David Goulden
Chief Financial Officer at Booking
Thank you for those comments, Glenn and as you said, I'm not going anywhere for some time. Over the next year in my CFO role and I will involve beyond that. I will remain as focused as ever on continuing to help deliver strong results from the business and creating value for all stakeholders. Now turning to our results. I'll review our results for the fourth-quarter and provide some color on the trends we've seen so far in the first quarter and our thoughts on 2023. All growth rates for 2022 are relative to the comparable period in 2019 unless otherwise indicated. All growth rates for 2023 are on a year-on year basis unless otherwise indicated.
We will be making some references to the comparable period in 2019, where we think these are helpful. Information regarding reconciliation of non-GAAP results to GAAP results can be found in our earnings release. Now onto the fourth-quarter. We were encouraged to see room night growth of 10% in the fourth-quarter, up from 8% room night growth in the third-quarter with the improvement driven by Asia and the US. For the fourth-quarter the US was up more than 35%, rest-of-world was up more than 10% and Europe and Asia were both up mid single-digits. Q4 was the first-quarter of room night growth in Asia versus 2019. Growth in total room nights on a year-on year basis increased from 31% in Q3 to 39% in Q4.
Our mobile apps represented over 45% of our total room nights in the fourth-quarter and about 45% for the full-year. We continue to see an increasing mix of our total room nights coming to us through the direct channel. Direct channel increased as a percentage -- as a percentage of room nights in the fourth-quarter and for full-year relative to 2021 and 2019. The international mix of our total room nights in Q4 was about 48%, which was higher than Q3, but still a few percentage points below Q4 2019. Our cancellation rate was slightly above 2019 levels in Q4, but was slightly below 2019 levels for the full-year. In Q4, the booking window Booking.com remained shorter than in 2019, similar to what we saw in the third-quarter of 2022. This booking window expanded meaningfully versus the fourth-quarter of 2021, when we saw a higher mix of near-term bookings during the COVID 19 Omicron variant wave.
For our alternative accommodations at Booking.com our room night growth rate was about 15% in Q4 versus 2019 and the global mix of alternative accommodation room nights, was about 29%, which was a couple of percentage points higher than Q4 2019 and Q4 2021. Q4 gross bookings increased 32% versus 2019 or 47% on a constant-currency basis. The 32% increase in gross bookings was 22% points better than the 10% room night increased due to 29% higher accommodation constant-currency ADRs and also due to five points from strong flight bookings across the group, partially offset by 15 percentage points of negative impact from FX movements.
Our accommodation constant-currency ADRs benefited by about 1% points from regional mix and about 28% points from rate increases across all our regions. Despite the high ADRs in the fourth-quarter we have not seen a change in the mix of hotel star ratings being booked or changes in length of stay that could indicate the customers trading down. We continue to watch these dynamics closely. Airline tickets booked in the fourth-quarter were up about 249% versus a small base in 2019, and up about 61% versus 2021, driven by the continued expansion of Booking.com's flight products. Revenue for the fourth-quarter was up 21% versus 2019, and up about 35% on a constant-currency basis.
Revenue as a percentage of gross bookings was about 130 basis-points below Q4 2019 and was about in line with our expectations. Our underlying accommodation take rates were about in line with Q4 2019 levels. Marketing expense which is a highly variable expense line increased 32% versus Q4 2019. Marketing expense as a percentage of gross bookings was about in-line with our expectations and with Q4 2019. Sales and other expenses as a percentage of gross bookings were up about 40 basis-points compared with Q4 2021, and was in line with our expectations. About 42% of Booking.com's gross bookings were processed through our payments platform in Q4, up from about 30% in Q4 2021. Our more fixed expenses in aggregate were up 24% versus Q4 2021, which is higher than our expectations primarily due to changes in FX in the quarter.
Adjusted EBITDA was over $1.2 billion in the fourth-quarter, which was 3% below 2019 and would have been about 16% above 2019 on a constant-currency basis. Non-GAAP net income of $957 million results in non-GAAP EPS about $25 a share, which was up 6% versus Q4 2019. On a GAAP basis, we had net income of over $1.2 billion in the quarter which included a $240 million pretax gain related to sale of office building for Booking.com's future headquarters in a sale-leaseback transaction, as well as $179 million unrealized gain equity investments primarily related to Meituan, JD, and Grab. When looking at the full-year, we are pleased to report our 2022 room night was 6% higher than 2019, and our gross bookings were 26% higher and about 36% higher on a constant-currency basis.
