Executive Vice President and Chief Financial Officer at Booking
Thank you, Glenn, and good afternoon. I'll review our results for the second quarter and provide some color on trends we've seen so far in the third quarter. All growth rates for 2022 are relative to the comparable period in 2019 unless otherwise indicated. Information regarding reconciliation of non-GAAP results to GAAP results can be found in our earnings release. Now on to our results for the second quarter. Room nights in the second quarter were up 16%, a 25-point improvement from Q1 and our first full quarter of room night growth versus 2019. On our May earnings call, we discussed how we started off the quarter with a 10% increase in room nights for the month of April, which was a 14-point improvement from March. As we moved into May, we saw further strength in room nights resulting in 22% growth for the month. June room night growth of 14% landed between April and May.
On -- for Q2 on a regional basis, room nights in Europe were up over 20%. The U.S. was up about 30%. Rest of World was up in the mid-teens, and Asia was down high single digits with all regions improving from Q1 levels. The improvement from Q1 was helped by all regions with Europe and Asia contributing the most. Mobile bookings, particularly through our apps, represent about 50% of our total room nights in the second quarter. Our apps were over 2/3 of our mobile bookings and over 40% of total room nights, which was in line with the first quarter. In the second quarter, we continued to see an increasing mix of our total room nights coming to us through the direct channel versus Q2 2019 and versus Q2 2021. The international mix of our room nights in Q2 was about 45%, an increase from about 40% in Q1. Q2 international room nights were up mid-single digits compared to Q2 2019 levels, which was the first quarter of growth versus 2019 for international.
And these international room nights drove most of the overall improvements in room night growth from Q1 to Q2. The improvement in international room nights we saw continue to be driven by travel within Europe, and these cross-border room night bookings continue to have on average longer length of stay and a shorter booking window than comparable bookings in 2019. In Q2, we also saw an encouraging improvement in long-haul international room nights, which almost recovered to 2019 levels. We saw very strong growth in our domestic room nights in the second quarter, also an improvement from Q1. We were pleased to see our cancellation rates below 2019 levels in Q2. You'll recall our Q1 cancellation rates were about in line with 2019. In Q2, the booking window of Booking.com moved closer to 2019 levels than it was in Q1 but remained shorter than 2019 across all major regions.
The booking window expanded versus the second quarter of 2021. Our alternative accommodations of Booking.com, our room night growth rate was 25% in Q2 versus Q2 2019, and the global mix of alternative accommodation room nights was about 32%, which was about in line with Q2 2021 and a couple of percentage points higher than Q2 2019. Within Europe, our mixed alternative accommodations continues to be meaningfully higher than the global average. In North America, our mix of alternative accommodations remains low relative to global average. However, we did see an encouraging increase in mix versus Q2 2021 in that region. Q2 gross bookings of about $35 billion increased 38% versus Q2 2019 or 48% on a constant currency basis. The 38% increase in gross bookings was 22 percentage points better than the 16% room night increase due to 25% higher accommodation constant currency ADRs and also due to a few points from strong flight booking growth across the group, partially offset by the 10 percentage points of negative impact from FX improvement -- from FX movements.
Our accommodation constant currency ADRs benefited by about two percentage points from regional mix and about 23 percentage points from rate increases across all of our regions, most notably in Europe and North America, especially in high-demand, leisure-oriented destinations. Constant currency ADR growth versus 2019 accelerated from 18% in Q1 to 25% in Q2 due primarily to higher rates in Europe. Despite the higher ADRs in the second quarter, we have not seen a change in the mix of hotel start rate levels being booked or changes in length of stay that could indicate that consumers are trading down. We'll continue to watch the dynamics closely. Airline tickets booked in the second quarter were up about 190% versus a small base in 2019 and up 31% versus 2021, driven by the continued expansion of Booking.com's Fly platform. Consolidated revenue for the second quarter was $4.3 billion, which was up 13% versus 2019, up about 20% on a constant currency basis.
Revenue as a percentage of gross bookings was about 275 basis points below Q2 2019, down more than our expectations due primarily to timing differences between gross bookings and revenue recognition driven by stronger bookings than we expected in Q2. Our underlying accommodation take rates were about in line with Q2 2019 levels. Marketing expense, which is a highly variable expense item, increased 27% versus Q2 2019. Marketing expense as a percentage of gross bookings decreased by about 40 basis points versus Q2 2019, which is better than our expectations, mainly due to higher-than-expected marketing ROIs in a high-intent travel environment. Additionally, our direct mix was a little higher than we expected. Sales and other expenses were up 87% versus Q2 2019 due to a higher volume of merchant gross bookings and higher third-party call center costs. 38% of Booking.com's gross bookings were processed through our payments platform in Q2, up from 16% in Q2 2019.
Compared with Q2 2021, sales and other expenses as a percentage of gross bookings were up about 40 basis points, slightly better than our expectations of up 60 basis points. Our more fixed expenses in aggregate were better than our expectations, up 7% versus Q2 2021, primarily due to a slower-than-expected ramp-up in terms of our G&A and IT expenses. Adjusted EBITDA was $1.1 billion in the second quarter, which is better than our expectations. If we were to normalize for negative timing impact on revenue in the second quarter, our adjusted EBITDA would have been meaningfully higher than in Q2 2019. In addition, the changes in FX rates are negatively impacting the translation of our EBITDA to U.S. dollars. Our Q2 EBITDA would have been about 10% higher if FX were in line with Q2 2019. Non-GAAP net income of $776 million results in non-GAAP EPS of about $19 a share, which is down 19% versus Q2 2019.
