Travelzoo, a hotel and package deal publisher, said in a financial filing on Tuesday that it would ask its stockholders to approve making a metaverse experiences scouting business a wholly owned subsidiary of Travelzoo. The business, Metaverse Travel Experiences (MTE), is currently wholly owned by Azzurro Capital.
The proposed consideration for the issuance of Travelzoo stock is mix of $10 million (details are explained in the document posted below) and 100 percent of the equity in MTE.
At a Dec. 28 special meeting, the company will ask shareholders to vote on allowing the hedge fund Azzuro Capital, an investment vehicle owned by Travelzoo founder Ralph Bartel, to pursue a transaction that would effectively leave Azzuro and Bartel with an approximate 50.01 percent stake in Travelzoo (up from 35.99 percent) and his brother, CEO Holger Bartel, with 4.1 percent. The company will issue shares of common stock representing approximately 27.5 percent of outstanding stock.
The planned subsidiary aims to build “relationships with creators and providers of high-quality metaverse travel experiences to broker contracts between such creators/experience providers and businesses planning to market metaverse experiences to consumers.” Skift covered the debut of the unit earlier this year.
Building on initiatives that had mixed results in the past, Airbnb is debuting an Airbnb-Friendly Apartments program to enable long-term renters in multifamily buildings where landlords permit it to list their rooms or apartments on Airbnb.
Sentral Wynwood in Miami participated in Airbnb’s new Airbnb-Friendly Apartments Program. Source: Airbnb
For both guests and hosts, one of the things the program aims to do is avoid the all-too-frequent situation where guests have to pretend they are part of the host’s visiting family or a close friend because the building doesn’t allow Airbnb rentals.
The newest incarnation of the program enables long-term renters to browse for multifamily buildings that allow Airbnb short-term rentals, get in touch with the management of the building, and, like other first-time hosts, get access to experienced hosts to help with starting out on Airbnb and listing their apartments.
“Renters interested in hosting a spare room, or their entire apartment when they’re out of town, can browse more than 175 Airbnb-friendly apartment buildings, subject to availability, in 25+ markets across the U.S., including Houston, Phoenix, and Jacksonville,” Airbnb stated as part of the announcement.
The company added that renters participating in this multifamily building program over three months hosted an average of nine nights per month and earned an average of $900 net of Airbnb and landlord fees.
Airbnb has had issues with some of these sorts of arrangements in the past. Several years ago, for example, Airbnb enabled a Miami-area developer, Niido, to use the Airbnb brand and enable tenants to host short-term rental guests, but other tenants felt blindsided by the arrangement, and Airbnb eventually sued the developer.
A vacation rental in the RedAwning portfolio. Source: RedAwning
Channel managers have tech systems to assist accommodations in distributing their properties to websites such as Airbnb, Vrbo and Booking, and sometimes to global distribution systems, among other outlets.
“After we made the decision to sell our business, we looked for a company that would create true synergies with our existing value proposition,” said Joel Inman, CEO and founder of Lexicon. “As I got to know the RedAwning platform, I realized they have already solved many of the technical challenges Lexicon has been facing. RedAwning brings true technology and automation to channel management that delivers value through higher conversion with essentially zero manual work.”
RedAwning has a portfolio of some 15,000 managed and independent short-term rentals in North America, and already provides channel management services as it places them on websites such as Vrbo, Booking.com, Expedia, Homes & Villas by Marriott International, and Google Travel.
RedAwning hopes to pick up the channel management client roster of Lexicon Travel Technologies, which is headquartered in Park City, Utah. RedAwning is buying Lexicon’s channel management tech.
RedAwning said most of Lexicon’s clients have already related their intentions to use Red Awning for channel management.
“The transitions will be seamless for all of our new clients, as RedAwning already supports all of the same PMS (Property Management System) platforms as Lexicon and all of the channels too, as well as many more for Lexicon clients to join,” said RedAwning CEO Tim Choate in the announcement.
Although some advertisers reined in their budgets for some Google products, the company’s travel and retail verticals led Google’s search and other revenues in the third quarter.
Couple relax on the beach in the tropical island. Source: Getty Images
Parent company Alphabet recently reported that its search and other revenue categories grew 4 percent during the third quarter to $40 billion, spearheaded by travel and retail.
The company declined, during an earnings call with analysts last month about the quarter that ended September 30, to provide additional detail on the performance of its various verticals.
