Want to know how to grow an online travel business? Then take a look at Priceline, which owns Booking.com, Agoda.com, Rentalcars.com and Kayak.
Two things to note: (1) Its online advertising strategies are exceptionally aggressive yet disciplined, and (2) 90% of the company’s gross revenue is made outside its home market of the United States.
Combine them and you’ve got a gross profit of more than USD21 million a day.
That adds up to a USD2 billion gross profit for the third quarter, 42% up over the previous year.
By some weird coincidence – or may be not – Priceline’s online ad spend across all brands also grew 42% for the period.
And how much did they spend online – most of it with Google AdWords – during the quarter?
The answer is USD533 million, up from USD375 million the year before.
Offline ad spend grew even quicker – almost 500% – but from a much lower base: US8.4 million to USD40 million.
This no doubt can be attributed to the new Booking.com TV campaign which started in the US and is now rolling around the world – same vision, local accents.
On the global front international operations contributed USD1.8 billion of the USD2 billion gross profit.
International sales grew 42% (that number again) and the company did not discuss US figures in the results announcement.
“Booking.com and Agoda posted solid third quarter results leading to 36% room night growth for the Group, and the US business of Priceline.com showed positive momentum with accelerating bookings growth,” said Jeffrey Boyd, Chairman and CEO.*
He made no mention of other Priceline properties Kayak or Rentalcars.com.
Looking ahead, the growth story is set to continue.
Mr Boyd predicted growth in total travel bookings during the fourth quarter of 27% – 34%, driven once again by the twin pillars of aggressive advertising and its international business.
Oh and good, extremely usable websites. Forgot that bit. Rather important.
So now you know what to do. Execution, however, is much harder than it looks.
* Priceline CEO and president Jeff Boyd has handed over control of the company to Booking.com boss Darren Huston. Boyd will remain chairman and Huston retains his role as Booking.com CEO. See Tnooz story.