Creating a culture of experimentationBooking.com is one of the pioneers in the e-commerce travel industry. Currently focused on finding accommodation for travellers, Booking.com connects millions of tourists with over 29 million property listings of all descriptions including hotels (rated from one to five stars), private houses, apartments, bed and breakfasts, and even Glamping sites for those who don’t require a solid roof over their head at night.
The company’s birth story is integral to its growth and continued success. Conceived in Amsterdam in the early, Edenic years of the internet, bookings.nl (as it was then called) initially catered to a local market. From the beginning, revenue was generated from a commission charged to the hotel. Meanwhile, travellers browsed and booked for free.
Amsterdam (and Holland itself) is a relatively small territory, especially for an internet company. But because of the city’s popularity with tourists, Amsterdam also boasts a high concentration of hotels, which gave the fledgling company a perfect testing ground for its new product.
It also benefitted from the fact that Dutch people are fond of travelling. When it came time to expand internationally, it was only logical to target those destinations most favored by Dutch tourists, namely Italy and Spain
Rob Ransom, Booking.com’s Vice President of Strategy and Corporate Development explained the strategy: “We built supply by following the demand and that was a key lesson on how to deal with the chicken and egg problem. Supply without demand isn’t going to get you very far and it was a natural thing to follow the Dutch consumer. It offered us an appropriate balance, which is critical to any successful platform.”
Two sides of growth
The other side of the growth story related to the suppliers group, the hundreds of thousands of property owners with rooms to let. Booking.com recognized that maintaining strong relationships with these suppliers was essential. “We understood that only if we kept both groups happy and provided actual value to them—only then would we be successful,” said Emmett O’Keefe, the North American Head of Public Affairs for Booking.com.
From the beginning, Booking.com featured an open platform. That is to say, any provider that agrees to the guidelines and conditions can list on the site. What’s more, Booking.com has never demanded exclusivity. This openness paved the way for rapid growth as both property owners and consumers alike recognized the benefits. Now the company is among the largest travel e-commerce companies in the world with over 1.55 million room nights in 230 countries and territories booked daily.
The challenges of scale
As with any business, achieving such scale came with challenges. In the hospitality industry especially, many things go wrong on the individual consumer level. While it is rare that a single incident would do serious damage, an accumulation of negative interactions could prove devastating. Death by a thousand cuts was a real danger.
Therefore, small things counted. To help maintain current information about the properties, the booking platform made extensive use of individual customer ratings and comments. To prevent fake reviews, Booking.com opened the comments section of a particular property only to customers who had actually used the accommodation. This genuine, credible feedback became vital to the customer experience.
“If we were to switch off our reviews on the website, reservations would probably drop dramatically because people count on having this essential factor,” said Peter Lochbihler, the Director of Global Public Affairs. “I can say that the 180 million customer reviews we have live online are 100 percent verified.” When more immediate complaints emerge, customers can turn to one of 9,000 customer service reps.
On the other side, analysts at Booking.com constantly reviewed data from the platform to help develop insights into providing the optimal online customer experiences. “We invested in machine learning and artificial intelligence to constantly improve service for the customer,” said O’Keefe. However, when issues arise, Booking.com has thousands of employees devoted to answering calls from property listers.
The digital tool
In many ways, Booking.com’s approach to customer service followed a traditional strategy. However, it was also complemented by more digitally centered solutions that helped to reduce issues for customers or property listers before they resulted in a phone call.
The company used hundreds of metrics to measure performance, including one that helped determine what kinds of display features resulted in a completed booking. For example, Booking.com learned that if a hotel said it had a pool but did not display pictures of said pool, it did not receive as many reservations as a similar hotel that posted pictures of the pool area. Small insights like these proved enormously helpful to both sides of the customer experience.
Another important area of measurement was participation. To remain on top, Booking.com knew it needed to remain attractive and relevant both to customers and accommodation providers alike. “The best way to drive the business is to continue to provide more selection to our customers. That is more correlated with success and transaction volume than anything else,” said Ransom.
The startup mentality
With selection as the key to generating return visits to Booking.com, the challenge became how to increase customer choice. Booking.com prided itself on “maintaining a startup mentality,” meaning that nothing was set in stone and everything was up for discussion.
To that end, the company encouraged constant experimentation. For example, different versions of interfaces were tested against each other before being adopted for the platform. “We run 1,000 concurrent tests each day,” said Ransom. “Over time we’ve built up the capability and the belief that experimentation at that level results in a better outcome for the customers and the marketplace.
“Every digital platform should be figuring out how to experiment, how they present things on both sides of the marketplace,” Ransom advised.
New realities of privacy and regulation
A number of high-profile cases where personal information was either stolen or misused put the spotlight on privacy concerns for e-commerce companies with complex digital ecosystems. While Bookings.com was less susceptible to cases of election interference, it was—and continues to be—wary of privacy issues and data breaches. To that end, the company complied rigidly with the European Union’s General Data Protection Regulation, which was implemented in May 2018. Lochbihler said the regimen was a “favor to the industry because it sets a very clear framework.”
Regulators also showed concern about home sharing (or short-term rentals) and its impact on housing for permanent residents of any given city or town. Booking.com has collaborated with local governments to address the issue, recognizing that solutions (such as minimum night stays for certain properties) would have to be part of its digital platform to be effective for all parties.
New paths to growth
To increase revenue sources, some companies in the e-commerce travel space integrated other travel-related services into their offering. These included car rentals, flights, tours, and even restaurant reservations. For much of its history, Booking.com chose to stay focused on accommodation. Ransom believes this decision was part of the reason the company survived while dozens of other e-commerce travel outfits closed their doors. “I think it’s harder to stay focused than it is to diversify. As we do more in accommodations, we find it’s like peeling an onion: Layer after layer, there’s more to do in this sphere. We had the discipline to not enter into other categories and dilute our focus and resources.”