 40% of Booking’s active customers have booked alternative accommodation properties in 2018. So, clearly very good scale and engagement, how do you think about the runway for growth in alternative accommodations going forward?

David Goulden

Yes. It’s a very important market for us and it remains a growth area. As you mentioned, we have already a large platform in the alternative space. But we’re pushing for different areas of growth within that. So we have a big emphasis by adding more individually owned properties. And then also, we are also emphasizing on building out awareness among customers of our alternative asset, so they can kind of come there first as opposed to come there for somebody else and wind up booking an alternative and those are kind of the two major focuses. But it’s a big business and we think there’s a lot of growth potential for us across it.

Doug Anmuth

Okay. Maybe you could elaborate a little bit and just talk about some of the benefits of your model having kind of old property types together in one place, no traveler’s fee, everything instantly bookable. How that benefits consumers from your perspective relative to what competitors are doing?

David Goulden

I think that you summarized it quite well. I mean we think that’s exactly what customers want. And we spent a lot of time talking to our customers, a lot of time getting feedback for what works across our sites. So we hear from them on several times. They don’t want to go to multiple sites. They want to compare all the information in one place and have clear comparisons.

Once they’ve made a choice, they don’t want to have to wait for a confirmation. There’s nothing more frustrating than having a choice and then having play telephone tag or e-mail tag with somebody to confirm your booking. And they want to see upfront the price they’re going to pay. They don’t want to get hit by additional fees.

And then the last thing we hear from them is they really want to know if somebody’s got their backs standing behind and they’ve got world-class customer support. So that’s what we hear from customers. That’s kind of what they want and we think that’s exactly in line with what we’ve been driving and a lot of it has been customer driven.

Doug Anmuth

So you’ve talked about alternative accommodations being more costly to operate. It’s nicely profitable, but still dilutive to your pretty high hotel-driven margins. How do you close that gap? Can it close more over time?

David Goulden

Yes. So there are some structural differences. So the biggest one really is higher customer service contacts from both the properties and the customers. If you’re a single property owner, you’re probably less familiar with how you sign up and register for the service. If you’re a consumer, obviously if you’re booking a hotel you know where it is you can find it somebody is greeting you obviously the dynamics get a little bit different in the alternative space. So — and then also there’s a difference in terms of how we recover some of our payment costs. Obviously a hotel is more used to doing with a virtual credit card. And with our alternative property they may not have the ability to handle that. We may be doing wire transfers things like that. So those are some of the differences between them.

But we’ve been developing our tooling and automation to reduce the cost of those contacts. Some of those contact points won’t go away, but we can service them much more effectively. So we are doing work to kind of close that gap. What I’ll wrap up by saying is though its very margin-dollar accretive for us, right? It’s a business that is nicely profitable. It’s growing margin dollars. That’s the important part of our overall marketplace.

Doug Anmuth

Okay. So the tone of Booking has shifted a little bit I think over the last couple of years. Of course still very focused on accommodations, but also more toward becoming a holistic travel platform. If you can talk about what’s driving that change and what parts of travel outside of accommodations are most interesting to you?

David Goulden

Yes. So the tonality shifted a little bit. But bear in mind that the core accommodations is at the heart of what we’ve been doing going forward. But our visioning around the connected trip with accommodation at its core is the thing you hear us talk more about. And that — what all that is about, is just taking friction out of what is still a very complicated and often friction-full travel experience. So the more friction we can take out, the more enjoyable we can make the whole experience for the customer the more likely they’re going to come back to our site and use our services.

So in terms of what parts outside of the core business we’re focused on? Right now, we’re focused on connecting and removing friction in some of the areas we already have. So ground transports experiences in dining, those businesses that we’re already in and we can then to the extent we can kind of make them seamless and make them more available through a common approach to customers that’s a benefit. So that’s where we are right now.

Doug Anmuth

Okay. Let’s talk about marketing a little bit. So over the past year or two, we’ve seen kind of rationalization in performance marketing spend kind of across the industry just more focused on optimization. Where do you think we are kind of in that process? And how do you characterize the environment? Is it stable or still kind of moving around?

