Travel Trends with Dan Christian
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Travel Trends with Dan Christian
The Evolving OTA Landscape Part 1 with Traci Mercer, SVP, Priceline
What if your travel booking experience could be completely transformed? Join us as we unravel the captivating evolution of Online Travel Agencies. From the groundbreaking innovations since the 1990s to today's data-driven personalization, you'll discover how OTAs like Priceline have reshaped the travel landscape and what that means for your next trip.
Our episode dives into the heart of Priceline's strategies with insights from Traci Mercer, Priceline's Senior Vice President & Head of Accommodations, Flights & Strategic Projects. Learn how OTAs are not just service providers but vital partners for consumers and suppliers, streamlining the travel booking journey with convenience and flexibility. From the iconic "Name Your Own Price" model to the advent of comprehensive AI solutions, you'll understand how Priceline leverages extensive customer data to enhance your travel experience and cater to emerging trends like event tourism and American exploration of Asia.
Looking ahead, we explore the future of OTAs and their groundbreaking technologies. With Priceline's Trip Intelligence suite leading the charge, discover how AI is revolutionizing trip planning and booking. As generational shifts and technology advancements continue to unfold, we delve into the collaborative dynamics between OTAs and hotels, and the exciting innovations poised to redefine the travel experience. Whether you're a frequent traveler or planning your first adventure, this episode promises invaluable insights into the ever-evolving world of online travel.
👉 Listen to The Evolving OTA Landscape Part 1 with Priceline Now
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Hello everyone and welcome to Travel Trends. This is your host, dan Christian, and I've just arrived back from an incredible week in Phoenix at the Focusrite conference. I just wanted to say thanks again to Pete Gene and the entire team at Focusrite for bringing us in to the event. It was really extraordinary to be able to see our 2025 trailer on the main stage. That was something really special. Thanks to all of our partners, thanks to all of the guests that joined us.
Speaker 1:We did more than 25 interviews at the event and we look forward to releasing that episode in the next few weeks and then continuing our collaboration with Focusrite in 2025. We had so many incredible conversations there, including a conversation with Steve Hafner, who is the co-founder of Kayak and someone that we're keen to interview on the show and will be able to in season five, and I just wanted to acknowledge, as we go into this series on OTAs, the fact that when we reached out to both Glenn Fogel, the CEO of bookingscom, as well as Steve Hafner, the co-founder and CEO of Kayak, they had actually made a number of their executives available across the organization to participate in Travel Trends season four, and we're going to meet two of them this week we're going to speak to Tracy Mercer from pricelinecom on today's session and then we're also going to speak to Rob Ransom from Bookingcom, and I want to give a bit more context to each of their roles. But I also just wanted to acknowledge that introduction and that opportunity and I'm thrilled to be able to continue our OTA focus in season five. And thanks to all the sponsors that have stepped up, that have committed to come back for next season and a number of new sponsors that are going to be participating not only as title sponsors but theme sponsors for 2025 and season five. If you want to get involved, now's the time. Please reach out to us, go to traveltrendspodcastcom or reach out to either dan or melanie at traveltrendspodcastcom to get more information.
Speaker 1:Now let's talk about the evolving landscape of OTAs. For many of our listeners, I'm sure they're familiar with the journey of Priceline and booking, but I thought I would just make sure that it was clear to all of our listeners just how incredible this two-part conversation will be this week, given the history of both companies. Priceline, of course, was built during the dot-com era 1997, 1998, most famous, of course, for the William Shatner campaign that really launched that brand into the stratosphere during that time, and it's certainly one of the incredible travel stories of the dot-com era that has actually, through mergers and acquisition, continued to grow in scale and remains the largest OTA globally based on volume, even larger than Expedia and we're going to talk a bit more about Expedia and some of the OTAs in season five. But I really wanted to give acknowledgement and credit to this incredible journey that both Priceline and Booking have been on. Of course, glenn Fogle was part of the mergers and acquisitions team before he became the CEO of Booking Holdings, which was one of their prized acquisitions that took place in 2005. And really that was a transformational year for both companies because, all of a sudden, you had this powerhouse OTA of Priceline building in Bookingcom, which ultimately became the brand that they repositioned around in 2018. So, interestingly, now Bookingcom and Glenn Fogle, of course is the CEO of that group, of which Priceline is now a part of.
Speaker 1:So in this conversation, we're actually going to speak to Tracy from Priceline and then we're going to get into a conversation with Rob Ransom from Bookingcom.
Speaker 1:Now, don't forget, we send out a monthly summary of all of our podcasts and upcoming travels, so make sure you register at TravelTrendsPodcastcom and subscribe to our latest newsletter and be sure to check out the highlights from Focusrite on our LinkedIn and Instagram channels, and we also have that promo video up on our YouTube channel as well. Now I want to introduce you to the Senior Vice President of Accommodations, flights and Strategic Partnerships at Priceline. Her name is Tracy Mercer and she's had an extensive career in the travel industry. She even started with Expedia. She's worked for technology companies like Hootsuite, she worked for Sabre for a number of years and she recently joined Priceline post-pandemic to take on this exciting new role and scale this important part of the business, and I'm really keen to get her take on everything that's happening at Priceline and the evolving landscape of OTAs. Well, thanks so much for joining us, tracy. I'm really looking forward to this conversation with you. Where are you joining us from today?
Speaker 2:Hey, I'm thrilled to be here. I am joining you today from the Seattle Washington area in the US.
