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Skift Take
Just about every travel company — Sonder included — wants more direct bookings because of the lower costs and chance to build customer relationships. Still, Sonder may be at a growth stage where adding distribution channels can be an important hedge against over-reliance on the bigger ones.
Hotel and short-term rental brand Sonder stated it generated 45 percent of its bookings on Sonder.com last year, but its chief financial officer said direct traffic has never been a primary objective.
Sanjay Banker, the CFO and company president, told Skift last week that his company isn’t actively managing direct-traffic as a key metric, adding he hopes Sonder bookings through online travel agencies skyrocket.
Direct bookings have soared since pre-pandemic 2019, when they were in the “20s” as a percentage, he said, until now. SimilarWeb estimated that Sonder.com got nearly half of its desktop traffic directly in January 2022.
Banker quipped that Sonder could easily get 100 percent direct traffic if it ceased distribution through all other channels, including Airbnb, the online travel agencies, metasearch engines, global distribution systems and newly signed travel management companies.
Measuring But Not Prioritizing?
Still, co-founder and CEO Francis Davidson mentioned Sonder’s direct-booking bonafides in his prepared remarks during the company’s inaugural earnings call Wednesday as a public company.
“One metric we track as a proxy for the strength of our brand and guest loyalty, our direct bookings on sonder.com,” Davidson said. “Despite minimal marketing spend, sonder.com continues to be our largest single channel for bookings and accounted for 44 percent of total bookings in Q4 and 45 percent of total bookings in 2021. We believe delivering a better guest experience will translate to more direct bookings and increase customer loyalty, resulting in lower customer acquisition costs, higher lifetime value, improved RevPAR (revenue per available room) and higher cash flows to Sonder.”
Banker pointed out that Sonder doesn’t do a ton of brand marketing so much of its direct traffic comes from word of mouth, repeat business, and “outbound selling,” meaning sales efforts targeting groups and corporate housing when not done through global distribution systems and travel management companies.
But does Sonder place more importance on direct bookings than Banker admits? Is his downplaying the importance of direct traffic perhaps a cover story for what was a weak part of the business, especially pre-pandemic?
After all, industry giant Airbnb touts its advantages in attracting some 90 percent of its traffic directly, and Booking.com CEO Glenn Fogel often speaks of his desire to acquire more repeat business through its app so the company doesn’t constantly have to pay Google to attract bookers.
In addition to Sonder CEO Davidson pointing to direct bookings as a plus in Sonder’s earnings call Wednesday, the issue came up as a risk factor in a November 2021 investor presentation where Sonder stated: “Sonder uses third-party distribution channels to list all of its units, and these channels have historically accounted for a substantial percentage of Sonder’s bookings.”
In the same presentation, though, Sonder stated that 20 percent of its RevPar growth would be tied to adding distribution channels, bolstering revenue management, adding ancillary services, and loyalty and customer relationship management.
So part of the RevPar growth would be linked to increasing bookings on outlets other than Sonder.com.
Banker said Sonder’s prime objective is to be present everywhere, on all channels, and to serve as many people as possible.
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