“In challenging times like these, advertisers are carefully evaluating the effectiveness of their budgets,” said Chief Business Officer Philipp Schindler. “Search tends to do relatively well in such an environment, given its strong measurability and focus on delivering ROI (Return on Investment). It’s also well-suited to quickly adjust to changes in consumer behavior.”
Travel’s strength in Google search — notice the company mentioned travel first, before retail — came as a variety of travel businesses posted strong third quarters based on consumers still wanting to board flights despite the cancellation crapshoot over the summer.
Alphabet’s net income for the third quarter fell 26 percent to $13.9 billion on $69 billion in revenue, a 6 percent increase.
Airbnb said that the flexible search features it has rolled out since early 2021 have so far diverted bookings from destinations coping with overtourism and peak travel times, according to data it shared on Friday.
The short-term rental booking giant has increasingly offered search tools — see Skift’s earlier coverage: “Airbnb’s Next Big Change: Search” — in response to evidence that many people don’t have a destination or fixed dates in mind when they start researching trips.
“In 2019, the top 10 most visited cities on Airbnb in the European Union — including Paris, Barcelona, and Rome — accounted for 20 percent of all trips in Europe, whereas they account for just 14 percent of trips in 2022.”
“Guests using flexible search tools book less often in the 20 most popular destinations on Airbnb in Europe (-17.5 percent) and more often in less-visited communities ranked outside Airbnb’s top 400 destinations (+35.5 percent), when compared to guests booking via traditional search on Airbnb.”
“Guests booking via Airbnb’s flexible search tool—that provides an option to include a location without dates—are also more likely to book outside the top 10% most popular dates (-7.3 percent) and are more likely to book nights on weekdays (+5.7 percent).”
“Flexible search is also helping to redirect guests approximately 5 miles farther away from their initial intended location within cities, compared to traditional searchers on Airbnb … In Amsterdam, flexible bookers more often stay outside the city’s inner limits (+32.5 percent) compared to traditional bookers.”
As context: Airbnb’s search changes had two components.
People who don’t have a destination in mind can now be inspired by Airbnb’s new “Categories” category, which has been viewed more than 120 million times since August, according to company statements. This tool helps divert reservations away from Europe’s most saturated hotspots, according to Nathan Blecharczyk, Airbnb co-founder and chief strategy officer, when discussing the report at Web Summit in Lisbon on Thursday.
Travelers with flexible dates have been able to take advantage of Airbnb’s recently added feature that lets them say they’re really interested in traveling anywhere for a week and a week or a month anytime in the next year. The tool lets some travelers avoid peak time crushes in travel because of seasonality.
“What we want to do now is we want to be more in the inspiration business,” Chesky said. “You come to Airbnb and we can point demand to where we have supply. … We can highlight what makes us unique and get into the top of the purchasing funnel, which is basically giving people ideas of where to travel based on what’s available.”
Airbnb has been attempting to cope with the overtourism ever since 2018, when it created an “office of healthy tourism,” which at the time was the company’s term for proper tourism growth management. It began adding flexible search tools in early 2021, as Skift reported.
Skift coined the term overtourism to describe “a potential hazard to popular destinations worldwide, as the dynamic forces that power tourism often inflict unavoidable negative consequences if not managed well.”
Google announced it will shut Book on Google for flights for users outside the U.S. at the end of September, and told Skift it will likewise end the feature in the U.S. sometime after March 31.
It turns out, a declining number of users were booking their flights on Google, which acknowledged that travelers would rather book their flights with online travel agencies or directly with airlines.
Google Flights will end doing its own airline bookings. Source: Sean O’Neill
To be clear, Google Flights is not shutting down, but will continue to enable travelers to click on airline and online travel agency links to book their flights, as they have done for years for the vast majority of flights. What changes is that Google will no longer take a small share of bookings on Google channels, but will refer all users to partners for bookings.
Eliminating the feature likewise doesn’t hurt Google’s case to beat back regulatory efforts to diminish its power on antitrust grounds.
With the Book on Google feature for flights, travelers can book on Google, but Google was just facilitating the booking for that airline or online travel agency, and the latter provided the customer service function. Google wasn’t charging airlines for the feature.
“Over the next 12 months, we plan to phase out the Book on Google feature for Flights,” Google stated. “We originally offered this functionality to give people a simpler way to buy their tickets and to help our partner airlines and OTAs receive more bookings. However, we’ve found over time that people actually want to book directly on partner websites, and we always strive to meet user preferences whenever possible.”