Speaker 1:Oh, that's fantastic. Well, I think everyone got a good idea from that introduction about your incredibly impressive background in the travel industry both your roles, of course, at Expedia and at Sabre, and now with Priceline. And I'm really keen to have this conversation with you about OTAs, because it's really not been a subject that we've spent a lot of time on on our podcast and it couldn't be more important. But let's start to give our audience a bit of background on your role. So take us a little bit through your career in travel and how you've come to be at this particular place in time with Priceline.
Speaker 2:Absolutely Well, let me just start. So Priceline, a part of Booking Holdings, has been a leader in the online travel industry space for about 25 years. It's kind of providing deals and helping customers around the globe experience the moments that matter to them. And in terms of my journey to get here, I'm currently in a role of Senior Vice President of our accommodations business, our flights business and our strategic business unit. This means I manage our partnerships, our relationships with our hotel and flight partners. My team oversees kind of fine-tuning our revenue management strategies and ensuring that our customers get a seamless experience across the board.
Speaker 2:So that's a bit about my role. As far as what got me here, my career has traversed lots of functions, companies and even continents through the time, but what I found consistent is I've leaned into areas that are at the intersection of sort of travel to end technology and distribution, and what's happened throughout that time is it's changed a lot, and so I've been fortunate to work across different parts of the industry, from marketing to commercial and sales to product and technology, and that's given me a really good understanding of how the pieces all fit together and how to bring some synergies and identify sort of frameworks or sort of pattern matching across teams and disciplines, despite the continent or the country that I might be in at the time.
Speaker 1:Yeah, no, that's great and I think that's why I really wanted to have you here and part of this conversation, because I certainly know a number of your colleagues as well and a few of them have been on the show this season, depending on when people are listening to this. So, as you mentioned, priceline, part of Booking Holdings we had Kayak for Business, join us for a conversation and booking as well, so clearly all part of the same family. And this is where your background at Expedia, I mean there's the two large players of course, in the OTA world with Expedia and Booking and Priceline. Obviously, I know very well from those early days of William Shatner and Name your Price, and so I was a big fan of the platform from the early days and, interestingly, how Priceline acquired booking and then rebranded around the booking name. So I would love for you to share a bit of the journey.
Speaker 1:I think the Skiff team has done a great job of writing about the history of OTAs, dennis Shaw in particular, who's a fantastic journalist, and I had the pleasure of being interviewed by him once on stage and I would highlight to our listeners. If you're looking to understand, that's a great place to gravitate to, but I would love to get your perspective on the journey of a brief recap, if you will, of the history of the OTAs and then today, what the specific focus areas are for Priceline.
Speaker 2:Sure I echo your comments that there's a great amount of research, opinion pieces and a variety of content out there on the history, the dynamics of sort of the internet boom that happened back in the 90s. Online really changed the way how people booked their travel by putting that control of travel in the hands of the customers directly. Otas automated the travel agency experience and suddenly as a traveler you didn't have to rely necessarily on a travel agent or spend hours with the old phone book flipping through a phone book. You could just compare options, plans and book your own entire trip online, which for many of us today it sounds very basic. Of course we did that, but back then it was a really game-changing way. It brought a whole new level of transparency and convenience to the end consumer, and Priceline was right at the start of it, to your point. We launched in 1998 with this concept of name your own price. It was a model that many people still remember today. It is a model that was pretty revolutionary at the time. The idea was really simple you could bid on an airline ticket and then later we added hotels and even gas and other services and if a supplier accepted your bid, then the deal was yours. It was a contract and it was done and that was game changing because it made travel so accessible and affordable for everyone at the terms that they named in terms of their price.
Speaker 2:Now, today, as the travel landscape has evolved, we and our business at Priceline has too. We've expanded into hotels, car rental, cars. We've become a full service OTA. We don't sell gas anymore. There was a thought around should we do toilet paper? During the pandemic? That was also out the window. None of those things would make sense. But while you can't really bid on travel anymore, we still offer a mix of retail and opaque offerings, and that gives travelers a lot of options.
Speaker 2:We keep sort of that spirit of the innovation alive and as we kind of transferred through the years, even if we go back, so if this started in the 90s and we go kind of around 2009, priceline was one of the first to launch a travel app, which today again, many people have their apps and that's consistent. But that was a really big step forward in making it even more seamless and mobile and sort of in your hand. Now, coming forward to today, otas are just a huge part of the travel industry. They're not that cutting edge sort of new thing that they were back in the day. It's really seamless. Millions of travelers use the online travel agencies to do everything that they need, whether it's a place to stay, a flight, a rental car, even cruises or entire vacation packages, and we're consistently finding new ways to improve our customer experience and make things easier for both our travelers and our consumers, but also our partners, who are the ones that are making their availability public and available on the online travel sites.
Speaker 1:Yeah, that's great.
Speaker 1:I think you did an excellent job of recapping, you know, 20 years of history of technology in the travel space with this concept of an OTA, an online travel agency.
Speaker 1:Then everyone was terrified of this idea that travel agents were going to disappear because everyone was going to go online. And here we are in 24, going into 25. And obviously travel agents are having a renaissance and OTAs are doing incredibly well, and so I would love to hear from your vantage point what the role you see as an OTA in the modern travel landscape. And I guess I'll give you an exact story on my personal experience that I'm always amazed the number of people that I speak to and come across that book with OTAs, and just how important that is that they booked a car or they booked their hotel or they booked their flight, and I always think about those three, that's, the flight, car and hotel. And so I guess I would like to understand, in the modern travel marketplace, how people use Priceline to fulfill their travel bookings, how much of that business is air car and hotel, and are there other areas that you're focusing on as well, that you see that Priceline is going to be particularly relevant in the travel booking process?
