BKNG
#Okay, <UNK>.
So first on the parity clause, we're pleased with the outcome.
We wouldn't have proposed it otherwise.
For us, parity is not a construct of the online industry, it's actually the whole travel industry.
Like if you had to go to a site that sold a Delta airline ticket and it was always $10 more, it's hard to be in business.
Apple has the same thing.
If you go buy a Mac at an Apple Store, and you go to a third-party distributor and it's $10 more, there won't be any third party distributors.
Parity is a very important construct that levels the playing field, and allows us to really reach our primary objective.
Our primary objective is to always make sure our customers get the best price.
We can't be in business if our customers feel like they're playing more using any of our assets.
So we worked through this compromise, I think it was well understood by the authorities that there's a free riding problem in our business like ours.
If our suppliers who basically load the prices onto our system then load higher prices on our system and lower prices on their system.
But more importantly, regardless of whether there's parity or not, if a hotel is on our system and the prices are too high it won't convert, and if it doesn't convert, it won't show up because there's a ranking mechanism anyway that always makes sure that the best product moves to the top.
And our best partners have the best product have a very strong incentive to give our customers good value, because our customers won't buy things that aren't good value.
So there's already a really strong reinforcing element.
I don't see this as having any significant impact on our business.
But it's a moving target.
There's always new discussions and things, but the way that our business runs and the reason customers use our product, they want to have confidence that we're getting the best pricing, and this agreement doesn't at all affect our rights or ability to make sure that they get the best price, and that's what's important.
And then on the Booking Suite topic, we don't release right now how many sites we're putting out.
Maybe in a few quarters we'll give everyone an insight into that, but it's off to a very strong start.
So it's promising.
The team in Seattle, which was Buuteeq, is our back end team, and we now have salespeople out in the field.
They're really a second tier sales force.
They're not in every office but they're there in when a warm lead happens, it get handed off to somebody who really knows the depth of what they're talking about.
We're in the bigger countries, but in the smaller countries we're just getting to that.
Our teams are just getting trained up on that, so it's sort of a rolling motion.
But early signs are very, very positive.
And the demand for the product is extremely strong, which is a good feeling, because it shows our partners trust us, and they recognize that this value proposition is really outstanding for people who have a website in the accommodation arena.
Okay, <UNK>.
Thanks.
Yes, what we find, at least in our business, and this is now more a Booking.com, Agoda, rental car statement.
I'll put aside KAYAK and OpenTable because of the aforementioned, they're primarily on app, and they get the really high repeat frequency type customer, which is a different set of behaviors.
But in our business, our most loyal customers, it's a bit of a circular arc because our most loyal customers are the ones that carry the app, and our most loyal customers are the ones that bounce over all the screen.
So the app for them is not just a booking experience.
It's the thing that they carry their reservation in.
We now have travel guides, so the travel guide is in the app.
When they check into a hotel, immediately it says, are you happy or sad.
So all of these things come with the app, and help our most loyal customers that are often the people who booked with us already many times, continue to repeat with us.
So it would be a stretch to say that everyone who uses the app is a more loyal customer, because the input to that generally is the more loyal.
But we do find generally now going away from app and talking about mobile more generally, the move, the biggest thing that's changing in our business is the move from a single screen world, where you only did one thing with us, which was make a booking, to a multi-screen world, where you have an end-to-end experience, from looking to booking to enjoying your trip on the ground, is giving us more and more loyalty.
People realize there's lots of reasons to use our products, but when we can actually make the whole experience better, people see that, wow, this is just a better way to do things.
And it's hard to make that multi-screen experience all tie together, and we are certainly not complete with that work.
But it's a huge differentiator, and for a big player like us we have the assets and the resources to invest to make that seamless, and for you to be able to do that anywhere you travel in the world.
This isn't easy work, by the way, because all of these softwares don't naturally speak with one another, and you've got to get the right cloud-based architecture where your account can sit in the cloud, and no matter from you're on the app or the Booking Now or you're on an Apple watch, or you're on the website, that your account immediately gets tied together.
That's work the team has done and I think does reward the bigger players who can really plumb that new end-to-end multi-screen digital experience for our customers.
So I'm excited.
For e-commerce players, mobile is a real positive.
When you're in the media business, mobile has this extra tradeoff, that it's harder to convert something through media on a smaller screen.
That's obviously, you're seeing that trade-off between those who own the transaction those who don't.
Okay.
Well, <UNK>, yes, we ---+ so first of all, you start out with hotels, and then below hotels, there's a whole collection of things that you could call self-catered products.
First just commenting on B&B's and apartments and things like that, we see that the commission levels and the take rates in that space are equivalent to the hotel space.
We don't feel any extra pressure.
Again, that's all with the lens that we have a very low bar as it is, around the world, compared to most of our competition.
But we don't feel pressure to go lower.
When you get into the single vacation home space, we still have generally signed up, without having to dilute our take rate much.