Some pundits saw Book on Google as the company creeping toward becoming an online travel agency, but that never appeared to be the intent. Google makes too much money on travel advertising to want to directly compete with its biggest partners. Google also has no interest in dealing with flight changes and cancellations, or in providing customer service to stranded travelers.
Google launched Book on Google in 2015 as a way to facilitate bookings for airlines and online travel agencies in an era when many of their mobile websites weren’t particularly sophisticated.
But partners’ mobile capabilities have improved in the interim, and Google said it saw a declining share of flight bookings coming from the Book on Google feature.
Many metasearch sites over the years have tried these types of facilitated bookings for partner airlines and hotels, but with a few exceptions, such as HomeToGo in Germany, this type of feature has been waning for years.
Ted Clements, FareHarbor’s acting CEO who served as chief operating officer for the last three years, will step down from these positions in September, Skift has learned.
A small group tour of the Vatican. Source: Viator
Staff was informed of the move Tuesday, and no replacement has been named. Clements plans to stay in Amsterdam, headquarters for sister company Booking.com, and may pursue new opportunities, according to the announcement.
Rob Ransom, senior vice president, global strategy and business development for Booking Holdings, made the internal announcement, and said he would play a more active role in FareHarbor.
FareHarbor more than doubled its revenue during the years Clements served as chief operating officer, according to the announcement.
Tours and activities are key to Booking Holdings’ connected trip strategy, which aims to provide a hassle-free travel experience throughout the journey.
Booking Holdings acquired FareHarbor, a tours and activities technology and distribution platform, in 2018 for $139 milliion net of cash acquired and $110 million in stock.
FareHarbor co-founders Lawrence Hester and brother Zachary Hester left Booking Holdings in July 2021. Max Valverde, who served as FareHarbor CEO from 2019 to 2021, likewise left Booking at that time.
FareHarbor’s strategy has evolved over the last few years, evolving from an exclusively build-your-own strategy model in the early days under Booking Holdings to include FareHarbor outsourcing some of that work to partners such as TUI’s Musement and Viator in recent years.
The changing of the guard at FareHarbor comes as Google is getting more aggressive in building its own “things to do” business with an emphasis on big attractions. Booking engines such as FareHarbor and Peek participate in Google’s offering.
“Google will kill Airbnb,” tweeted Nick Huber, who writes about business and real estate, owns a self-storage company, and has 247,000 followers on Twitter.
Two people independently messaged me about the tweet, which has generated a few thousand “likes,” and hundreds of retweets since Sunday.
One Skift colleague said of the tweet: “Everything this guy says in his tweet thread is wrong.”
Conversely, a superhost in Europe messaged me about Huber’s tweet: “I would have to agree. Everybody loves a direct booking (both hosts and guests), with no whopping service charges.”
A Tripadvisor vacation rental in Miami listed in Google Vacation Rentals. Source: Google
Hosts Just Need to Put Links to Properties in Google … Hmmm
If only it were that simple.
Huber argues that hosts and guests can avoid Airbnb’s substantial fees, and both can save money with direct bookings. Actually, he claimed that Airbnb takes 25 percent of the transaction, mostly from guests, in the form of fees, which seems excessively off the mark.
After this story posted, travel industry veteran Drew Patterson tweeted that Airbnb revenue was only 13 percent of gross bookings in 2021.
Might also mention his math is wrong on margins / take rate. In 2021, ABNB did $6B revenue on $46B gross booking (13%) vs. his claim of 25%.
One of the silliest things Huber tweets is, “All it takes is folks putting a little link to their software in the Google listing. Management co manages that directly. Way more revenue to owner and less cost to guests.”
Alas, graveyards full of startup companies from Palo Alto to Madrid and Mexico City are testimony to the fact that you can’t merely put a link on a Google business listing, and expect millions upon millions of customers to discover it, and then use it. It takes a mammoth amount of resources to attract direct bookings and for a vacation rental business to build their own brands.
Hey, direct bookings would be mostly great for hosts and, to a lesser extent, guests, but how can property owners and managers attract them?
If you look at the global hotel industry, it has done an admirable job over the last few years, spending huge sums in advertising to urge customers to book directly on their own websites, where they have the lowest rates, instead of using online travel agencies.
Hotels have made significant strides in this regard in attracting direct bookings, but the vast majority of them still rely on online travel agencies to attract price-conscious consumers who care little about whether they are staying in a Marriott or a Sofitel.
Hotel direct bookings haven’t killed Expedia or Booking.com. Travel, it is often said, isn’t a zero-sum game. There is ample room for multiple winners.
