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The online travel agency business over the years ago, and he argues that the profit margins in the third quarter, it is branching out through
last couple of decades has largely been built could be similar. investments in China and Southeast Asia and
around selling hotel stays. But in 2019, there via its own business operations into tours and
will undoubtedly be an acceleration of the drive “You see great growth, or we think it's great activities, ridesharing, and food delivery.
to diversify their core businesses not only into growth, in terms of online bookable supply,” he
apartments and vacation rentals, but also into said during an earnings call several months ago. Booking Holdings and TripAdvisor both acquired
tours and activities, restaurants, food delivery, “And we're still overall at the tip of the iceberg. tours and activities software-connectivity companies
and ridesharing. So when we look at how this attraction business, in 2018 to further expand in the sector. Booking
this experiences business can compare to the Holdings picked up FareHarbor for $250 million,
The online travel agency future is wide open. trajectory of bringing hotel booking online 20 years and TripAdvisor bought the smaller Bokun for an
Although it has more to do with marketing and ago, we still see remarkable parallels, a similar undisclosed sum.
business models than products, just consider margin structure. And it starts with collecting
that Booking Holdings over the last year and demand and supply, bringing it together, and “In the area of experiences, we are building out
a half reversed long-standing practices and that's exactly what we're doing.” our product capabilities, creating a seamless
leaned into brand advertising instead of paid integrated way to offer more choices for our
ads on search engines, and accelerated its use But then there’s the financial issue of experiences accommodations customers,” Glenn Fogel, the

of the prepay merchant model over its mainstay generally being lower-priced than hotel bookings. Booking Holdings CEO, said in a November
pay-at-the-hotel agency model. ONLINE TRAVEL AGENCIES We asked Kaufer that question at Skift Global earnings call. “This quarter, Booking.com made
Forum in New York City in September, and he progress integrating FareHarbor's products, giving
So anything can happen. WILL BE AROUND A DECADE perhaps coined the name of a new sector: food Booking.com access to new local attractions in
and activities. Or at least it is an interesting way the U.S. and the ability to leverage FareHarbor's
But back to the subject at hand, which is the FROM NOW, BUT FOOD, to look at in-destination opportunities. He argued technology to help even more tours and attrac-
diversification of online travel agency business that volume in the breadth of activities, f rom tions around the world come online.”
lines, TripAdvisor has been a leader in the march ACTIVITIES, AND RIDES dining to tours, that travelers pay for on vacation
away f rom hotels, which however is still its can compensate for the sometimes-lower prices. Booking Holdings’ step into tours and activities is
main business at 73 percent of revenue in the WILL BE A LOT MORE clearly not as advanced yet as TripAdvisor’s, but it
12 months ending September 30. In the same “Yes, there are the Motel 6’s and the $250 shows how all the major players are branching out
period, TripAdvisor’s revenue from its non-hotel IMPORTANT TO THEM AND helicopter tour,” Kaufer said. “So on average, I’d beyond hotels, and looking to capture travelers
segment — experiences, restaurants, and home probably agree the transactions are of smaller through the entire trip.
rentals — jumped 80.8 percent to $429 million THEIR CUSTOMERS. THE size (than hotels) — I’m not sure — but think
compared with the year-earlier period. about how many things you do when you are “Booking.com's experiences product is scaling well,
SAPLINGS OF THIS FUTURE in-destination on a leisure trip. And you are and we now offer experiences in approximately 70
And during the most recent 12-month period, the spending a comparable amount in in-destina- cities worldwide,” Fogel said. “In addition, we are
latest information available, TripAdvisor’s experi- GROWTH ARE ALREADY tion food and activities as you do on the hotel, making progress with experience in other areas
ences, restaurants and home rentals segment at least. Therefore, that’s a really big spend pie such as offering at-hotel services and restau-
contributed 26 percent of the company’s total VISIBLE IN 2019. that we can help consumers with.” rant booking options, though we note these are
revenue of $1.59 billion. This non-hotel sector’s nascent efforts.”
contribution to TripAdvisor’s total revenue TripAdvisor will clearly expand its experiences and
increased nearly 4 percentage points compared dining footprint in 2019. It has already begun to Expedia is less focused on making a big play in
with the 12 months ending September 30, 2017. expand its TV advertising beyond hotels and into tours and activities, although it has offered brick-
tours and attractions, and officials announced and-mortar tour businesses in popular vacation
For TripAdvisor, particularly in its peak third quarter they will broaden the focus of its advertising in destinations such as Las Vegas and Honolulu
in 2018, it was experiences and restaurants that terms of all the various things — not just hotels for years.
drove the boost in its non-hotel business. The — that you can book on TripAdvisor this year.
company’s alternative lodgings business, mired As the online hotel booking business gets more
in a hyper-competitive market alongside Airbnb, Unlike TripAdvisor, Booking Holdings doesn’t competitive, with big chains pushing direct
Booking.com, and Expedia’s HomeAway, saw its break out its revenue according to business lines, bookings, Google getting into the fray, and Airbnb
revenue decline a single-digit percentage in the but undoubtedly makes the vast majority of its throwing its weight around, you can look for
third quarter, for example. money on hotels. While the company, which online travel agencies to continue to point their
owns brands from Booking.com and Kayak to businesses beyond hotels.
TripAdvisor CEO Steve Kaufer has compared OpenTable and Agoda, sold 1.8 million airline
the drive to make tours and attractions online tickets and booked 19 million rental car days
bookable to bringing hotels to the internet 15-20

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