Our full-year revenue was over $17 billion, which was 30% above 2019 and up about 24% on a constant-currency basis. Full-year revenue as a percentage of gross bookings was 14.1% in 2022, which was lower than the 15.6% in 2019 due to almost a full point of noted impact from timing about 40 basis-points from the slower recovery in advertising and other revenues, which have no associated gross bookings and about 30 basis-points from an increased mix in flights. The benefit of take rates in 2022 from increased revenue from payments was offset by our increased investments in merchandising, each of which impacted our reported take rates by about one percentage points in 2022 compared to about 0.5 percentage points each in 2019.
These changes in payments revenue and merchandising costs versus 2019 are mainly at Booking.com. Our full-year adjusted EBITDA was about $5.3 billion, which was 10% below 2019 and up about 6% on a constant-currency basis. Adjusted EBITDA margin was 31%, which was four points higher from our EBITDA margin in 2021 and better than our expectations for a few points higher at the start of the year. Now onto our cash and liquidity position, our Q4 ending cash investment balance of $15.2 billion was up versus our Q3 ending balance of $11.8 billion primarily -- driven primarily by the $3.6 billion bond offering we completed in Q4. The $2.1 billion of free-cash flow generated in the quarter and about $600 million in proceeds from the sale-leaseback transaction I mentioned previously.
This increase in our cash balance was partially offset by about $2.3 billion in share repurchase in Q4 and by the payments of about $780 million in November debt maturity. Looking forward into 2022 we generated almost $6.2 billion in free-cash flow, which was 38% higher than in 2019. We repurchased over $6.5 billion of our shares in the year and reducing our year end share count by about 8% versus 2021 and by 22% over the last five years. We are proud of this accomplishment because it reflects both our commitment to return capital to shareholders and how carefully we've managed our stock-based compensation expense and it's dilutive impacts. We continue to see many publicly-traded companies pro-forma [indecipherable] very real expense associated with stock-based compensation.
We strongly disagree with this approach and therefore every profit metric we report includes the negative impact of stock-based compensation expense. We view SBC expense as a very low-cost of doing business across every stakeholder who fully counts when evaluating the performance and returns of our business or any business. If anything, we view SBC dollars even more valuable than cash dollars because of our long-term expectations, [indecipherable] more in the future. It's the same expectation that serves as a rationale for pursuing our share repurchase program, a program is meaningfully reduced our share count over-time has not just served to offset dilution from SBC.
Simply offsetting dilution does not represent a return on capital to shareholders, but actually represents a cash drain on our business that does not get counted in many companies pro-forma reported profits. In 2022, our stock-based compensation resulted in less than 0.7% of shareholder dilution and during the last five years. This result in less than 3% occupancy dilution. As I mentioned during the same-period, we reduced total share count by a net 22% inclusive of the shares that were added as result of our stock-based compensation activities.
Our future practices will continue to guide, but the same two philosophical approaches that guide us in decades, namely, number-one, the stock-based compensation accounts[phonetic] and two our stock repurchases. First and foremost are meant are actual events to return capital to shareholders in the form of share count reductions. In January, we started to sell down our investment in Meituan and completed the sale of our position in February. Total proceeds of $1.7 billion from the sale represents a $1.2 billion or over 250% increase in the value of our regional investments.
On an after-tax basis, we expect this to increase our available cash position by about $1.4 billion. Our business partnership with Meituan continues. We think about our capital structure and allocation framework going-forward we are focused on growing returns for our shareholders, whilst prudently investing in our business and maintaining our strong investment-grade credit ratings. We will target maintaining a gross leverage ratio of about 2%, which is about in line with historic levels. On a net leverage basis, we've started to run the business with negative net leverage. However, we plan on moving gradually through addition our positive net leverage targeting about 1x net leverage over time. We believe managing our capital structure with these targets will allow us to maintain our strong investment-grade credit rating whilst also generating additional capacity for returning capital to shareholders as our EBITDA increases.