Speaker 2:Yeah Well, I can talk a little bit about the role that we play and what we're fulfilling for customers, and I think it really comes down to a few key things. From a consumer perspective, the value that we add is really about that convenience, that choice and that flexibility, and there are a number of players in the space and for Priceline, as well as many other OTs, we've taken that guesswork out of travel by putting everything in one place, and I would agree with you. I think the fundamentals are flights, hotels and rental cars, but it doesn't end there and it doesn't have to end there. Whether it's tours, attractions, activities, transfers, cruises, as I said before, or full inclusive packages, the reality is all of that is available through online travel agencies. Today, given my role within the Priceline business and representing Priceline and Agoda in North America, we focus more on the hotel business and the flights business at least my team does so I'll spend a little bit more time thinking about that and maybe sharing a bit more as the travelers kind of come into the site sort of what's the value that they're getting from it, whether it's providing access to all of those things or it's just comparing prices, reading reviews and reading reviews from travelers that are like you or customers that are like you, or potentially in the language that you may be searching in. In the case of our GoToBrand, you can book that entire trip and have that influence in one place. It's essentially that 24-7 travel agent, 24-7 customer service, and it saves time.
Speaker 2:Now there's also a supplier side to this that I think is really important. As we think about the landscape and from a supplier perspective, otas are really an invaluable partner for them, and I think most of them would agree with that statement that customer demand. They would love to access all the customers directly to the best of their ability, but the reality is you have to go where the customers are, and many of your online travel agency partners are not just leading in the area of technology and innovation and distribution and bring in demand, but they're also huge marketing engines, and so we're constantly working with our supply partners because we know that we can bring valuable consumer demand to them. We're working to increase the share of wallet spent on travel globally, not just across the board. But how do we get more people thinking about I have some extra money, I want to go travel, I want to experience the world, I want to experience those moments that matter, and I want to close the gaps that may exist, because I firmly believe that the more you can educate yourself, the more you can go to someplace you don't know and experience a culture you're not familiar with, the more it starts to bring down the barriers of fear and uncertainty, and so we're constantly working to do that.
Speaker 2:Now we do it from a very tech driven at our core way. It's focused on efficiency, on optimization, on partnering with the right areas to bring the right demand to our supply partners, and we ultimately kind of sit in this great place where we're connecting supply, our supply partners, with this equation of demand, and it's making this marketplace really, really powerful. We are a Priceline is a very US-based OTA and, as we're seeing today, this is growing. This space continues to grow. Us-based OTAs are consistently hitting double-digit growth. I think in 2023, we were consistently hitting double-digit growth as a sector and, according to Focusrite's latest research, otas crossed the $100 billion mark for the first time in 2023. And that just shows how critical this has become in terms of the travel ecosystem and the role that it really plays in some of those core segments that we talked about.
Speaker 1:Yeah, it's really interesting and I want to continue on some of the customer behavior that you're seeing.
Speaker 1:And then I really want to dive into hotels and accommodations, because I know that is a particular area of focus for you and I think that's going to be a great interest to our listeners.
Speaker 1:But before we do, when we think about the OTA value add, one of the things that you obviously have is an amazing amount of data on your customers.
Speaker 1:You can see what they're researching and what they're purchasing, and so you have a much better vantage point than a one hotel or even a hotel chain when you're actually looking at the entire customer journey. So I'd love to understand how you're leveraging that at Priceline to be able to either improve the customer experience or tailor offerings. How do you leverage that incredibly valuable data? And the reason I asked you that specific question is because I had a chance to interview Paul, the co-founder of Kayak, and Steve obviously was on stage Steve Hafner talking about the fact that you know AI is great, but you need data you know starts with data to be able to really leverage AI, and it was a great conversation between the two of them from last year's focus right, and it informed a lot of our thinking going into this year, our AI summit, and so I would love to understand how you and the organization leverages that data for improving the customer journey.
Speaker 2:Based on some of the data, the way we leverage it. It obviously drives a ton of personalization, and I think the number one way that I would think about using data for purposes of your audience and how to think about how we, as an OTA, are using it is it's all about creating trust with the end traveler and the consumer. That data allows us to provide recommendations that are personalized, that are reliable, that are spot on, that help us inform those travelers, those end users, the people on our sites or on our apps feel confident that we are bringing forward the things that align with what we know about them. I think there's a lot of concern about who has my data, how's it being used, what are you doing with it, and I think, from our perspective, how we view this is it is a way for us to make a personalized, reliable and informed recommendation set for you. I'll give an example. Now, we can do it in cohort level or we can do it at a more personalized level, but we are seeing some shifts from our go to point of sale. We have seen a lot of interesting behavior with the Japanese travelers At a high level. We're seeing about 30% of them traveling solo and seeking rooms with bathtubs. Now that may seem like what does that matter, but this is a little data-driven insight that allows us to tailor the experiences, the photos, the hotels and the rooms that we may surface to our partners. That's consistent with driving conversion, understanding and knowing ways to help our hotels fill and sell their rooms in a way that may be more appealing to that specific customer.
