It wasn't expected that two years ago, around the time when Booking Holdings had appointed its CEO, Glenn Fogel, the company would lean more towards brand marketing and pushing towards the merchant hotel model, yet that is exactly what the hotel booking platform is doing.
That’s because Booking.com, the parent company’s biggest brand, grew up since its early days a decade-and-a-half ago on paid marketing through sites like Google, and scaled its business on the agency, or pay at the hotel, business model.
But there’s a dramatic shift underway. In its third quarter financial results announced Monday, Booking Holdings revealed that its merchant hotel revenue jumped 53.4 percent to nearly $1.05 billion while its agency revenue grew less than one percent to $3.54 billion.
If you looked at the numbers from the perspective of room nights booked, prepaid merchant room nights leaped 65.7 percent compared to the third quarter of 2017 while agency nights jumped a mere 2.3 percent.
Part of this growth in Booking Holdings prepaid hotel model is taking place in Asia, where it operates its Agoda brand, which traditionally has traditionally used the merchant model, and the much-larger Booking.com, which has relied on the agency model.
The spike in Booking Holdings merchant hotel bookings, which improves cash flow and brings it higher commissions from hotels, coincides with its rollout starting in the fourth quarter of 2017 of a new global payments platform. The new payments technology gives consumers and hoteliers more choice, enabling them to pay and take payments, respectively, through systems as diverse as credit cards, Alipay and GrabPay, for example.
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