Property owners use Airbnb for a reason: Airbnb has a great brand, and attracts legions of guests who start searching for places to stay on Airbnb instead of beginning their trip-planning on Google.
How does the host with one or a handful of properties compete with that kind of market power?
Direct Bookings Have Risks, Too
And although guests can avoid Airbnb’s fees by booking direct with the host, they run the risk of having no one to turn to if the host or property turn out to be a nightmare. Whether or not they work as well as advertised, Airbnb has some insurance protections in place for both hosts and guests.
Airbnb critics will be quick to say that Airbnb’s customer service for guests can be challenging, but it’s often better than dealing with hosts who have no brand or track record to stand behind them.
In fact, Google’s travel vertical has a vacation rentals feature, and it hasn’t really distinguished itself or put much of a dent in Airbnb’s growth precisely because Airbnb, and other big vacation rental brands, have shunned offering their homes and apartments through Google vacation rentals. So Google is hardly usurping Airbnb on that front.
Google has certainly damaged the businesses of innumerable travel companies because of its near-monopoly in search and the way it preferences its own travel advertising features. Curiously, although most of the far-out theories about Google taking over the travel industry tend to say that Google will transition from an advertising to a booking platform and would become an online travel agency — a switch that Google has shown little appetite for — Huber isn’t even making that argument.
Instead, he’s arguing that Google will serve as a listing platform, and build advertising around it, and that hosts, with an assist perhaps from property managers, would see direct bookings flow like lava down a hillside because these offers are inherently the best and cheapest deals for both hosts and guests.
Both Google and Airbnb Face Headwinds
Google killing Airbnb begs the question of which of the two has momentum versus the other. Both face big antitrust or regulatory challenges, and it’s hard to choose which one has the more daunting obstacles.
A little deeper into his twitter thread, Huber retreats a bit from his Google killing Airbnb opener, and pleads for “nuance.”
“Of course Airbnb will always have users,” he tweeted. “But over time many guests will go on google, find a vacation rental in an ideal location, click through to that website & book w/o paying hundreds in fees. 20 yrs from now ABNB will be a glorified lead generator.”
When it comes to predicting the future of companies two decades from now, I’ll pass on that one, considering it is difficult to look even two or three years ahead to see what the business world would look like.
So, alas, in Huber’s view, his talk of Airbnb’s death was apparently bombast.
When a twitter user tells Huber he downplayed the importance of factors like trust and reliability when considering direct bookings versus reservations through Airbnb, Huber retreats a bit further, tweeting:
“I think there will be an increased number of guests going directly. You can do all of those things without giving a huge chunk to Airbnb.”
Finally, that’s something we can agree with: There are many hosts doing everything they can to generate direct bookings, and they’ll likely have a degree of success. But I don’t believe “Google will kill Airbnb,” or that Airbnb will close shop anytime soon.
Note:This story has been updated to include additional information on Airbnb’s take rate. It also clarified Google’s role in the travel industry.
Much of the attention regarding the euro’s historic fall has focused on Americans getting cheaper vacations in Europe — and the converse for EU residents — but the euro’s reaching parity with the U.S. dollar obviously has business consequences too — and Booking Holdings will likely have to deal with a material adverse impact.
In a research note Wednesday, Jake Fuller of BTIG wrote that he expects an “11 point headwind” to Booking’s growth in bookings in second quarter results and through the rest of 2022 because of volatility in the euro and British pound.
Passengers of a flight from Amsterdam wearing protective face masks arrive at the Eleftherios Venizelos International Airport, following the easing of measures against the spread of coronavirus disease (COVID-19), in Athens, Greece, June 15, 2020. Reuters/Alkis Konstantinidis
BTIG estimated that Booking Holdings generates about 55 percent of its bookings in Europe. The company doesn’t break out the percentage. “Within Europe, we assume an 85-15 split between the euro and British pound,” the note said.
Booking Holdings’ exposure to the euro “is likely material, should impact the 3Q guide, and does not appear to be reflected in consensus numbers for the year,” the research note added.
Geography has played a major role in how various online travel agencies fared during the pandemic.
Expedia Group benefited throughout much of the pandemic when the U.S. domestic travel market boomed, particularly for stays in vacation rentals.
On the other hand, Booking Holdings suffered because Europe was slower to rid itself of lockdowns than the U.S., and now Booking has to cope with the euro falling to a low it hasn’t seen in two decades.
From a variety of reports, Booking Holdings appeared to be gaining market share in June, but the euro crisis could blunt some of the progress.