Speaker 2:Both Priceline and Agoda really act as discovery engines, I think, and that's introducing travelers to new destinations, new accommodations, new hotels, and so this data that we learn about our customers and how we kind of put that to use in this customer data platform and our user interfaces it's really the beauty of pulling that together. Now I want to flip to kind of how do we use that in a different way? Which is, what are data platform and our user interfaces? It's really the beauty of pulling that together. Now I want to flip to kind of how do we use that in a different way? Which is, what are the trends that it drives? So you can consume data and you can make it really relevant. For me, I searched for a vegan restaurant. You then remember that and going forward, you tag these restaurants that are vegan. You know Japanese traveler trends at a high level are wanting bathtubs. We're now showing photos with that. But as we step back, it's really fascinating at a really high level to see the travel trends shift over time. And we have a unique vantage point with Priceline being such a strong North America-based OTA. And then Agoda at least for Agoda in North America we see a lot of the Asian travelers coming in.
Speaker 2:So one big trend we started to see, looking in our Priceline data across the US, is what I'll call kind of event tourism, but this will resonate, I'm sure, depending on when you're listening to this. But we saw a huge surge in travel around concerts and festivals. Can anyone remember the Swifty effect? Right, everyone knew about it. That allowed us to really think about what do we have available and how do we join in that conversation.
Speaker 2:And we launched a really great campaign called Eras to End Zones, which was could a social influencer really make it from the Eras Tour in Tokyo all the way to the Super Bowl? So Aras to End Zones and book it all through Priceline and make the timing happen, make the connections happen and experience both. And the answer was yes and it was a great, viral, little fun way. So that big trend on event tourism, obviously the Swifty effect. But more recently we're starting to see around Labor Day. We've noticed a spike in travel related to sporting events, whether it's NBL, us Open, college football. It's really driving a lot of people to pack their bags and get on the road. But more domestically, that's really fascinating.
Speaker 1:Yes, keep going. Exactly the insights. Only a person in your position has the privilege and understanding, and I think our audience is going to love this. So, yeah, please keep going on these consumer trends.
Speaker 2:Right, I will keep going. I have a couple more that I thought were kind of fun and interesting and a few that definitely resonate for myself. So the next trend that we started to see is a pretty big surge of sort of the great outdoors, particularly for American travelers. They're craving a connection to nature, whether this was a huge surge towards national parks or emerging themselves in what has become trendy now, which is this sort of cowboy culture. People are prioritizing outdoor adventures, wide open spaces and really putting on sort of their cowboy boots and hats and getting out there and experiencing something. And we're seeing that from a destination level destinations like Nashville and some places in Texas, to just these national parks and an increased kind of great outdoors theme. So that's another kind of macro trend that we saw.
Speaker 2:And the third is Asia, and this is definitely an area that's booming right now for many of our US travelers. After a lot of kind of domestic and what we call near border travel during the pandemic, followed by a pretty major European travel surge as people started kind of heading over there, americans are now venturing further out, with Japan being a huge draw. This year, asia is set to become the second largest outbound region for global travel in the next few years and Agoda is seeing that as well from their perspective which is just growing fantastically. So, whether it's Americans going to Asia and really just experiencing and going further out, or whether it's kind of that outbound market, those are some of the high level trends that we're seeing and some of the ways that we use data at a very more personalized level.
Speaker 1:That's terrific, Tracy. Thanks for coming prepared for those, because that's exactly what I want to know and our listeners want to understand as well, Because obviously it's the theme of our show at Travel Trends and only someone like yourself, as I was saying that has the vantage point to be able to see what people are searching. And, of course, I think you very mindfully touched on the importance of privacy and how you're leveraging user data, but I see there's so many benefits to be able to action that in a positive way that improves the customer journey and gives them the right recommendation. So that's fantastic. We'll be right back. Are you interested in learning more about how AI is impacting the travel industry? Well then, you have to check out travelaicom slash trends Travel AI are the leaders in implementing AI across a range of exciting travel businesses and they share and showcase many of the exciting developments on this page with our listeners. Their team knows that AI is going to transform every industry on the planet and the best companies today are integrating AI into all of their processes. So check out the latest developments at travelaicom slash trends and learn how to make your travel business more efficient. They're also on LinkedIn, Pinterest and Twitter. Are you looking for ways to grow your travel business through paid media and optimized SEO, Then you have to check out our friends at Propeleccom.
Speaker 1:They are the leading digital agency for growth in travel and tourism. Propelec offers bold digital marketing strategies to ensure your travel company's success. They have a remarkable methodology that has actually been implemented by TravelAIcom, and they are a leading SEO agency globally and offer a range of resources a podcast of their own, a blog on their website, Propelliccom. That's P-R-O-P-E-L-L-I-Ccom. And don't forget to mention Travel Trends for your free marketing audit. Now back to the show, the other thing I wanted to get into, just given the fact we had this Forbes travel guide series. It was all focused on accommodation and more focused on luxury, of course, but we have a lot of people that listen to our show globally and they're from all different aspects of the travel industry, but we certainly have a large audience now on the hotel side, so I'm sure those of them that are listening in they're like you've got to ask about hotels, We've got to get into the hotel conversation, so I want to switch into that now.
Speaker 2:Let's do it.
Speaker 1:Yeah, so give it to your focus and also your background. So, when we think about how important accommodation is to Priceline and very much part of the founding story, obviously flights as well but accommodation, given the frequency of purchase, the margins that are involved, obviously it's an incredibly competitive space and hotels are often quite sensitive about because OTAs can be incredibly advantageous, especially post-major crisis, to get bookings back to a particular destination, and so I know there's many advantages to leveraging OTAs. But obviously there's sometimes concerns about how hotels work with OTAs more as a strategic partner than seeing it as a direct competitor to their direct booking channel.