David Goulden

Yes. I think let’s go back and kind of look at the catalyst that have let us to kind of change strategy a little bit here. So after a period of very aggressive growth across all available channels, we took a step back in middle of 2017 to kind of assess where we’re heading. And we changed our strategy to take a longer term view.

We said let’s align our ROIs with the long-term quality of traffic as opposed to the short-term growth objectives. And that’s really kind of what changed our approach and kind of let us to go through this optimization phase that we talked about over the years. We feel comfortable with where we are now. We think we are focused on the right levels of ROIs and that’s how we’re looking at how things have developed.

Doug Anmuth

And where do you think you are with some of the kind of marketing partners that you have just there are periods where you talked about kind of leaning in a little bit more at different points in time? And maybe you could talk a little bit about how those relationships are. What kind of drives you to do that at different points?

David Goulden

Yes. It’s really a function of how much traffic they’re making available to us. So we’ll lean in, when there’s more traffic and we’ll spend more. When there’s less traffic available that’s when you see more leverage through that line in our income statement. So it’s really a function of us viewing them as a marketplace and how much traffic they’re getting at the top of their fall. And therefore, how much there is first to bid against.

So in periods where there’s high traffic going in those channels and for example we saw a little pickup across those channels in the third quarter last year, we talked about leaning in because there’s more traffic. So we spent more. So it’s really a function of how much traffic is coming to us. Our ROI objectives doesn’t change very much. It’s a function of how much volume and therefore how much we can spend against those ROI targets.

Doug Anmuth

Okay. So with that in mind, you did talk a little bit on the last earnings call just about some growth challenges in your primary performance marketing channels. Can you just talk about what’s happening there? And how you kind of get through that? And how you’re looking to diversify?

David Goulden

Yes. I mean, I think it’s — we said very clearly that we’ve seen our pay channels grow from historic growth rates, slight slow down from historic growth rates. Some have slowed. Some have gone negative. You can see the public resource some of the many places for example you see what’s going on there. This channel is looking at how they want to drive growth in their business.

Now one of the key things that we think we can fall back on is the fact we believe that we are a leader, the leader in optimizing the performance marketing spend. And we continue to look at those pay channels as a source of growth, at attractive ROIs and we have very strong partnerships with Elong and we work closely with them. We are experimenting for optimization on both sides and that’s the real asset that we think is important to our business and one we continue to keep building on.

Doug Anmuth

Okay. Let’s shift to the other side of marketing a little bit just more on the direct channel. So growing faster than paid for you. You’re also accelerating your investments in brand marketing. Still a small part of the spend at about 10% I think of overall marketing. But what’s driving that acceleration? And how should we think about the trajectory for that over the next few years?

David Goulden

Sure. So the brand spend, the brand investment, it’s really related to the investments we called out on our call — at our Q4 earnings call. Areas to drive growth in our accommodations business and specifically to support the growth of that direct channel. As you know, over 50% of our bookings come in through the direct channel and it’s a key asset for us. We want to kind of drive more of that. In terms of how we’re doing, we are measuring that through testing of the actual craze themselves because they’re still in the early stages of rolling out that new campaign and many properties have seen a bit of Be A Booker campaign in the U.S.

We have a similar campaign in Europe, although a slightly different focus, because obviously the awareness is stronger over there. You’ll see us — we’ll lean into that. And what you’ll see differently this time from prior campaigns is we’ve historically been very good at capturing opportunistically through brand campaigns, at particular events or programs. But you’ll see us have much more consistency now. So you’ll see us kind of roll out a program that really builds brand awareness off a very consistent base for a prolonged period of time looks to reinforce that brand over quarters and in to years.

Doug Anmuth

Okay. And just I guess you kind of mentioned a little bit on geography. Just curious on Booking in the U.S. in particular. Just how do you think about where the brand is and the overall opportunity here?

