Latest / Marketing Made Simple with Fexingo: Branding, SEO, and Digital Strategy for Beginners / How Booking.com Uses Scarcity to Drive Billions in Revenue
Transcript
- Lucas: So you're on Booking.com looking at a hotel in Barcelona. It says 'Only 2 rooms left at this price.' That single line — it's not just a status update. It's a carefully engineered piece of marketing psychology. Luna: I have to admit, I've booked rooms I wasn't sure about just because of that message. Lucas: Exactly. And it works. Booking.com's parent company, Booking Holdings, generated over 20 billion dollars in revenue last year. A meaningful chunk of that comes from that one tactic: using scarcity to nudge people from maybe to yes. Luna: So is this just about making people feel like they'll miss out? Lucas: Yes, but it's more precise. The principle is called loss aversion. Psychologist Daniel Kahneman showed that people feel the pain of losing something twice as strongly as the pleasure of gaining it. So when you see 'Only 2 rooms left', your brain goes: 'I'm about to lose this option.' That hurts more than saving a few dollars feels good. Luna: Makes sense. And Booking.com takes it further – they also show 'X people are viewing this property right now.' That's social proof layered on top. Lucas: Right. Robert Cialdini calls that 'social proof' – we look to others to decide what's correct. When you see twenty people looking at the same hotel, you assume there's a reason. Combine that with a dwindling room count and you've got a powerful emotional push. Luna: Has Booking.com ever tested what happens if they remove those messages? Lucas: They're not public about specific A/B tests, but there's good third-party research. In 2016, Expedia ran a study – actually, it was a paper from the Journal of Marketing Research – that found adding scarcity cues like 'limited availability' increased conversion rates by about 20 percent. Booking.com essentially built its whole front-end around that insight. Luna: But there's a dark side, right? Some of those messages aren't always accurate. I've seen the same 'last room' message on the same hotel over multiple days. Lucas: That's the criticism. If you cry scarcity too often, you erode trust. Booking.com has faced consumer complaints and even regulatory scrutiny in parts of Europe. The UK's Advertising Standards Authority has called out some of their messaging for being misleading. Luna: So how do you use this tactic without crossing the line? Lucas: The brands that do this well are transparent. Don't fabricate scarcity. If you're a small ecommerce brand, you can show real-time inventory honestly. 'Only 5 left in stock' is fine if it's true. For services, you can use time-based urgency – 'This price expires in 2 hours' – as long as you really do end the deal. Luna: And that's a principle worth holding onto. Lucas: And look, if today's episode sparked something you've actually used in your own work, that's the link – buy me a coffee dot com slash fexingo. It's a simple way to support the show. Luna: Yeah, we really appreciate that kind of gesture. Lucas: So back to Booking.com – they also use a variant called 'Booked X times today'. That's not just scarcity, it's social proof again, but with a recency bias. It tells you that other people have made the same choice today, which validates your potential decision. Luna: And they personalize it. If you've been searching for a specific date range, the message might say 'This price is only available for your dates' – that's tailored scarcity. Lucas: Exactly. Personalization makes the loss feel more relevant. Booking Holdings has a massive data operation – over 28 million listings across 220 countries. They can tailor those messages based on your search history, device type, even how long you've lingered on a page. Luna: So it's not just one line of text. It's a whole system of triggers designed to reduce hesitation. Lucas: And they've got the metrics to prove it. In their 2025 annual report, they mentioned that direct channels – meaning people who go straight to Booking.com without clicking an ad – account for over 60 percent of bookings. That loyalty is partly because they've trained users with consistent, effective messaging. Luna: Are there other industries doing this well besides travel? Lucas: Amazon does it on product pages with 'Only 3 left in stock'. But interestingly, they also show 'More on the way' – which can backfire. Social media platforms like Ticketmaster use countdown timers. Even B2B software companies use scarcity: 'Only 10 seats left at this price' for a webinar or a course. Luna: That last one – if it's a digital product, scarcity is artificial. You can always add more seats. Lucas: And that's where ethics come in. A physical product has real scarcity. A digital product or service can be manufactured. Some marketers argue that's inherently manipulative. But others say it's just a legitimate way to create urgency and help people make a decision they're already considering. Luna: I think the key is transparency. If you say 'limited time' and then extend the deadline, people notice. Lucas: Right. There's a fine line. Booking.com itself has received mixed reviews on trustpilot – partly because of this practice. So the lesson for marketers is: test scarcity, but don't abuse it. If you build a brand on false urgency, you'll eventually lose the credibility that makes the tactic work in the first place. Luna: So to sum up: scarcity works because of loss aversion, but it needs to be real and consistent with your brand promise. Lucas: Exactly. And if you want to dive deeper into the psychology, Robert Cialdini's book 'Influence' is still the best resource. He covers scarcity, social proof, and all the other principles we've touched on. Luna: And if you want to support our work on Marketing Made Simple, you know the link. Lucas: Yeah, it's buy me a coffee dot com slash fexingo. Thanks for listening.