Speaker 2:Yeah, thanks for bringing it up, because I do think it's an important topic to touch on. If we go back several years, I think there was friction in that relationship. What are OTAs? How do I use them? What I think the good news is is, generally speaking, we have moved away from those early days of viewing OTAs as competitors and we've moved much more into a strategic partnership place. Let's face this it's a huge global business and there is room and, frankly, a need for all of us to be thinking and prioritizing. How do we get that share of wallet and travel and how do we help people experience the world and close some of the divides that we may be seeing, regardless of what country you're in, I think we're seeing a lot of division across the globe, so I think that's a good news story. So, you know, I think that's a good news story. Now, in terms of why has that happened? Well, one I think there is fear and uncertainty and doubt when you don't understand something. So, over time and through many years of partnership and these earlier, we are a great way to increase visibility and reach.
Speaker 2:Otas help hotels with their visibility. They provide a broader audience and one of the things that I think is so amazing about Priceline is our consumers are incredibly passionate travelers. Our Priceline travelers book eight plus trips a year. Now compare that to a US national average of two to three trips a year. We have travelers that are traveling and that means we're able to introduce hotels to people who are the most frequent travelers, the biggest spenders and the ones that are going out there looking at different things, or they may be the travelers who are trying new destinations, trying new brands, trying independent hotels. So I think there's a question for us on how do hotels use that and how can they take advantage of that? And, frankly, how do properties, how do the hotels around the world make sure it's beneficial to them? So you know, the good news is I think we have recently done an accommodations barometer study through our. News is, I think we have recently done an accommodations barometer study through our BHI. You know, 77% of the properties agree that listing on these OTA or digital platforms just increase their overall number of bookings. So we're not at a point of saying it's me or you. We're at a point of saying it's incremental and that's good. That's not just me saying it, it's saying that's across the board. So that increased visibility, that increased reach is something we know.
Speaker 2:You know being a discovery engine for our hotel partners is another thing. We introduce travelers to new destinations and experiences that they might not have experienced otherwise, and Priceline has always delivered amazing deals. That's sort of been core to who we are since the beginning. But this you know, you can touch on the ways that consumers may do that, but I think for us, ota is acting as this discovery engine and providing recommendations based on what we know about those travelers so far.
Speaker 2:Going back to that data, how do we use that data that we know about you to say you know what. You like this destination, you like this destination, you like this kind of hotel. Let's recommend another place that may be available. And that's something that technology, you know, really empowers and provides, and I think that's a huge benefit to our hotel partners, particularly as they're going through seasonal impacts or, potentially, demand shifts in their market and the next piece that I'd say would be off-peak occupancy. So there used to be a time when I would just use OTAs when I didn't have demand otherwise, and I think we can still be an incredible complement to times during that. And for Priceline, we still have this opaque product offering an express deal or opaque offering which allows hotels to provide a more discounted price point, to provide that to consumers who wouldn't otherwise be able to see it through the opaque way that we provide that listing. And so I think that is another way that we enter into this and some of the value that, frankly, our hotel partners see with us.
Speaker 1:That's really interesting. One follow-up to that that I was keen to get your take on is the smaller, independent or boutique hotels, which clearly a lot of younger travelers are gravitating towards. I do want to talk about the short-term rental space as well, because clearly that's also been perceived as are people still staying at hotels when there's all these Airbnb options that are out there, and the reality, as you know, is that actually you offer actually more selection and more inventory, and so yeah. But in terms of the smaller independent hotels, is there ways that you see that they can benefit from working with OTAs? Are they less likely to benefit from the platform because they're less deal-oriented like some of the larger suppliers?
Speaker 2:No, I think it's actually in many ways more beneficial for independent hotels, and when I say more beneficial it's because they don't have necessarily a brand affiliation, a brand marketing spend. They don't have maybe a brand loyalty program that really advertises them. And so to help level the playing field a little bit for independent hotels help level the playing field a little bit for independent hotels we see an ability to partner with OTAs and leverage that sort of billboard effect to compete more head-to-head with their potential chain affiliate partners. Now, a reality that we have seen is independent hotels have seen a large decrease over the last 25, 30 years, and I think that's an interesting stat also to know about, which is, if you go back to the early 90s to kind of today, you're talking independent hotels representing maybe 60, 65% of what was available to today, being more like 25 to 30% of what's out there. So there's a lot of chain affiliation. That is something very true in the US. As you get outside the US, that changes and there's much, much more independent and fragmented hotels. But the majority of independent hotels and chains are using these and I think that leveling the playing field is important for them.
Speaker 2:If I think about sort of the revenue management strategies or distribution strategies. I mean, I think, a few things to think about, and my background originally in this industry started in revenue management and that's what led me to an OTA was. I was in revenue management and I, frankly, just didn't fully understand how to use this newfangled transparent OTA thing. But years later and tons of insight later, I think we can see this as offering customers that are truly unique. So at least in Priceline and Nagoda, we have customers that are truly unique, whether it's through our B2B platform or our incredibly loyal customers that we talked about before. You're not going to get those anywhere else necessarily, and so that's something that can provide that demand and I'd say for us as well.