David Goulden

Yes, I mean, obviously, the U.S. is a great marketplace with a ton of opportunity. We’re not the biggest player in the U.S. marketplace, which gives us upside. I think that the U.S. marketplace plays nicely to the value proposition, which we bring. So that’s why one of the biggest brand areas that we’re spending is on the U.S. not only are we driving — look to drive overall awareness, but also we spoke a little bit earlier about the alternative platform that we’ve built. We want to build the awareness of that because our brand awareness in the U.S. is much stronger in the hotel space than it is in the alternative space and we’re looking to drive that as a subset of our branding campaign. So we’re pleased with our growth rates in the U.S. marketplace. We know there’s a lot of potential for us to capture more and that’s why we’re making a big investment.

Doug Anmuth

Okay. So let’s shift gears a little bit talk about payments. Payments platform, certainly a big focus for you last year. This year, it’s driving strong merchant booking growth. So 63% last year and then 29% last quarter. Maybe just take a step back for people a little bit less familiar. But what are you doing in terms of the payments platform? How do you think about the opportunity in around what you’re building?

David Goulden

Sure. So let’s kind of step way back make sure you kind of know where this transition is happening. So the transition towards more revenue flow to payments is really happening at Booking.com. So Booking.com has historically been an asset where we’ve operated what’s called an agency model, where essentially we are the booking agents and the payment is being handled by the customer paying up at the property. We started to get into and roll out a new payments platform at Booking.com starting essentially in late 2017, but not a whole lot of volume went through payments in 2017. In 2018, Booking.com about 10% of the TTV went through our payments platform.

Now that shows up in a couple of places in the income statement. The cost of transacting those payments — processing those payments are mainly in sales and other with our payment service partners. And the incremental revenues from payments are sitting up in the merchant revenue line. So, they’re impacting two different parts of the income statement.

Now, as we’re ramping up a new service, not surprisingly, the costs are ramping before the revenues ramp. So, what you saw happening in 2018 is the impact of that shift and putting about 10% of our TTV through payments, was about one percentage point of EBITDA growth in 2018. So said differently, EBITDA growth would’ve been one point higher if we hadn’t been going through this shift towards payments.

Relative to 2019, we expect the payments platform to have a modestly negative incremental impact on EBITDA growth compared to 2018 and we don’t expect any additional negative impact in 2020. So, relative to the investment levels that we’re making that will basically plateau out this year.

Now, important to remind everybody is that payments offers a lot of benefits to us and to the customer. We can make a better customer experience. We can do more merchandising. We can reduce customer service cost, because a big piece of our customer service cost calls have come in. If customers who are asking why the property is billing them at a different time or a different amount than they would’ve done per the expectations, so payments helps us take a lot of friction out of the system and helps us put a lot of serviceability into the system.

Doug Anmuth

And just to clarify that point you made when talked about one percentage point of EBITDA growth kind of hit in 2018.

David Goulden

In 2018, yeah.

Doug Anmuth

And you’re saying, it’s slightly more than that?

David Goulden

Slightly modest, yeah. A small increase to that investment, let’s call it, in 2019. And then flattening out in 2020.

Doug Anmuth

Okay. Okay. We’re going to open up for questions in a minute. So, if you have one there’s a mic coming around. But let me, in the meantime, just ask, if you can talk a little bit more about what you’re doing kind of on merchandising and in terms of customer acquisition? How that program is being utilized in markets where you have strong price competition?

David Goulden

Yeah. There’s a couple different programs we took on merchandising customer acquisition. So, let me talk about them each of them separately, Doug. So, what’s in merchandising, first to clarify. So merchandising includes our pricing actions that we may choose to take to incentivize a customer and other packaging things, right? Basically you may give people the discount on an attraction or a car ride or something if they’re booking is through us. So, those are examples of merchandising.

It’s being used primarily in markets, with strong price competition, including Asia. Customer acquisition programs are much more global and includes incentives like our refer a friend program and include things like call-to-action programs to encourage customers to book with us or book us around certain vacations. So, that’s how those two things play out. So, one is what people will focus, the other one is global.

