Booking Holdings just told investors its most discounted guests are a growing majority of its room nights
Level 2 and 3 Genius members booked a high-50% share of Booking.com room nights last quarter, up from a year ago, and they arrive entitled to as much as 15 or 20 percent off your rate.
by Markus Busch
The number, in your terms. On the August 4 earnings call, Booking Holdings told investors that Level 2 and Level 3 Genius members were more than 30% of its active customers and a high-50% share of room nights, both up on the year. Across the trailing four quarters the Booking.com share booked by those travelers moved from the mid-50s to the high-50s.
Close to six in ten room nights on the channel now arrive from a guest sitting in the deep-discount tiers.
How she got there, and why she stays. Five bookings in two years reaches Level 2, fifteen reaches Level 3, and Booking's own traveler page counts flights, rental cars, taxis and attractions toward her progress, so she can climb into the top band on spending that never touched a hotel room. There is no demotion and no requalification. The tier is hers for life, and the discount you fund follows her whether or not she books you again.
Now put it on a room. Take €200 a night and a 15% commission.
A standard booking: she pays €200, commission takes €30, you keep €170.
Level 1, ten percent off: she pays €180, commission takes €27, you keep €153. Forty-seven euros of your rate, gone. That is 23.5%.
Level 2, fifteen percent off: she pays €170, commission takes €25.50, you keep €144.50. Call it 27.75%.
Level 3, twenty percent off: she pays €160, commission takes €24, you keep €136. Thirty-two percent.
Your commission line falls every time, and that is the part that misleads. Commission is charged on the reduced price, so every euro you discount buys back fifteen cents of commission and costs you the other eighty-five.
Whose setting it actually is. Level 2 runs from ten to fifteen percent and Level 3 from ten to twenty, so the figures above are the top of each band. The tier belongs to the guest; which levels you fund is a setting in your extranet. A property offering Level 1 only gives ten percent to everyone, including the woman entitled to twenty. So the high-50% figure tells you who is shopping your page rather than what you granted — and it tells you which way the ask points, which has only ever been one way.
They also said it gets stronger. Given the importance of loyalty and how well Genius has worked so far, the company said, it sees further opportunity to strengthen the offering. Read that from your side of the desk. A discount program already reaching six in ten room nights is about to be strengthened.
The catch. Booking has not published how those bookings split across the bands, so nobody outside the company can build a blended number for the channel. High-50% is Booking.com's room nights and not yours, and a property in a market with fewer repeat platform users will sit under it. Nor does any of it say what those dates would have done without the discount attached.
Monday. Your extranet knows what share of last quarter's Booking.com arrivals carried a Genius discount. Nobody outside your property knows that number and very few inside one have looked. Pull the share, pull your tier settings, then run the arithmetic above on your own rate instead of on €200.
Those three figures are your cost of sale on this channel. The percentage you agreed to is not.
You negotiated a commission once. Then you agreed to a discount, and the discount grew into most of the channel while the commission never moved.
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