Online travel giants Q1 marketing spending shows wide variance

Expedia Group, Booking Holdings and Airbnb collectively spent more than $3.5 billion on marketing in the first quarter of this year – up nearly $1 billion compared with the same period in 2022 - but the breakdown of that spending and related strategies varies widely among the three global travel giants. 

Expedia Group doled out the largest percentage of its revenue on marketing (which both it and Airbnb report as combined sales and marketing). With revenue of $2.7 billion in the quarter, marketing spending of $1.7 billion came in at 63% of revenue. That’s up from 59% in the first quarter of 2022.

Rival Booking Holdings, meanwhile, increased its marketing spending in Q1 to $1.5 billion from $1.1 billion in the first quarter of 2022. But with revenue also increasing year over year nearly 40%, from $2.7 billion in Q1 2022 to $3.8 billion in Q1 2023, as a percentage of revenue marketing accounted for just 39% this year, down from 41% in 2022.

And Airbnb continues to be the outlier with its focus on bringing in traffic direct or through unpaid strategies such as earned media. In Q1 of this year Airbnb’s revenue was up 20% year over year to $1.8 billion with marketing spending of $450 million in the quarter – just 25% of revenue and up slightly from 23% in the same period of 2022.

In a call with analysts to discuss the results, Airbnb co-founder and CEO Brian Chesky said the company’s latest product update – which had been announced a week prior to the quarterly financial report – had garnered the most press coverage the company has ever had from a product launch with 3,000 articles. Chesky said it reaffirms that Airbnb has “the largest share of voice in travel.”

“So we think that there's a lot of opportunity for Airbnb to continue to be front and center in people's minds in PR, in social media, and even in pop culture, on TV shows, movies, songs, etc.,” Chesky said.

“So I think the name of the game is both paid media and then earned media. And earned media is a really important part of international story and international expansion because earned media really creates trust more than paid media, you know.”

Along with spending a far smaller percentage of its revenue on marketing, Airbnb called out different strategic goals than both Booking Holdings and Expedia Group.

The accommodation platform is focused on global expansion and capturing new markets through investments in brand marketing in more countries around the world.

So we think that there's a lot of opportunity for Airbnb to continue to be front and center in people's minds in PR, in social media, and even in pop culture, on TV shows, movies, songs, etc.

Brian Chesky - Airbnb

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Chesky told analysts the company has started with Germany and Brazil with both brand marketing as well as public relations and working with local influencers, and now those are two of Airbnb’s fastest-growing markets.

“So we're now looking at bringing this playbook to other markets around the world, and I'll give you a couple of examples. Number one is Asia-Pacific. We think there's a huge opportunity in Asia,” Chesky said.

“… we're getting more aggressive in Italy. We're getting more aggressive in Spain, and we're now looking at other markets in Northern Europe. … And then, finally, it's Latin America. We're seeing a lot of growth in Brazil, and we're now going to bring it to some other really large markets like Colombia and some other markets within Latin America. So I think international is going to be a pretty big boon to growth over the next two or three years.”

Airbnb also said it is using performance marketing as a tool to fine-tune the balance of supply and demand in specific markets.

“Other companies tend to use it as an arbitrage business to buy lots of customers. We've never thought of it that way. We think of … performance marketing really as a laser, to laser in on balancing supply and demand in markets all over the world.”

Meanwhile, online travel agencies Expedia Group and Booking Holdings are more aligned in their marketing strategies, with both focused on driving direct business, loyalty and usage of their respective mobile apps.

Speaking to analysts about the company’s first quarter financial results, Expedia Group CFO Julie Whalen said there are two factors that drove a 26% increase in sales and marketing expenses in the quarter.

“First, in our B2C business, we leaned into marketing to take advantage of the strong demand environment and to accelerate gross bookings growth. And we also maintained our marketing spend mix towards longer-term payback channels to drive loyalty members and app users, which given the longer-term return profile of the spend is less closely correlated to demand within any given quarter,” she said.

“The second reason for the increase in marketing spend is an increase in commissions to support the accelerating growth in our B2B business, which fall into our direct sales and marketing line.”

And for Booking Holdings, CFO David Goulden said the company saw better-than-expected ROIs in its paid marketing in Q1 due to higher average daily rates, lower cancellation rates and long lengths of stay. Looking ahead, Goulden said, “… we still expect to be leaning into marketing and merchandising because we believe there's recovery in the travel market available to us. And I think that our growth rates relative to the market demonstrates that we're making progress there.”