Speaker 2:We also deliver arguably the most comprehensive set of sort of inventory technology, product and sort of a customized approach. So it's not a one-size-fits-all marketplace, and I think that's the most important thing whether you're an independent hotel, whether you're a revenue manager or, frankly, whether you're a part of a chain hotel is every market has its nuance and customers book by day of arrival and length of stay for their experience, and you can't have a one-size-fits-all, and I think that's a beauty. That both Priceline and Agoda offer is the ability for our hotels to really understand and use our platform in a way that suits them best and not have to be forced into it being applied globally everywhere, and I think that allows them to cater their revenue management and distribution strategies in a unique way. So those are some of my thoughts on it.
Speaker 1:Yeah, no, I think you've addressed a lot of the points about the value for hotels, no question in terms of the strategic value and even working with the smaller independent hotels.
Speaker 1:The one thing I'd like to move into, I guess, is the role of OTAs in discovery, and I think this is where I think perception has been that you're using an OTA because you already have an idea of where you want to go. You're going to book a flight, you're going to a business trip. Obviously, the OTAs really took off and took a lot of that business travel. Initially, that people was managed travel for a long time and keeping people within their programs, and so people all of a sudden had the freedom to book on OTAs themselves, but they were booking their flight to Denver, they booked their car rental and there was a very specific formula for a business travel trip. Now, when you're thinking about the leisure customer, clearly they're looking for inspiration and that comes from multiple different sources. So I'm keen to know how you see the role of the OTA and helping travelers discover new destinations or even new experiences.
Speaker 2:Yeah, yeah, well, let's talk about that and sort of how we see it evolving. So let's start with sort of OTA usage or you know kind of our OTA is here to stay. I think we're seeing it grow and we're actually particularly seeing it grow among younger demographics like Gen Z and millennials, which we don't see that slowing down anytime soon, which we don't see that slowing down anytime soon. There was some studies done that I want to see if I can remember some of the stats there. But bookings on OTAs, so sort of the general OTA, were growing in 2024 versus, I think, in 22. So we were seeing this growth of OTAs and how OTAs are growing. Now. Obviously, 24 is a unique year because it's post-COVID, so there's some changes. But what was more interesting about the growth and I already mentioned about hitting this sort of billion dollar mark in 23, is that a lot of that growth is actually coming from millennials and Gen Zs 53% and 50% respectively. According to some brand marketing studies that we did and what we saw, there is a good quarter of those travelers prefer to book on OTAs exclusively, and why I think that's important is we do talk a lot about what's the next generation going to do. Are we going to still have space for them? Are they only going to book short-term rentals? And I think, as we sit back and we see these stats coming through, otas continue to grow. They're growing across the younger demographics, the Gen Zs and millennials, and we personally don't see that slowing down. I think they're going to continue. Otas are going to continue to be key partners for our hotels, helping them manage their revenue and tap into new markets and new demographics. So I think that's an important thing At a high level.
Speaker 2:Over the next few years, I think you'll see customer experience in the OTAs really amp up. I think that is an area where we're all focusing more in that B2C brand and that customer experience and user interface. We're already seeing some early stage applications and some huge wins with the advent of Gen AI and the large language models and how those are being incorporated. But I think even more personalization, more personalized recommendations and a smoother travel planning thanks to some of these travel innovations is going to really step change that customer experience. So I would say that's one sort of trend that we're seeing and we hope to see continue. And then I really do think we're going to see an even closer relationship between how hotels use OTAs and the data that we can provide to boost also their direct booking channels, to build loyalty, to build personalized experiences, and it's going to be a bit more seamless and complementary in that relationship.
Speaker 2:So while I can't predict what it's going to look like in the future, I think what we all know for sure is that technology is not slowing down right now. It is increasing at a pace. I feel like we always say this oh, it's increasing. But the large language models Gen, ai, chatgpt and others have been game changers for all of us and it's going to impact the way that the future of searches, it's going to impact the way personalization is in the future and, I really do think, also the regulatory landscape globally and how that's going to change and if it will keep up or not. It's a wild card. But I rest pretty easy knowing that while in the near term we're going to see great upside from this long term, being at the intersection of travel and technology, we're going to play a critical part in enabling whatever that looks like and providing travelers kind of what they're seeking, and so that's the part I love about working for a big technology company at this stage.
Speaker 1:Yeah, for sure, and I'm keen to get your insights and get as many predictions from you on the future and talk about technology as well.
Speaker 1:The one thing, just before we segue into that a bit more, is you brought up the profile of a Priceline customer and I'd love to just get a bit of an understanding of that, especially because a lot of the listeners on our podcast are B2B. They understanding of that, especially because a lot of the listeners on our podcast is B2B. They're suppliers and they're trying to understand is there an opportunity to work with Priceline and who is the customer? And you mentioned about obviously, being able to reach younger travelers, which is a struggle for many companies. They're trying to figure out how to connect with them. That's why they're all on TikTok all of a sudden and trying to figure out their social strategies.
Speaker 1:But, yeah, I think it'd be helpful for our listeners to hear a little bit more about a typical profile of a Priceline customer. I'm sure there's great diversity, but is there any way that you can just give us an understanding? Is there two or three different personas of the type of people that utilize Priceline More? So to understand the opportunities for people to collaborate with you, knowing the type of customer profiles you have.