Doug Anmuth

Okay. Questions in the audience? Mic is coming over to you.

Question-and-Answer Session

Q – Unidentified Analyst

As you build out the events and activities in the local markets, how important is it to have that traveler begin with the booking of the hotel? I guess, what I’m asking is over time, can you see that to be a standalone business where people come to Booking just for their event and activities, or will it always be the lodging is the core and that’s going to be the add-on?

David Goulden

Over time, we’re looking at that. We, obviously, are very — we want to make sure that we maintain our great conversion rates when people come on the site to book places to stay. But we’re certainly looking at the possibility of opening that up and making it a standalone access point. And obviously, once you do that, you can do things like, you can start doing a performance marketing campaign on some of those events and experiences. So, we are looking at that. At the moment, as you correctly pointed out, today the way to get exposure to those is to book a property through booking.com, but we’re looking at the alternative.

Doug Anmuth

Let me ask about China. Clearly, an investment area for you. So, you’re building from the ground up. You also have partnerships and investments in Ctrip, DiDi, Meituan, how do you feel about kind of how you’re positioned overall in China? And then how do you balance what you’re doing directly versus how you’re partnering with some of those players I mentioned?

David Goulden

Sure. So, from a positioning point of view, I think we feel we are best positioned non-Chinese travel company in China. Now, we also recognize that China is different than some of the growth drivers that were important for success here and in Europe may be different than in China. For example, there’s not a very big Google search channel to say the obvious in China. So, our strategy there is and has been to build out our business organically.

We have over 1,000 people in China. We have a large call center dedicated to Chinese customers. That’s very important for Chinese traveler. And then, of course, when I talk about difference, that’s where our partnerships come in. So, these partnerships take different sizes and shapes. But generally the key thing is to give us access to Chinese bookers and using those partnerships as a way to access the market where we can’t access the market the same way that we’ve accessed it on more established markets. There’s a question there.

Doug Anmuth

Open the front here. Then another one over here when you’re …

Unidentified Analyst

I had a question about the connected trip. In the last conference call, you talked about offering restaurant suggestions to travelers on a trip in the future. When you did that, would those suggestions be offered in the Booking app or will they go through OpenTable? Or how do you see sharing data between OpenTable and Booking for the connected trip?

David Goulden

Sure. So for those of you who are Booking customers, you may have gotten a notice recently a privacy notice saying, hey Booking.com is part of Booking Holdings, and we like your permission to share information across the different brands and opt-in, opt-out. So we are obviously in a GDPR environment. We have to get people’s okay to do that. But those have been going out in waves, so getting high level of response for those. So we can start using the data to share and help create the trip.

The connected trip really comprised of a few things. There’s individual verticals that exist now by themselves accommodations, attractions, restaurants, et cetera. And then there’s a marketplace that we’re building where all comes together in an artificial intelligent powered data rich environment, where we can kind of put the information together and help you build that connected trip. So those are how all the pieces fit together. But obviously in this day of privacy we need to ask customers to opt-in, so we can share the information across the sites.

Doug Anmuth

Another question.

Unidentified Analyst

Hi. Can you just talk to where you think the merchant split of TTV is going to get to over call it the next three years to five years and how are you getting that target?

David Goulden

Sure. So motion TTV of Booking.com obviously increased from very close to 0% to 10% last year going to increase this year. And we’ll continue to increase for a few years to come from here. It will not be the entire business. That’s not our objective. Our core agency product is a very attractive product, both hotel and for the traveler. But obviously, as we do more things along the line of the connected trip, the ability to put it together really is tied to the ability to how the customer manage the overall payment flow as well. So we are on a journey. It will be 100 and it’s got quite some way to go given it was only 10% last year.

Doug Anmuth

Let’s just stick with some of the international markets. Hoping you can provide some color, kind of how you think about LatAm, India, Southeast Asia, all growth regions. If you could share some of your latest views and then how you are focused on gaining share in each of those markets?

