Booking a niche in travel world
After surviving early struggles, booking.com has become the industry leader
A small Dutch start-up firm that was struggling two decades ago has become a global giant in the online hotel-booking business, thanks to the rapid growth in demand among travellers and the shrinking world due to the Internet.
When Booking.com was founded in 1996 by Geert-Jan Bruinsma, a tech guy, the Internet was only in its early stage and online booking was unheard of by most prospective customers. But now the site has become the world leader in booking hotel and other accommodations online and is part of the Nasdaq-listed Priceline Group, the world’s third-largest e-commerce company by market capitalisation.
“At the beginning, we were a very small company in Amsterdam. As a start-up we struggled in the first few years to get funding. People [were] reluctant to invest in an Internet company,” Gillian Tans, Booking.com’s chief executive officer, recalled about the time she joined the firm in 2002.
At that time, she knew how difficult it would be to persuade customers all over the world to book hotels through a website, but she thought the Internet could be a solution for finding and booking properties easier, Tans told journalists during a recent media visit to the site’s headquarters in Amsterdam.
Tans said Booking.com began taking the friction out of travel. It started with a basic product aimed at making things more transparent, informative and intuitive.
“Luckily we [were able to] survive after we sold the firm to Priceline Group in 2005. It’s a perfect match. That deal made us able to continue building our dream,” said the CEO, who is the highest-paid online travel executive, earning total compensation of US$17.1 million (Bt580 million) last year.
Booking.com is the largest and most important brand in the Priceline Group. During Tans’s tenure over the past 15 years, the company has expanded to more than 15,000 employees in 199 offices all over the world.
Tans said her site’s mission was to help leisure and business travellers, whatever their budgets, easily discover, book and enjoy the world’s best places to stay.
‘Fail fast’ approach
One secret behind Booking.com’s success as the world’s leading online accommodation aggregator is its approach to developing new products. Its people think about how they can build customers’ experiences when they develop products or create innovations.
They are always trying new things and are not afraid of failure, as trial and error help the company quickly achieve its goals of finding out which ideas please customers which do not.
“Our approach to innovations is to fail fast,” said David Vismans, global director and chief product officer.
Vismans’ job is trying to figure out what makes customers come back to the website, to build experiences for customers, and really to understand what customers want from the site.
His department does both qualitative and quantitative research to try to improve the experience when customers use the website or application.
Like many tech companies, the site has used “A/B testing”, a method of comparing two versions of a webpage to see which one performs better, to help predict customers’ preferences.
“If we need to create a ‘book’ button, we want to understand what the colour of the button should be,” Vismans said. “So we created two versions of the website, one with a blue button and the other red. The colour that [attracts] the most [bookings] will determine the colour [we decide to use],” he said.
Vismans praised the Internet as a useful tool to help him run tests and know which idea works for customers very quickly, he said.
“We have done [it] this way for nine years and it’s very effective in building something that customers find most valuable or usable for them. We followed what the majority of customers want,” he said.
“If you want to do a lot of pre-testing, you need to fail fast, then you can try a lot of things,” he said.
But how hard is it to predict customer behaviour? Only one idea in 10 is successful, he said.
The “fail fast” approach is also seen in the customer service department, which is in charge of post-booking customer experience.
Last year, there were 14 million calls to the company’s service centres, according to James Waters, senior director of customer service products and experience.
He said that every year customers’ expectations of products and demand for quality would go up. But he said his team had always been built on the concept of customer support and letting the customer decide what is important.
He said that despite the high demand, “We respond it as quickly as possible, because the more things we can try the more things we can test and the more things [on which] customer can tell us yes or no.”
However, Waters forecast that people would become more comfortable with technology over time. More people will choose to come to the website or use the app to solve things themselves rather than calling the service centres, he said.
“There are lot of things you are able to do by yourself, for example changing the name, date, or making cancellation,” he said.
In the view of the company’s director of software development, Georgeana Trofim, the success behind Booking.com is wanting to be globally scaled but locally relevant.
“There is no ‘one size fits all’. We focus on local markets. Different countries have different versions of the site. We have offices in more than 70 countries,” she said.
Also, she said, customer services focus on diversity of populations and connections for local people.
Booking.com operates its own in-house customer-service team, which is available around the clock to assist guests in their native languages.
For Tans, the challenge in the coming years will be to make sure Booking.com keeps its focus on consumers and maintaining the right investment to grow the company.
“I hope we can make a lot more progress in connecting travellers with great stays as well as connecting more companies to the world through our platform,” she said.
She said there was still more opportunity for her firm to grow as the travel industry market is a trillion-dollar market.
There will always be high competition for online travel agencies, and that is why Booking.com keeps being innovative to make sure it does the best for its customers, Tans said.