Speaker 2:Yeah, I mean I think I touched on some of this earlier but I'll speak to it again. I think some of the things that we see in a Priceline Traveler that were really amazing and surprising to me is when there are some diehard Priceline lovers and many OTAs have gone out and done different loyalty programs and schemes. We have just kind of a level of loyalty that goes with the amount of time that you book. So our loyal, our platinum members are our most frequent bookers. What I think is interesting is one the stat that I shared before Priceline bookers book on average eight plus trips a year versus the average two to three. And again for a US traveler to book eight plus trips a year, that's a lot.
Speaker 2:The second thing that I see with kind of high level trends with our Priceline travelers is that we have a ton of repeat travelers. They love to come to Priceline. We've done some really great and interesting customer research on what they're telling us. And what they're telling us is I know I can get a deal. Everything is there. Your store is stocked.
Speaker 2:No matter whether I'm looking for Spokane, washington, I'm looking for Bismarck, north Dakota, or I'm looking for Miami, the store is stocked with a plethora of different types of hotels, star rating sectors, et cetera, and we really are experts in that hotel landscape. And so I think what we find with our travelers is they tend to gravitate a little bit more towards those deal seekers, those deal finders. So that resonating of I was looking for a deal, I found the best deal, this hotel was a better price than what I've seen it before. Those are the things that resonate and our mission is, as I said before, is we want to be the best travel deal makers in the world and provide that to our very loyal customers. And that is what we see about our customers coming back.
Speaker 2:In terms of the demographics and things of our customers. They skew kind of two extremes. A lot of the growth is coming from that Gen Z and millennial population, as I mentioned earlier. That's where the growth is coming from. But we still have a strong index in sort of those Gen X customers and that sort of persona of deal hunters, deal finders, and this is what I'm looking for. So at a high level. That's a bit about our customers.
Speaker 1:No, that's great, and the reason I wanted to ask you for sure was that perception is not often reality. When the brand may have a certain perception and this is the case with tour operators or certainly with hotels and I'll use the reference of Travelzoo, for example Even though the people are actually deal-oriented towards TravelZoo, there's a lot of high net worth individuals that book luxury products, and I think that's sometimes what's lost is that the perception of who the customer is. And the reality is there's a ton of opportunity for companies that are maybe not working with you today that will listen to this and realize actually, they're missing an opportunity. So I'm glad you addressed those. Now let's talk about the future and the exciting role that technology will play, especially for a company that is as forward thinking as Priceline. So tell us some of the things that you are investing in working on to stay ahead in the competitive OTA market going into 2025.
Speaker 2:Well, I mean I touched on it earlier, but I would be remiss to be a technology and travel company and not talk about generative AI. We really believe Gen AI is a key to boosting productivity, enhancing customer experience, driving industry innovation across the board, and we were one of the first travel companies to really leverage advanced AI capabilities and provide personal assistance and enhance customer engagement with the launch of our Trip Intelligence Suite and our travel assistant Penny in 2023. What I thought was really interesting about some of our applications of that, when ChatGPT GenAI kind of first hit the market at the end of 22 now, which is crazy that it was 22 and it's already 24. But almost two years ago people didn't really know exactly how do I use this, how should I apply it. Our application in early 23 was let's create our travel assistant. Let's align it with our spokesperson. Kaylee Cuoco is our Priceline spokesperson. Her character was Penny and also you think about Penny and the play that that has in sort of price deals money. That was a great fit for us. So we've got our travel assistant Penny. That launched kind of low in the conversion funnel, and what I mean by that is every e-commerce company has said through the years like, oh, my cart abandonment, oh, if I could just get conversion improved. So to launch some of those things not top of the funnel and the inspiration stage, but actually right down there at the bottom of the funnel, was a really interesting learning for us, and so those are some of the ways that we kind of started applying it.
Speaker 2:If I talk about our Trip Intelligence Suite, it's really designed to make trip planning and booking faster and more personalized and affordable. So it launched our Trip Intelligence Suite, launched with 40 plus AI powered tools, including Penny. In a different iteration it leveraged six months worth of that in-market learning that we had to expand, make Penny even smarter, worth of that in-market learning that we had to expand, make Penny even smarter. So make that sort of chat integration, that Gen AI personality, even smarter across all categories. And then it provided some money-saving tools to the end customer. Now we're sitting here a year plus after its launch. Priceline's Trip Intelligence Suite has evolved into the industry's most comprehensive Gen AI-powered tool suite, with 2024 upgrades adding over 30 new features to that. So that's what we added this year and those features are really helping the end consumer save time and money through enhancing their research, giving custom itineraries, doing coupon management, giving priority access with car rental partners.
Speaker 2:There's tons of ways that we've been able to take this. And so you go back to I'm giving you data, I want a personalized experience. There's so much out there which originally we said give me everything. But then you kind of say, just give me the right things, just give me what I need, help curate it. And this is allowing us to launch early, launch, fast learn and now apply these different iterations. So, with that strong understanding of learning and what the customer wants and those tools, we are kind of continuing to lean into this space.
Speaker 2:To lean into this space. We're going to work to take that friction out of the trip planning process, because I think everyone knows that is a pain, it can be a pain and then the booking process can be painful. So it's not about gimmicks, but it's about how do we use this to make that seamless and easier, whether that's remembering things that you've done before or strategically embedding tokenized FinTech into Penny so that the chatbot can actually do the checkout for you and you don't have to enter all of that information and have it auto-populate Like. There's just really simple ways that you think about making my life easier that we can start implementing. Yeah, I think there's other ways that we're seeing it.