David Goulden

Yes. A couple of different approaches. So if you think of Southeast Asia and India, we have two of our brand companies operating there. We have Agoda, which is a local Asian based brand and we also have Booking.com. And we are able to use them to segment the market a little bit and track different customers and have really a couple of different ways to address those markets.

In LatAm, there’s actually quite a good connection between many of the LatAm countries and Europe, and therefore, we’ve really had a strong presence there for quite some time with Booking.com. And the connection has always been – obviously, the flow of those economies work to our favor. So that’s how we’re addressing those markets.

Doug Anmuth

Okay. Other questions in the audience? There’s one in the way back.

Unidentified Analyst

Hi. Can you speak about the trends in retention and behavior in your loyal customers your Genius platform, and if you’re seeing more people booking just directly through the app and booking more trips a year and so forth?

David Goulden

Yes. Sorry, can you just repeat the very first part of the question. I want to make sure…

Unidentified Analyst

Trends in retention and just behavior of your different members in your loyalty program and the Genius…

David Goulden

Sure. Thank you. I appreciate your clarification. So we don’t disclose how big that Genius customer base is, but it’s a very sizable, very active base of customers. And just for people who don’t know what that is if you were with Booking.com once you’ve stayed more than twice, you get into Genius status and Genius status gives you discounted room rates from properties that participate and there are hundreds and thousands that do maybe other perks like upgrades and breakfast and things like that. So it really is a powerful program.

It’s an important cohort. It’s a growing cohort. It is very big. And not surprisingly as in any industry the 20-80 rule applies and they represent a good chunk of our bookings.

It’s growing. We’re looking at ways to enhance the overall Genius program making more attractive. And we think it’s a very important part of our direct program and also ties to the connected trip because we want those Genius customers who are our most frequent customers we want to continue to provide more value for them in more and more different ways. So it’s a key part of the strategy and is growing nicely.

Unidentified Analyst

Hi. Just why won’t you disclose that how big that size is in the cohort?

David Goulden

We think very carefully about what we disclose and what we don’t. And we just — we think that — we’ve disclosed a lot of new things recently in terms of the size of our direct business, the size of our mobile business, the size of our alternative business.

So we just — and certain things we think are helpful to investors certain things are competitively sensitive and we want to strike the right balance. I think we’ve done a lot in last year or so in trying to be helpful giving you things like annual guidance. So there’s a lot of things we’ve been doing to try to make it easier to understand the business but certain things like that are really important to us.

Doug Anmuth

We’ve seen – if you go back over the last few several years let’s say we’ve seen a lot of M&A in the online travel space. But I’d say, it hasn’t really come from Booking as much. How do you think about what’s the philosophy around M&A and kind of type of things that would be interesting from a technology perspective or geographically?

David Goulden

I think there’s been actually a couple of questions may be came up on the back of the last earnings call about where there was a tone change. Obviously, Glenn mentioned M&A I think twice. Some people thought three times, but I think it was twice, because people tell me – yes well there you go Doug.

Doug Anmuth

I said it wrong.

David Goulden

But you were close. So let me clarify that. So it’s really not a change in tone. We have a successful M&A record. And what we were simply doing was reminding people different ways we drive shareholder value especially in the context with new and large share repurchase authorization. We didn’t want people to think we’re just taking our eye off the ball in terms of the three different ways we can drive shareholder value through building the business through M&A and obviously through capital returns.

In terms of – we may have been a bit more active than people may have realized. Maybe the best way I think is just go back and look at what we’ve recently explain where it fits into the portfolio. So, recently, we acquired companies like FareHarbor, HotelsCombined and Venga the acquisition we closed a couple of weeks ago. And what they’ve done is they’ve enabled us to either enter a new market like FareHarbor with the experiences and attractions or build out an existing portfolio of assets.

So like HotelsCombined to take our meta product KAYAK and extend that into Asia. Or just acquire a new technology, so Venga will give us the CRM capability for our restaurant platform on OpenTable. So we have been active and continue to have a very good corporate dev team that looks carefully at everything that we see in the industry.