On a GAAP basis, we had operating income of $1 billion and net income of $857 million in Q2. Now on to our cash and liquidity position. Our Q2 ending cash investment balance of $14.2 billion was up versus our Q1 ending balance of $12.8 billion, primarily driven by $2.6 billion of free cash flow, partially offset by about $1.3 billion in share repurchases in Q2. The increase in free cash flow included a $2.1 billion benefit from change in working capital due to the increase in our deferred merchant bookings and other current liabilities, partially offset by the increase in our accounts receivable. We continue to return capital to shareholders and more recently have increased the pace of our repurchase given the pullback in our share price. In addition to the $1.3 billion of share repurchase in Q2, we repurchased another $840 million of our shares in the month of July, which brings our year-to-date repurchases to just over $3 billion and our outstanding authorization to about $7.4 billion.
Given our recent increased pace of share repurchases, we now believe we'll complete our current authorization in about two years from when we started the repurchasing back in January. Now onto recent trends for the third quarter. Joint room nights increased about 4% versus 2019 or about 7%, excluding Russia, Belarus and Ukraine. Growth fluctuated a bit in July and were strong in the second half of the month versus the comparable weeks in 2019. ADR growth remained at Q2 levels, and gross bookings were up just over 20% in July, including some help from flights, partly offset by negative impacts of FX pressure. In July, constant currency gross bookings were up about 35%. Compared with June, growth rates in July moderated in all regions with North America showing the smallest change. In July, Europe room night growth was up mid-single digits and up low double digits, excluding Russia, Belarus and Ukraine. Growth in the U.S. was up 25%. Rest of World was up low single digits, and Asia was down about 10%, all versus 2019.
When thinking about the rest of Q3, we realized there continues to be volatility in the environment, and our commentary assumes that room night growth for the fourth quarter will be at the same level we saw in July. We do expect the strength in ADRs we saw in July to continue for the remainder of the third quarter as well as continued strength in price and flight bookings. We expect the difference between the level of room night growth and gross booking growth for the full third quarter to be a few percentage points less than the 22% it was in Q2 due to factors, including more FX pressure in Q3. We expect FX pressure gross bookings by about 12% in Q3. In July, the overall booking window Booking.com remained stronger than it was in 2019, similar to Q2. We expect Q3 revenue as a percentage of gross bookings to be about 70 basis points lower than in Q3 2019 due to investments in merchandising, consistent with our prior commentary about the opportunity for us to lean into a recovering travel market in 2022 and due to an increase in the mix of flights and some impact from FX rates.
We expect our underlying accommodation take rates to remain stable. We expect Q3 marketing expense as a percentage of gross bookings will be slightly above Q3 2019 as we expect to invest in capturing demand and increasing awareness during the peak travel season. We expect Q3 sales and other expense as a percentage of gross bookings to be about 40 basis points higher than it was in Q3 2021 due to higher gross booking mix and higher third-party call center costs, including the impact of our partnership with Majorelle. We expect our more fixed expenses in aggregate will be about 20% higher than Q3 2021 with personnel up about 10% and both G&A and IT up meaningfully versus Q3 of last year. The year-on-year increase in G&A is driven by higher deal sales taxes, which are tied to revenue as well as increased personnel-related expenses due to return to a hybrid work environment. We expect IT expenses to increase year-over-year at a similar rate to what we saw in Q2.
Taking all this into account, we would expect Q3 adjusted EBITDA to be slightly above Q3 2019. As I noted for Q2, the comparison of our Q3 EBITDA expectations to Q3 2019 is negatively impacted by changes in FX rates. At current exchange rates, we expect that our FX-neutral Q3 EBITDA growth versus 2019 will be about 15 percentage points higher than our expectation on a reported basis. We know there's a lot of interest in what will happen beyond the summer. Booking.com's gross bookings for the Q4 travel period are over 15% higher than they were at this time in 2019 but with a high percentage of cancelable bookings. The booking window is still shorter than it was in 2019, which reduces the amount of gross bookings that we expect on the books for Q4 at this time.
The shorter booking window limits our visibility into Q4, and we recognize that conditions could change rapidly. Please note these Booking.com gross booking trends for Q4 period are on a euro basis. On a dollar basis, these growth rates would be about 10 percentage points lower. We are maintaining the full year EBITDA margin commentary we provided in February and May, and we still expect EBITDA margin for 2022 to be a few points higher than in 2021. As a reminder, timing mainly impacts adjusted EBITDA and EBITDA margins for the year. If it were not for the impact of timing, our expectations for the full year EBITDA margins would be a few points higher than our guidance for the year. As the year has progressed, we revised our allocation of our growth investments between marketing and merchandising.
We now expect marketing spend as a percentage to gross bookings to be about the same as it was in 2019 and expect to spend more on merchandising. This higher merchandising, along with a higher-than-anticipated mix of flights and some negative FX impact, means we expect our take rates for the year will now be in the mid-14% range. Our underlying accommodation take rates remain about the same as we were in 2019. In conclusion, we're encouraged by our strong Q2 results and by the continued growth above 2019 levels we have seen in July. We remain confident that our focus on customer acquisition and our strategic priorities is the right approach for 2019 -- sorry, for 2022.
We'll now take your questions. Michelle?