Speaker 2:Save time Customers in general. From our data show that customers spend the equivalent of two working days planning a trip, which in some ways they love and that's exciting, but in other ways it's a pain. So many of our features that we're leaning into with Gen AI is how do we make that more pleasurable, more easy, and using this Trip Intelligence Suite to generate some itineraries instantaneously based applying it some internally, some externally, top of the funnel, bottom of the funnel. But I love that. We leaned in really quick and have taken a lot of learnings, and I think that's an area that for us is really important.
Speaker 1:No, I couldn't agree more, and I think that why I wanted to spend time on that for sure is, given the whole idea of OTAs and technology, the importance of Gen AI and how that's going to transform the customer experience in the years ahead, so we'll have to have you back for our AI Summit in 2025 and talk about all the things that Priceline is doing. This is like the start of a conversation I'd like to spend another hour on, just on itself.
Speaker 2:Absolutely.
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Speaker 1:And now back to the show. There's a couple more questions I wanted to ask you. One that I wanted to ensure that I did was that, given everything we've covered so far, and for those of our listeners who are kind of uninitiated about Priceline or now their ears are perked again to realize wait, a second. Priceline is still incredibly relevant, contemporary. There's a huge opportunity here. I would love to hear what advice you would give to the travel providers that are listening to that whether it be the hotels or operators that are listening to this and whether it's Priceline but even just in terms of how they should maximize their partnership with OTAs, what recommendation advice would you give them?
Speaker 2:Yeah, absolutely Well. First of all, I hope if you are a hotel partner listening to this, or an airline partner or something else, first of all, I hope you've heard of us. We've been in the industry for 25 years and the Booking Holdings Group is a large group and a large player in this industry. That really works to make sure that our partners are connected with us, feel supported and are engaged. So that would be number one. But let's talk about, if that's the case, how would you approach your partnership or what advice would I have? I'd say, first, recognize that it really is a true partnership and that it can be complementary in the role that we play in the distribution mix and the distribution strategy. So gone are these days of fierce competition and we're at a point now where we need to think about strategically how do we partner together to help deliver what's needed for the end travelers and customers and how do we help you compete in the best way possible.
Speaker 2:So I'd say, number one, approach it as a true partnership and that complementary role In our Priceline to Go to Global Partner Services team. We really pride ourselves in taking a customized approach with our partners, tailoring every touchpoint to reflect what their goals are and creating unique strategies to address their challenges. So don't be afraid to ask for what it is you really need and then be open to hearing what we're saying in terms of this is what we're seeing from customer trends. If you're really wanting to drive something, here's three other areas we may also recommend. But customizing that approach is something we pride ourselves in. We are clever, we are customizable and we're personalized to helping our hotel partners in that approach and not a one-size-fits-all marketplace out there and not a one-size-fits-all marketplace out there.
Speaker 2:And I think we try to approach each interaction with intention and value, creativity, kind of pushing the boundaries to set up for success. And we have some scrappy energy here still. So, even though an OTA may have been around for 25 years and you may have heard of Priceline yeah, I've talked to them or yeah, I'm on their site Like, tap into our team, our scrappy energy, our determination to solve challenges with you and find creative solutions, because there is a lot more innovating and a lot more happening both on the consumer side and on the partner kind of hotel side of this. And then let's not forget, at the end of the day, like travel is supposed to be fun, let's infuse some joy and some enthusiasm and and some professional like work life balance, but having fun while we're doing it. And I think that's something that I hope my team embraces and certainly we want to embrace as not just a customer brand, but this is supposed to be fun. Let's be partners and let's get, let's get creative on how we can come together.
Speaker 1:Yeah, very well said. I love that you mentioned that, because that's always been my association with the Priceline brand is that it always has been fun and playful. Going back to the, where we started our conversation with Name your Price and William Shatner and and so keeping that up that, that energy and the and the fact that travel should be fun, because it can, as you well know, when we're traveling for business or we're traveling for work and there's many pressing priorities and it becomes stressful, and even leisure and business travel blending together adds its own complexity. So I think that is a great way to finish off. And there's one last question I have for you, which is that, for all those listeners that are now keen to stay up to date with everything that's happening at Priceline, where would you direct them towards and is there anything else you'd point out that they should pay attention to?
Speaker 2:Yeah, well, you can always head to our website, obviously, wwwpricelinecom. You can follow us on social media and at Priceline. If you're a hotel partner, an industry partner, airline partner, you can reach out to your local market manager. If you don't know who that is, email us support at PricelineAgodacom. So those are some easy ways to get in touch with us.
Speaker 1:Fantastic. Thank you, tracy. I really appreciate making time for this, you and the team for making this possible, and I look forward to keeping in touch with you and seeing your continued success. Thank you so much.
Speaker 2:Great. Thank you so much. I appreciate the time and hopefully we brought some insight to this area.
Speaker 1:Thanks again for joining us on this latest episode of Travel Trends. I really hope you enjoyed our conversation with Tracy Mercer from Priceline and make sure that you stay tuned for our next episode on the evolving landscape of OTAs, when we speak to Rob Ransom, who is the Chief Strategy Officer at Bookingcom. I have a fascinating conversation with him about how Bookingcom is evolving as a global business, so make sure to tune in for that one, and don't forget to subscribe to our newsletter at TravelTransPodcastcom. Subscribe to our Instagram and LinkedIn channels as well, and you can see updates and clips from the show. Thanks again for all your support with Season 4. Thanks again to our partners and to all of our listeners, and we look forward to you enjoying the next episode. Until then, safe travels.