Doug Anmuth

Okay. One more up here or over there we have two more.

David Goulden

One, two.

Unidentified Analyst

If I may touch upon brand spending. So you guys talked here in the early innings of brand spending. So how do you think about that? Are there any key goalpost milestones that would suggest that you should spend more pullback or plateau it out?

David Goulden

Yes. Sure. I mean, obviously brand spending is something where the returns come over time whereas the more conventional performance marketing you see a direct correlation in the quarter, right? So it’s more of an investment. And it’s a little bit a science and art. I mentioned to you that we’re taking a completely different approach and really driving sustainable campaigns. So we are in the very early innings of building out a multi quarter multi year brand program.

In terms of measurement, you can measure it in a couple of different ways. I mentioned it in the early stages all you can do is really measure the success of the accretives and whether they’re creating the right impression and people walking away with the right messaging. Then you build on that over time by building brand awareness, purchase intent and all those things. So, you kind of look at those on a very regular basis.

You also do testing of which spots are working. So, on TV, are you getting various — 60-second spot versus 30 versus the 15? Are the brand spots working better than the product spots? So you get a lot of data which you have to pass through. And we kind of look all that and decide if we are in the right direction. We do believe from a strategy point of view that it’s the right thing to do and it’s something that’s going to require time and investment. So, we’re committed to it. But like everything that we do, we do it thoughtfully. We measure very carefully and we are in the process of doing all that right now. Right now, we’re pleased with what we’re seeing from the early results. But we know that it’s early.

Doug Anmuth

We got one more last question.

Unidentified Analyst

Just want to see if you could speak a little bit to the broad competitive environment which we say Airbnb buy HotelTonight and there are some data points that hotels are having a little bit more success driving direct bookings. So can you talk about your share within the online channel and how you see that progressing?

David Goulden

Yeah. Sure. As I mentioned in one of my earlier comments, when we’re starting off the most basic level, you just look at all the properties on our platform and available rooms they have and what percentage those rooms do we get, it’s high single-digit market share, right? So there’s a ton of opportunity. And, of course, because it’s a very attractive industry everybody is kind of looking at it.

I’d say a couple of different things. I’d say that if you look at what people are trying to do and how they’re trying to build out their sites, they’re trying to emulate what we have and what we are more than anything else. So we look at some of the competitors moving out of the alternative space and then into the hotel space, well, it would appear they’re trying to offer both on the same platform. We’ve been doing that for a number of years. We are very well-developed in the alternative marketplace. And the alternative marketplace and the hotel market place are quite different. Obviously, one can you build much out — much, much more through word-of-mouth. The other one uniquely much better at the traditional performance marketing in some of those other areas.

In terms of some of the hotel chains and what they’re doing, obviously, they’re looking to build out their loyalty customers, but I think people don’t realize that there’s a segmentation applies in this industry and not everybody’s going to be loyal to a hotel chain. There’s a certain type of customer who will and there’s a certain type of customer who wants choice and flexibility including the ability to get into chains and we offer that. So, it’s dynamic. It’s changing. I think we are very well-positioned.

Doug Anmuth

Real quick word association. Very quick first thing that comes to mind performance marketing?

David Goulden

Performance marketing? Growth.

Doug Anmuth

European macro?

David Goulden

Sluggish.

Doug Anmuth

Google?

David Goulden

Great partner.

Doug Anmuth

Hotel Direct?

David Goulden

Hotel Direct as a?

Doug Anmuth

Hotels booking direct pulling customers directly to them.

David Goulden

Expected.

Doug Anmuth

Airbnb?

David Goulden

Good company.

Doug Anmuth

Payments?

David Goulden

Very important.

Doug Anmuth

Alternative accommodations?

David Goulden

Growth.

Doug Anmuth

Margins?

David Goulden

Great.

Doug Anmuth

China?

David Goulden

Local.

Doug Anmuth

Share buyback?

David Goulden

Also great.

Doug Anmuth

All right. Thank you.



Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here