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After the Web · Era 3 · The early Web

1996–2006acquired by Priceline for $133M · 2005

Booking.com

An online hotel booking service that a Dutch university graduate, Geert-Jan Bruinsma, launched in the summer of 1996 with two servers under his desk and money from 18 friends, copying the idea from the American Hilton.com. Hotels set the price themselves and paid a commission only after the guest checked out, unlike the merchant model of Expedia and Priceline, where the platform resells rooms it has bought. In nine years the company grew from 10 hotels to its purchase by Priceline for $133 million in 2005; in 2007 the international, mostly European business gave the buyer about 55% of its bookings.

Founders Geert-Jan Bruinsma (founder of Bookings.nl, 1996) · Stef Norden (CEO of the merged company from ~2000) · Arthur Kosten (co-founder of Bookingsportal 2001, CMO from 2003) · Kees Koolen (operations director from the early 2000s, CEO 2008–2011)
Domains bookings.nl · bookings.org (historical) · booking.com
travelotamarketplaceagency-modelcommissionperformance-marketingseoaffiliatelocalizationpayments-anglebootstrap

In brief

Booking.com grew out of a site that a Dutch graduate, Geert-Jan Bruinsma, launched in the summer of 1996 with two servers under his desk and money from 18 friends. It was built the opposite way from what the early 2000s considered the "correct" model of online travel sales. The merchant model (Expedia and, among the Americans, Priceline) has the platform buy rooms at a wholesale price and resell them at its own. In the agency model the hotel sets the price itself, the guest pays the hotel on site, and the site receives a commission after checkout. At the end of 2003, according to the company's executives, an industry conference declared the agency model dead estimate, while the company's bookings grew 110% in the year before the sale. In 2005 the American Priceline bought it for $133 million, and in 2007 the buyer's international business, mostly European, already accounted for about 55% of its bookings.

How it started (the founders)

Bruinsma says that in the summer of 1996 he was searching the internet for a way to book a hotel, found nothing Dutch, and came across the American Hilton.com, where a room could already be booked online. He partly borrowed the design. He had no hotel experience apart from a side job as a night porter, where he learned how booking works. He emailed a business plan to a few dozen acquaintances who had internet access, mostly through his student fraternity; 18 of them invested. The legal entity was registered on November 12, 1996, under the name Boekingspunt Nederland, because the chamber of commerce did not accept "Bookings.nl."

The first 10 hotels signed up in January 1997, and sources date the first booking to January–February. Bruinsma set the commission at 5%, by his own account because he did not know the market rates. Later the rates rose to market levels; there is no exact figure for 2005.

In 2002, as Business Case Weekly retells it, IAC, the owner of Expedia, spent six months negotiating a purchase, but the board of directors called the deal off estimate. In May 2003 Arthur Kosten's investment group Bookingsportal bought Bookings.nl, and Kees Koolen became its operations director. Bruinsma explained his departure by saying that he was a developer, not a manager.

Separately, in Cambridge, Andy Phillipps and Adrian Critchlow launched Activebooking.com in 1999, also on the agency model (Active Hotels from 2001); it was combined with Bookings only in 2006, inside Priceline.

Year-by-year timeline

Lesser-known but significant facts

  1. The affiliate network was born of weakness. By 1997 Bookings.nl was only the third largest hotel site in Amsterdam. The top two worked by email, with no online booking. Bruinsma offered both of them a 50/50 commission split for embedding his engine. Both, by his account, agreed within the hour, and he did not know the word "affiliate" at the time estimate.
  2. A failed ad gave rise to the search strategy. The editors of De Telegraaf refused to accept an ad with an internet address instead of a phone number. Bruinsma moved to paid search advertising on AltaVista, and about 60% of early traffic came from search (by his account) estimate.
  3. The British handed out modems to hotels. In 1999, according to Active Hotels executives, only ~40% of independent British hotels had computers. The company handed out Alcatel phones with a built-in modem: that was how the first 500 partners were connected, and within a year the share of connected hotels rose from 20% to 80% estimate.
  4. Urgency signals grew out of books about persuasion. Arthur Kosten says he bought the product team books on consumer psychology and dating to work out why people trust a crowded restaurant. In his version, that is where the prototype of the notifications saying a property was booked a number of times in the past day came from estimate.

Legend vs. the record

The first growth lever

The lever was the agency commission after checkout, combined with traffic bought not from hotels but from search engines and partners.

Mechanics against mechanics. The merchant model of the Americans and Expedia has the platform buy rooms in bulk and resell them; Priceline's 10-K describes its own business this way: rooms are purchased and resold at a price the platform sets, and the supplier's brand is hidden until payment. In Europe it works differently: the platform takes the reservation with the customer's card, but the hotel pays it only after the guest checks out. As Business Case Weekly retells it, the agency commission was about 15% with nearly twice the conversion rate, while Expedia's merchant margin was 20–30% estimate.

Why agency. For Active Hotels, according to Matt Witt, the choice of the agency model was settled in the first six months: the startup had no capital to prepay for rooms. When, around 2002 (according to a participant), the company did try the merchant model, the pilot failed: customers did not like paying by card in advance, and hotels did not like what it did to their cash flow. By then Active was already profitable, and it went back to the agency scheme.

What the agency model cost. According to Kosten, Bookings had a lower margin per booking than Expedia, and this forced constant optimization of conversion. The core of the machine is described in Priceline's 10-K: the European business uses affiliate marketing and keyword purchases as its main source of traffic and depends heavily on search advertising prices. Participants describe the same mechanism: hundreds of localized pages per hotel and destination, then translation, advertising in the language of the market, and A/B tests. Bruinsma says he had landing pages before the term itself existed.

The flip side. Advertising is paid for up front, while the commission arrives weeks after checkout, which creates a cash gap. Participants link the sale to Priceline to this gap: the buyer's money, in Bruinsma's version, gave them room to pay the Google bill estimate. Right after the deal: Q4 2005, $158 million, +88% organic, against +3% for Priceline's US business according to the release table; Boyd cited +5% in Skift.

The paired story

The pair is Priceline.com (history-priceline): the American model, where the buyer names the price and the company earns the spread between it and the supplier's rate, against the Dutch one, where the hotel sets the price itself and the site receives a commission after checkout. The two stories connect on July 14, 2005, when Priceline buys Bookings B.V. and grows on it.

Parallels today (projects from the catalog)

What a builder can take from this in 2026

  1. A model with no prepayment can beat the "correct" one. The hotel has nothing to lose when the commission comes after checkout, while a merchant platform has to invest in rooms up front.
  2. Test the alternative on users. Active Hotels did not argue about the merchant model; it launched a pilot, saw that customers and hotels did not accept it, and went back to the agency model with evidence.
  3. An industry consensus can be wrong, but it has to be checked with numbers. At the end of 2003 professionals called the agency model dead, and in 2007 Priceline's international, mostly European business accounted for about 55% of its bookings. Later Expedia CEO Dara Khosrowshahi said in Skift that its attachment to the merchant model and high margins had blinded the company.
  4. The cash gap is the price of the agency model. You pay for traffic now and get the commission weeks later; the money of a richer buyer closes that gap estimate.

Discrepancies and what we could not verify

Sources (primary first)

Primary (period documents):

Participants' words in the press (counted as one source):

Secondary (used with markers):

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