Valerie Tamayo Online travel agencies have come to overpower the century-old hotel and airline giants that were once the biggest players of the travel industry. The biggest online travel agencies such as Booking.com, TripAdvisor, Airbnb, etc are gaining dominance in their segments. So much so, that every new entrant in the travel industry wants to follow the footsteps of these companies. So, we will be comparing AirBnb vs Booking vs TripAdvisor- Revenue & Business Model. The comparison will help gain insights into their techniques to attract more customers and maximize their revenue.
Airbnb
Airbnb is a community-based online marketplace for hosts and guests to list and rent local homes, respectively. Airbnb established its presence being the sole platform that links hosts and travelers and promotes a sharing economy. Founded in 2008, Airbnb has a worldwide value of $38 billion, offering over 7 million accommodations in 220+ countries. More than 150 million users have access to the platform, with the total visits in January 2020 being 91 million.
Business Model
Airbnb is one of the largest accommodation providers in the world that doesn’t own any property. On one end, the platform provides travelers with private living spaces and on the other, it enables local owners to earn extra income. Furthermore, it enables hosts to choose their guests based on profiles and enables guests to access ratings, reviews, and other information about the host and the listing.
Revenue Model
Airbnb earns its revenue by charging service fees on every booking from hosts as well as guests. The hosts pay 3% – 5% for listing a property or event, which is deducted when the listing is completed. The platform also charges a 20% service fee to hosts that provide experiential stays.
On the other end, the platform charges guests with a service fee of 6% – 15% which depends on the size of the booking. Therefore, if the booking is costlier, the guests pay a lower service fee. The service fee is non-refundable and includes a fee for cleaning, currency exchange, reservation, VAT, occupancy, extra guests, and service fee.
Booking.com
Headquartered in Amsterdam, Booking.com is a subsidiary of Booking Holdings. It is a travel software with 28 million accommodation listings which includes more than 6.2 million listings of apartments, homes, and unique places. The revenue of Booking Holdings in 2019 amounted to $15.07 billion.
Business Model
The business model of Booking.com is a multi-dimensional market that needs two interdependent user segments to operate; property providers and property renters. The value proposition that Booking.com offers its customers are accessibility, convenience, brand, risk reduction, and cost reduction.
Furthermore, it promotes its products and services through social media platforms and advertising on TV and online. The business model of Booking.com also involves updating and maintaining the web and mobile app platforms for customers.
Revenue Model
Booking.com earns its revenue through three major sources:
- Agency Model – The major source of income for Booking.com comes from the Agency model. Under this model, the travel software builds contracts with hotels that have listings on the website, and charges 10% – 30% commission on every booking. Hotels that want to rank higher on the travel portal pay higher commissions. The revenues under this model entail customer processing fees, travel commissions, travel insurance fees, and GDS reservation booking fees for specific travel services.
- Merchant Model – A small portion of the revenue is also earned under the merchant model such as transaction revenues, ancillary fees, customer processing fees, and retail hotel booking services with Agoda and Priceline.
- Advertising Model – Booking.com also charges advertising fee from third parties to advertise on its platform.
Thus, researching on Business and Revenue models will surely help businesses, as it would help them in developing their own Hotel booking app.
TripAdvisor
TripAdvisor is an online travel portal that provides a platform for consumers to make travel reservations, price comparisons, and provides services for experiences, travel activities, destinations, accommodation, and restaurants. It also provides access to users to leave reviews on different destinations, accommodations and restaurants for other users to view.
Business Model
The business model of TripAdvisor entails matching the demand of travelers with the travel partners that supply accommodations and other travel experiences. Therefore, the business model has the consumers and travel partners as the two key partners. On matching this demand, the travel portal collects commissions from travel partners on a cost-per-click and cost-per-thousand-impressions basis.
Revenue Model
The main revenue model used by TripAdvisor is the advertising model. It makes its revenues from the hotel revenues segment and the non-hotel revenues segment. The hotels pay a commission based on the number of clicks by travellers on the link of the hotel. Furthermore, suppliers of hotels, cruises, and air travel also pay fees based on CPM for displaying their advertisements on the platform.
Airbnb vs Booking vs TripAdvisor comparison
The comparison between them are given below-
| Aspects | Airbnb | Booking | TripAdvisor |
|---|---|---|---|
| Revenue | USD38 Billion in 2019 | USD 15.07 Billion in 2019 | USD939 Million in 2019 |
| Commission Payable by Hosts | 3% – 5% | 10% – 30% | 3% |
| Guest Booking Fee | 6% – 15% | None | 11% |
| Main Revenue Model | Agency | Agency | Advertising |
| Instant Booking | Optional | All Listings | Optional |
| Reviews By Owners | Yes | No | Yes |
| Reviews By Guests | Yes | Yes | Yes |
| Payments Handled By | Optimal | Owner | OTA |
I hope you get an idea from AirBnb vs Booking.com vs TripAdvisor revenue and business model.