We have a little bit more pressure there, because the average vacation home owner, it's a marketplace with a lot of friction, and a lot of uncertainty.
We're the first and only transaction engine that works ---+ that's instantly verifiable, so that property has actually a calendar that works.
There's no back and forth with the consumer, like once the consumer buys, then they have to pay.
There's a lot of work still yet to be done, and a lot of these players are used to marketing themselves through a classified ad, or on an Internet website, and they're expecting phone calls, or maybe it's some of them might be on AirBNB and there's different economics in that, that I would say, let's say that the story's still out in the vacation home market, but we've at least to date been able to approach it in a similar way.
The other argument of vacation homes is the length of stay is a lot longer.
The ADR is potentially higher, and therefore, they would argue the take rate percentage should be lower, but that the absolute take rate is actually very healthy relative to the booking.
Long answer to the question.
I don't feel a lot of pressure, but in the vacation home, single owner market we of course will compete as aggressively as we need to, and be smart about the economics.
Dan, why don't you take the first one, and I'll take the second one.
Sure.
So <UNK>, gross profit relative to room nights, the room nights are on an as-booked basis and the gross profit is on a stay basis.
So you've got a little bit of a mismatch there.
We had a strong quarter with accelerating growth, and to a not insignificant degree, those checkouts are going to occur in Q2 around Easter, and then Q3 around summer.
And the other factor is, as I mentioned before, OpenTable has a more dramatic inorganic benefit to Q1, because the travel businesses are seasonally smaller in that quarter, and so that's gross profit that's in our numbers, with no room nights associated with it.
And <UNK>, on loyalty programs generally, so we do have a couple in the Group.
Agoda has a loyalty program, although we're slowly phasing that out.
OpenTable has a points loyalty program.
This is in the more traditional earn points, earn nights, get things free.
Booking.com specifically, we believe that kind of mechanism for the really infrequent traveler can be as much of a turn-off as a turn-on, because they may only do two bookings a year.
They may be wanting to do one booking, and they maybe do it quite infrequently, and for them, what they want is just a great experience.
So we focus ---+ to drive loyalty, we focus very much on the product, and getting them amazing pricing.
When you go to a destination, it's not about what this hotel costs, it's about what does the selection and assortment allow me to buy, and our users love the fact that they can find that place that directly matches what they need, at a great value.
And that's what's driven our loyalty over time, has really been product experience.
That said, <UNK>, I can tell you haven't booked five times on Booking, because if you do within a year we have a program called Genius that we offer in more of a surprise and delight fashion to our most frequent guests, and that allows them access to other closed user group rates that are supplied by our hotel partners.
Our hotel partners are really interested in our most frequent guests.
It improves their conversion and therefore improves their placement on our front end to all customers.
And that's something we've had in the market now going on a couple years, and has been really successful.
That's been our approach to date.
It's not that we won't change that.
We're always questioning these things.
Rocketmiles we bought, is a really interesting small Company in Chicago that uses airline miles.
We're interested in it because it's a real fast-growing very unique business, but we're obviously now bringing in some people with some deep expertise within Rocketmiles, many of who came from the airline frequent flyer miles business.
We'll see if we learn anything from that, that might impact our thinking differently in the future.
<UNK>, one follow-up to your first question which is what you might have been getting at.
No substantial change in our take rates in Q1 or Q2 forecast.
Okay, <UNK>.
I'll take that.
We don't divulge that specifically, but at the higher level, I have shared this before, that if you were a property on Booking.com five years ago, on average, every year, we've given you more bookings.
So if you're a brand-new property you come on, and that's always been our goal, is to have enough demand so that all of our existing properties don't feel like we're taking business away from them, but they continue to get more, and we can always feed our new properties.
When you look at our property growth, that 40% we talked about, the properties are getting smaller and smaller on average.
It's not that we aren't signing up big hotels, big resorts, but on average, that's getting smaller.
Our unit growth in terms of bookable properties is not growing at the pace of our business, which therefore, allows us to continue to keep our property partners happy, is the way to think about it.
Yes, as I said on the last call, we think the consolidation clarifies competition.
It's not the strategy we're following.
And we continue to stay focused on what we're good at, and I ---+ even if the three players are now one player, we have the same strategy in the United States we've always had.
It hasn't changed our product, it hasn't changed our value proposition and we continue to push forward, and I would say quite successfully.
By the way, I say that, not saying the other strategy is bad.
It's just different than what we've been doing, and the space that we occupy is very large.
This has been said many times.
But it's either $1 trillion or $1.3 trillion.
Even if you add our largest competitor with us, we still make up less than 10% of the opportunity.
So it's not like we're running against each other every day.
It's more our segment of the business, which is online travel, largely independent travelers, people who leverage the Internet, has a nice tailwind behind it, and we're making sure that we do our best to capture as much of that as possible.
Thank you for all joining us and wanted to ---+ I know a lot of our employees and others join this call as well.
I want to thank everyone for a lot of super hard work in Q1, and we're looking forward to a really strong Q2.
