The team has moved to Amsterdam to report into the booking.com leadership team and effectively now drives tours and activities for the brand, according to Todd Henrich, senior vice president corporate development for Booking Holdings.
He was speaking at the EyeforTravel Europe conference in London last week and shared some thoughts on the company’s approach.
Henrich, who joined six years ago, says that while the company used to look for large standalone organisations who could operate on their own, it’s increasingly looking less for those and more for “tuck-in opportunities for any of our particular brands.”
“That could be anything for a small entrepreneurial acqui-hire team to several million dollars worth. We’re looking largely for capabilities. We don’t generally look to acquire scale as we have plenty of scale on our own.”
A good example is Booking Holdings recent acquisition of FareHarbor which Henrich says was not something where it had that expertise in-house.
“We could build it in-house with enough time, money and people but if you have a team that you feel that is strong in technology and with good business momentum behind them…We elected to buy that in FareHarbor.”
Henrich went on to provide a little more insight into what the company is looking for:
“We look for good fundamentals behind the business, good unit economics. We are not afraid to pay a big number for a business if we have faith in its ability to really scale economically.
“We are not a business that just pursues growth for growth sake, we ultimately pursue profitable growth so we want businesses that can grow profitably. But, if we find a management team with the business and the technology that we feel the unit economics can scale attractively, that’s very interesting for us.”
He also touched on the people element of an acquisition and the importance of retaining management team.
“In 99.9% of cases it is about the management team, it is about retaining the management team. Even if the business is a great business but we don’t feel the management team is aligned with us and our vision, we won’t pursue the acquisition.
“The FareHarbor example was a great one where we thought it was a great team but what really attracted us was that they were willing to get up and move to Amsterdam because they wanted to be part of the organisation.”
He points to senior executives within Booking Holdings which have been with the company since the beginning as proof that it holds on to its people. According to Henrich, Gillian Tans was one of the first five employees at booking.com, Rob Rosenstein was a co-founder of Agoda and Brett Keller has been with Priceline since the late 1990s.
Henrich also talked about the difference in acquiring standalone brands and putting “large earn-outs in place” to incentivise the management team versus companies that you merge into the organisation.
“All of a sudden the dynamic changes. That person has to subvert their goals and objectives to the goals of the company that is acquiring it.
FareHarbor, for example, is now part of booking.com and now the goal is to maximise revenue for booking.com which may not maximise revenue for FareHarbor. We may want to give the FareHarbor product away for free because booking.com will get more benefit.
In that case what we have tried to do is still create an attractive compensation package but give the person a lot of autonomy and leverage the capabilities to grow the business on a global scale.”
FareHarbor, he says, wanted to take the business global and can now do that with the backing of Booking and, alongside its own goals.
Henrich was asked about the growth of booking.com internally such as through its homes and apartments category which now has some five million listings.
“We used to talk about taking friction out of the hotel booking process, now we’re talking about taking friction out of the entire travel process. Part of that is giving customers what they’re looking for. It’s very clear that consumers don’t just want hotels, they are looking for other types of accommodation.”
An obvious question from moderator Paul Richer, senior partner of Genesys Digital Transformation, was whether the company thinks it can compete with Airbnb. Henrich says:
“We absolutely think we can. We have five million properties in that category now. We certainly don’t have the brand recognition that Airbnb has, they created the category but, we have a couple of advantages in terms of having it all in one place. While the Airbnb brand is great you also want to compare the cost if it’s two hotel rooms or one flat.
“We have also taken the same approach with no customer fees as we did with hotels.”