New and high-tech is suddenly out of fashion, with the Nasdaq down about 23% this year. That shift in sentiment seems to have hit the online travel sector, where the unexpected is making a comeback.
There’s no denying that day trips in the most remote geographies are still finding a lot of traction, but even the Airbnb ABNB 5.42%
As indicated in its first-quarter earnings report earlier this month, bookings to urban destinations are rebounding from pre-pandemic levels, and short stays are quickly regaining popularity.
As Omicron’s initial wave fades and summer approaches, shifting consumer preferences have led to a new takeover in the somewhat outdated motel sector. During the first quarter, Expedia Group,
The company also owns Airbnb rival Vrbo, which spends nearly 60% of its revenue on sales and marketing. This is only a slight increase from 58.9% in the first quarter of 2019. But at Booking Holdings is more traditional and global. Inc.,
The proportion of revenue spent on marketing, sales and other expenses combined increased from 33.6% to 55% over the same period.
Both platforms still managed to turn a profit on an adjusted basis for earnings before interest, taxes, depreciation, and amortization for the period — but with a lower margin than Airbnb. Airbnb has enjoyed the equivalent of luxury of natural travelers flocking to its platform — many for the first time — amid the pandemic. Airbnb spent just 24% of its revenue in the first quarter on sales and marketing — even if those costs include additional line items like overhead.
The comparison isn’t entirely fair: Airbnb grew its sales 80% in the first quarter of 2019, while Bookings and Expedia’s revenue remained slightly down. And for legacy online travel agents, the investments at least appear to be paying off. For the week starting May 1, Data.ai (formerly App Annie) showed a 122% increase in Booking.com app downloads and a 95% increase in weekly active users compared to the first week. first of January. That data also shows that Expedia’s downloads roughly matched Airbnb’s downloads as of the most recent week it was shared.
Sensor Tower data shows that Booking.com’s worldwide monthly app installs increased 13% in April compared to January 2020, while Airbnb dropped 12% over that period, even even relatively lower. In April, Booking.com had about 48% more monthly app installs than Airbnb.
Ironically, this year, Booking sought to re-engage interest in the eponymous brand by promoting its tired image. A Super Bowl ad for Booking.com featuring “The Wire” star Idris Elba mocks the brand as “never accused of being sexy, flashy or light,” unless, he added. , “we’re talking literally.”
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Of course, it’s not just advertising. When demand returns to traditional accommodations, online travel agents more broadly are the natural beneficiaries. Data from vacation rental data provider AirDNA predicts the largest US cities will continue to see the biggest growth in new bookings, noting that urban areas are reaching 45% higher rate than the same time last year in terms of bookings in the summer. Urban demand means more opportunities for traditional hotel stays, and in fact, data from the hotel data tracker STR shows occupancy by nearby urban hotels. This has recovered significantly from pre-pandemic levels.
It also shows that in the current inflationary environment, more cost-conscious consumers will be attracted to the relative affordability of hotels. Airbnb reported a 37% increase in average daily room rates in the first quarter compared with the same period in 2019, partly due to a shift to larger motel rooms, but also due to rising prices. STR data shows that average daily prices for urban hotels globally as of April are still slightly lower than in the same period in 2019, with prices for all hotel types increasing by less than 15 percent on average. %.
While Airbnb’s stock has lost nearly a third of its value in the past six months, Booking’s stock has posted single-digit gains. They say sexy sale. Recently, not so much.
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