BOOKING and AIRBNB are the absolute leaders in their respective categories: hotels bookings and short-term apartment bookings.

AIRBNB invented a completely new category, while BOOKING perfected the execution of a service that already existed and was in the hands of #travel agencies.

The winner:

6 years ago, AIRBNB was generating 20% of BOOKINGS's gross merchandise value. In 2021 it looked like AIRBNB was catching up reaching 60% of BOOKING's #GMV, but suddenly growth slowed down in 2022. AIRBNB now looks like the chronic 2nd placer.

In the first quarter of 2023 BOOKING grew its revenue 41% while AIRBNB only grew 20%.

For some strange reason, BOOKING ($107 billion) and AIRBNB ($95 billion) have very similar market caps. The former trading at 20 times 2022 EBITDA, the latter at 50 times 2022 EBITDA

#Profit

Booking.com has been a money-making machine almost from the beginning. Until very recently, AIRBNB found profitability a difficult task. In 2022 BOOKING generated $5.4B EBITDA and $2.9B net profit versus AIRBNB's $1.9B EBITDA and $1.3B net profit.

#Marketing

AIRBNB’s unexciting margins are especially surprising considering that 90% of AIRBNB's traffic is direct.

In 2022, AIRBNB spent a mere $1,500M on sales & marketing versus the $7,800M ad spend of BOOKING (which advertises massively on Google #Adwords)

AIRBNB sales and marketing line accounts only for $2.3 of every $100 of GMV.

BOOKING spends $6.5 for every $100 of GMV.

#TakeRate

Surprisingly AIRBNB has a lower take rate than BOOKING (13.3% versus 14.1% in 2022). AIRBNB’s market is a considerably more fragmented and less professional than BOOKING’s market, and their supply partners (the hosts) have limited chance to generate their own demand. Logic says they should have a higher take rate than BOOKING.

#Danger

Until a few years ago BOOKING and AIRBNB competed indirectly, mainly for the #guest, who had to choose between two categories, the hotel versus the apartment/house.

But things have changed, BOOKING is now aggressively competing in the tourist apartment category, and an increasing number of hosts are "listing" their apartments on both platforms. While AIRBNB has not dared to compete with BOOKING in hotel reservations

#Trivia

Did you know that Booking was one of the most successful acquisitions in history

Priceline, an American online #travel agency that was listed on the Nasdaq in 1999, had the brilliant idea of acquiring a small Dutch #startup called BOOKING for $135 million in 2005. Today the #hotels division (Booking) generates 95% of the group's revenue. In 2018 Priceline decided to change its name to Booking Holdings.

Did you know that AIRBNB was one of the most profitable #VC investments of all times

Sequoia Capital purchased 58 million shares in 2009 for $585,000. Today their shares would be worth $6.5B. A return of 1 to 10.000.

Joshua Novick
M&A, Corporate Finance - Managing Partner at Bondo Advisors

Follow Joshua