A staggering €15.4 billion was spent on marketing and advertising activities by Expedia Group, Booking Holdings, Airbnb and Trip.com Group together in 2023, an increase of 20% compared to the previous year.
Financial figures from four of the world’s largest online travel agencies show that they spent a record amount of money on promoting their brands and attracting customers as pent-up demand from the pandemic continues to drive spending.
Cumulatively, these four brands spent a staggering €14.4 billion last year, up 20% from $12.9 billion in 2022.
But beyond the impressive total spend figure, Trip.com stands out as the company that made the biggest “opening” in the marketing budget in 2023. After dramatically reducing its spending in 2020, 2021 and 2022 due to persistent travel restrictions caused by Covid in China, last year, as the restrictions eased, the online travel company returned to pre-pandemic levels of marketing spending. Thus, in 2023 Trip.com Group allocated $1.3 billion to sales and marketing – an increase of 117% ,compared to the 2022 figure of just over $600 million and on par with 2019 spending.
However, as a percentage of revenue, the Trip.com group is showing increased marketing effectiveness. Spending was 26% of revenue in 2019, 21% in 2022 and declining to 20% in 2023.
In a conference call with analysts to discuss fourth quarter and full-year 2023 financial results, Trip.com group CEO Jane Sun said the company is using its marketing budget to strengthen its global market presence, but also to expand its user base among “older demographics” – in the fourth quarter the number of users over 50 increased by more than 90%, compared to 2019.
“And this is just the beginning of seizing the market opportunity for the retiree community, which has buying power and plenty of time,” she said. The company also said it will continue to optimise marketing spend, focusing on increasing direct traffic and improving cross-selling within its platform.
Airbnb focuses on “education”
Airbnb has always touted the fact that the majority of its traffic – 90% is the most recent figure – is direct or unpaid and that it spends a relatively small percentage of its revenue on advertising. In 2023 that figure was just over 18%, with spending of $1.8 billion on $9.9 billion in revenue.
On a conference call with analysts to discuss the latest results, the company’s co-founder and CEO, Brian Chesky, reiterated the company’s different approach to marketing than its competitors. “We don’t typically try to acquire customers through performance marketing. Generally … we think of advertising more as education than sales.”
Mr. Chesky also cited the company’s success in “capitalizing on pop culture’s biggest moments,” such as partnering with Mattel to convert a Malibu mansion into the “Malibu Barbie DreamHouse,” which was listed on Airbnb.
The big… wasters
Of course, the ones who spent the most in terms of marketing in the online travel sector are Expedia Group and Booking Holdings.
The two companies account for the majority of spending among the four brands analyzed, with Expedia Group spending $6.9 billion in 2023 on sales and marketing (which includes commissions paid to B2B partners) and Booking Holdings spending slightly less, $6.8 billion, on marketing efforts.
For Expedia Group, which reported revenues of $12.8 billion for the full year 2023, this equates to 54% of revenue spent on sales and marketing.
In a conference call with analysts on the company’s latest results, Expedia’s outgoing CEO Peter Kern spoke about the company’s shift in investment over the past year from more than 20 brands to three -Expedia.com, Hotels.com and Vrbo.
“We removed the reliance on 76 different agencies around the world and instead created an entire marketing, creative marketing and media buying team internally. We consolidated all of our performance marketing into one team, with unified data and tools that allow us to optimize across brands and apply programmatic approaches to everything we do across metasearch, social, SEO and everywhere else,” he said.
Looking ahead, Kern noted that the company is on a “learning journey” to determine whether to advertise the three brands as a “family of products that work together” or whether they should remain separate.
As he has mentioned in the past, the last two years have been about overhauling Expedia Group’s technology platform and marketing model, which has resulted in a decline in some international markets. Now, he said, the company will be more aggressive with its global expansion.
“In ’24 you will see us spend more money in a number of markets to claim real share where we believe we have the right to win,” he said.
Meanwhile, at Booking Holdings, which reports marketing independently of sales, costs as a percentage of its $21.4 billion in revenue fell slightly from 2022 to 32%.
In a conference call with analysts in February, the company said it was pleased with its performance in a “competitive market” for advertising and marketing.
“We have improved our ability to use our performance marketing channels even more effectively and are now more focused on spending on our brand,” said the company’s chief executive, Glenn Fogel.
“In terms of loyalty, we have expanded and enhanced our Genius loyalty program on Booking.com to offer more benefits to more of our traveling customers by engaging more of our real estate and rental car partners. And finally, we continue to strengthen our direct relationship with our travelers as room nights through our mobile app and total direct room nights continue to grow in our mix,” he said.
And for this year, Booking Holdings said it expects its continued focus on promoting direct business to be a “source of leverage” for the company.
