September 03, 2018

Why Booking.com grew throughout Europe


Booking.com was able to grow throughout Europe because Priceline didn't listen to the "experts" and force a change from the agency model to the merchant model.

Meanwhile, Expedia was attached to the merchant model that worked well in the U.S. but they were too slow in recognizing differences in European markets.

In the online travel business, the revenue margin or revenue as a percentage of gross bookings for hotel rooms is higher using the merchant model as opposed to the agency model. Expedia Group has a large percentage of low commission airline flights in their agency revenue bucket such that it is not an apples-to-apples comparison with Booking Holdings where the substantial majority of their agency revenue comes from hotel rooms.

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Read also "Booking.com: The oral history of travel’s greatest acquisition"