The four brands spent a combined $4.08 billion on sales and marketing (reported by Booking Holdings as just marketing) over the first three months of the year, a 10.6% increase over the $3.69 billion they spent in the first quarter of 2023 when the companies went on to spend a total of $16.8 billion for the year.

While not a precise gauge of a business model, the marketing spend is an indication of the challenge the OTAs face in snagging bookings while competing with one another and suppliers such as hotels and airlines that are all struggling to increase direct business.

How intense is the competition? Consider this: Chief marketing officers at for-public companies in the United States reported spending an average of 9.2% of revenues on marketing, according to a survey conducted by the data company Statista.

The Q1 marketing spend for the big OTAs average 37% of revenues — and that average is not evenly distributed.

Expedia Group is the biggest spender in the group. It paid out $1.65 billion on sales and marketing in Q1, up 11% year over year and equal to 56.9% of revenues for the quarter, which is only slightly higher year over year.

Booking Holdings, meanwhile, falls in line with the average. The $1.6 billion in spent on marketing in Q1 was 6% higher year over year and 36.4% of revenues. That was a drop from the 40.2% of revenues it spent last year in the first quarter.

Airbnb spent $514 million on sales and marketing from January through March, a 14.2% increase from the same period last year and 24% of revenues, slightly down from the 24.8% it spent in Q1 last year.

The biggest change from last year was seen at Group. After slashing spending from 2020 to 2022 because of recurring COVID-induced travel restrictions, the company allocated $1.3 billion to sales and marketing in 2023 as restrictions were lifted.

Though still modest compared with the spending level of the others, the $320 million Group spent in Q1 this year represented year-over-year growth of 32%, the biggest percentage increase among the giant OTAs. Yet the figure worked out to a comparatively modest 19% of revenues and was down 1% from the fourth quarter.

What does marketing spend mean for the OTAs?

While parsing through the numbers is rather straightforward, determining what they mean isn't so simple and can mean reading between the lines of an earnings report or the accompanying call with analysts. Group CEO Jane Sun explained her company’s marketing spend increase by pointing to “robust growth” in China’s domestic market.

“Chinese consumers are changing their spending habits, placing great emphasis on quality, experience and emotional fulfillment,” she said during a May 21 earnings call. “This evolving mindset is prompting travelers to pursue personalized and high-quality travel experience tailored to their unique preferences, presenting a considerable advantage for travel industry.”

With interest in travel reaching “unprecedented levels,” she said, the company is “intensifying marketing efforts in many provinces [to] effectively encourage travelers to explore diverse destinations, largely contributing to the enduring popularity of the domestic travel.”

She added later, “The year-over-year increase [in marketing spend] was primarily due to increased marketing promotion activities in line with business growth.”

Things weren’t as clear-cut at Expedia Group, where the company was looking to the future while completing a tech migration last year. In a May 2 call with analysts, former CEO Peter Kern noted that gross bookings for Vrbo were slower than expected.

“We had pulled back on Vrbo marketing in the second half of last year while we went through our migration - and while we have been ramping that spend and the product has been improving, we have seen a slower than expected recovery,” Kern said before predicting growth would be lower than what the company had initially forecasted for 2024.

New CEO Ariane Gorin followed up on the point.

“To get the acceleration we want from our consumer business, we need to focus on the basics - driving traffic, increasing conversion, and expanding our margins through higher take rates and more efficient marketing,” she said. “Ultimately, this is going to come down to having great products and great brand value propositions.”

More efficient marketing was also a key point in the Booking Holdings earnings call, also on May 2. As with most travel companies, that means driving more direct bookings, CEO Glenn Fogel said.

“We are pleased to see the direct booking channel continues to grow faster than room nights acquired through paid marketing channels,” he said. “While we see paid marketing channels becoming a gradually smaller proportion of our business over time, we think it is important for us to remain proactive in these channels in order to bring new travelers to our platforms, so long as we are able to do this at attractive ROIs [return on investment].”

During a question-and-answer session with analysts, Fogel was asked how the company pursues greater marketing efficiencies.

“We're always looking for what is the best use of the money,” he said. “What's the best way to put it to work? And when we find things that work, we put more into it. When we find things that actually are not incremental and are actually duplicative, we pull it out and say, ‘Well, let's not spend the money there.’ And that's really what we've been doing.”

At Airbnb, the topic isn’t so much marketing efficiencies as discipline, chief financial officer Ellie Mertz said during the company’s May 8 earnings call.

“In marketing, we've been very disciplined over the last couple of years,” she said. “We continue to have a much lower level of marketing intensity than really anyone else in travel. And at the same time, you know, at the margin, we have seen some incremental opportunities to lean in on channels where we're seeing higher ROIs.”

When asked about the company’s investment priorities for 2024 and beyond, CEO Brian Chesky provided an example about the role of marketing in international expansion.

“We've done a lot of really good work over the last few years on international expansion. But I think at this moment, we are ready to step on the gas,” he said. “And by stepping on the gas, I don't mean it's going to be a significantly greater investment, but a much greater velocity, because we spend a lot of energy updating our products.

“So, most recently, we just updated our application in Asia, specifically in China. And we're bringing a lot of those improvements to Japan and Korea because the applications work fairly similarly,” Chesky added. “And so, getting these products onto a better standard is a really good first thing that you want to do before you actually step on the gas for marketing.”