Businessmodel of Booking.com

Customer Segments

Booking.com has a multi-sided market business model, with two interdependent customer segments that are both needed in order to operate:

• Property Providers – People who rent out their properties to travelers
• Property Renters – People who rent properties for use during trips ### Value Proposition

Booking.com offers five primary value propositions: convenience, accessibility, cost reduction, risk reduction, and brand/status.

The company offers convenience by making life simpler for customers. Property providers only need to add a few pieces of information to their online profile before their properties go live on its website; also, they can start receiving reservations immediately. All bookings made through the site are confirmed instantly. Lastly, it recommends destinations based on travel preferences.

The company creates accessibility by making its service widely available. It markets its properties on various search engines such as Google, Yahoo, and Bing so they can be exposed to more people. Booking.com also increases access by providing a wide variety of options. Its properties include everything from small bed and breakfasts to executive apartments to five-star luxury suites. Further, It is capable of advertising properties on its website in 41 different languages.

The company reduces costs in a variety of ways. It makes registration free, with no sign-up or subscription fees for property providers. It does not charge any reservation, administration, or other fees to property renters. It guarantees that it offers the best available short-term rental rates in a given area. In many situations rooms can be cancelled at no cost. Lastly, the site lists new deals daily, and consumers who subscribe to its mailing list can obtain secret deals offering up to 50% in savings.

The company reduces risk by maintaining high quality and security standards. It encrypts all personal information submitted on the site. Also, it allows customers to post reviews of their experiences, allowing newcomers to make informed decisions. There are more than 100 million reviews currently.

The company has established a powerful brand due to its success. It bills itself as world leader in booking hotel and other accommodations online.

It offers more than one million hotels and accomodations, including over 500,000 vacation rental properties. They are located in more than 95,000 destinations in 227 countries worldwide. More than 6.3 million room nights are booked on its website weekly. It has more than 13,000 employees in 187 offices in 70 countries.

Lastly, Booking.com has won a number of honors, including Globe Travel Awards for “Favorite Online Booking Website“ in 2015 and 2016 and World Travel Awards for “World’s Leading Online Travel Agency Website“ in 2014, 2015, and 2016.

Channels

Booking.com’s main channel is its website. The company promotes its offerings through its social media pages and advertising (online and TV).

Customer Relationships

Booking.com’s customer relationship is primarily of a self-service, automated nature. Customers utilize the service through the main platform while having limited interaction with employees.

The company’s website features useful resources such as travel articles and answers to frequently asked questions.

That said, there is a personal assistance component in the form of 24/7 phone and e-mail customer support, provided in up to 40 languages.

Key Activities

Booking.com’s business model entails maintaining and updating its platform for its customers. The platform includes its website and mobile app.

Key Partners

Booking.com maintains an affiliate program through which it invites third parties (every entity from blog owners to major airlines) to promote its service on their platforms (websites, mobile apps, etc.). Referrals that lead to bookings from customers earn the third parties a commission.

The commission amount ranges from 25% for 0 – 50 bookings in a month to 40% for 500+ bookings in a month. The company provides dedicated support from customer service personnel and allows program members to track their earnings online. Booking.com has a network of over 12,500 affiliate partner websites.

Key Resources

Booking.com’s main resource is its proprietary software platform.  It depends on human resources in the form of technology employees to maintain and update the platform, marketing employees to promote it, and customer service personnel to provide support.

Cost Structure

Booking.com has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is advertising, a fixed expense. Other major drivers are personnel costs, cost of revenues, and administration expenses.

Revenue Streams

Booking.com has three revenue streams:

Agency Revenues – Revenues generated from travel-related transactions where the company is not the merchant of record and where travel service prices are determined by third parties. These revenues include travel commissions, customer processing fees, GDS reservation booking fees associated with certain travel services, and travel insurance fees.

Merchant Revenues – Revenues generated from services where the company is the merchant of record. These revenues include transaction revenues, certain customer processing fees, merchant retail hotel reservation services at priceline.com and agoda.com, and ancillary fees.

Advertising Revenues – Revenues generated from fees charged to third parties to advertise on the company’s platforms.