Given these considerations and our current outlook for the business, we expect our annual total return of capital to shareholders to be at least equal to our free cash flow over the next few years. In 2019, we started the year with $4.5 billion remaining under our share repurchase organization that was approved in the prior year. In the second quarter 2019, our Board of Directors approved a new $15 billion authorization. Since the start of 2019, we repurchased the full $4.5 billion under prior authorization and have repurchased $11.1 billion under the $15 billion authorization, leaving us with $3.9 billion remaining at the end of last year.
We're announcing today that our Board of Directors has approved a new share repurchase authorization of $20 billion that we will begin utilizing after we complete the current authorization. We expect to complete the share repurchases under a cumulative $24 billion authorization within the next four years, assuming that travel continues to recover and grow from here. Before I turn to 2023, I'd like to remind you we'll primarily compare to 2023 with 2022. However, there will be some periods where a comparison to 2019 will be helpful to better understand the trends in the business. For example, comparing January 2023 versus '19 -- versus 2019 helps avoid the distortion created by -- from comparing to January '22, which was negatively impacted by the Omicron variant.
As you recall, our January 2022 room nights were 21% below 2019, but has quickly improved and February -- was in line with February 2019. So now on to recent trends and our thoughts for the first quarter of 2023. In January, we booked over 95 million room nights, our highest monthly amount ever and about 10 million more room nights than our previous monthly record set last May. January 2023 room nights were up 60% on a year-on-year basis. This compares to Q4 2022 room night growth of 39% on a year-on-year basis. When comparing January 2023 with January 2019, room nights were up 26%, a very nice improvement from the 10% growth in the fourth quarter of 2022.
This improvement in growth rates versus 2019 from Q4 January was driven primarily by Europe, Rest of World, and Asia. January room night growth versus 2019 was about 35% in the U.S., over 25% in Europe and Rest of the World, and over 20% in Asia. In January, we saw lower cancellation rates versus 2019. Additionally, we've seen the booking window fully normalized back to 2019 levels in January. And in some regions, it has expanded as we see a healthy mix of near-term bookings as well as bookings to stay late in the year. We also continue to see no change in the mix of hotel star rating levels being booked or changes in length of stay that could indicate that customers are trading down despite ADRs continuing to be higher than in 2019.
The average length of stay of transaction booked in January continued to be a bit longer than it was in 2019. January likely saw some benefit from bookings that were made in the month -- in December last year or potentially later in this year. This may indicate the room night growth could moderate from these levels going forward as some of these booking pattern differences normalize. On a year-on-year basis, January gross bookings were up 74% or up 83% on a constant currency basis. The 74% increase in gross bookings is 14 percentage points higher than 60% room night growth due to 13% higher constant currency ADRs and also due to a few points from flight booking partially offset by 9 percentage points of negative impact from FX movements.
Gross bookings in January were up 55% versus 2019 or up 72% on a constant currency basis. While there continues to be uncertainty around the month-to-month trends, our comments for the first quarter made the assumption that room night growth for the fourth quarter will be over 30% year-on-year compared to 2019, this will be just over 20%, assuming some moderation in growth from what we've seen over the last few weeks. We expect Q4 gross bookings to grow about 4 percentage points faster than room nights on a year-on-year basis due to about 6% higher constant currency ADRs and a couple of points from continued flight bookings partially offset by about 6% -- by about 6 points from FX.
We expect Q1 revenue as a percentage of gross bookings to be about 10.3%, a 40 basis point improvement from Q1 2019 due to a less negative impact on timing, partially offset by increased investments in merchandising and a higher mix of clients. We expect Q1 marketing expense as a percentage of gross bookings to be slightly lower in Q1 than in Q1 2022 due to increase in direct mix. Marketing and merchandising combined, as a percentage of gross bookings in Q1, will be a little higher than in Q1 2022, but for the full year, we expect to be about in line with last year.
We expect Q1 sales and other expenses as potential gross bookings to be about 30 basis points higher than in Q1 2022 due to higher gross merchant bookings mix and higher third-party core costs, including the impact of our partnership with Majorelle. We expect our more fixed expenses in Q1 to grow just over 20% versus Q1 2022 due to higher personnel and related expenses, indirect taxes and IT expenses. Taking all this into account, we expect Q1 adjusted EBITDA to be over $600 million, which will represent a more than 93% increase versus Q1 2022.
As we think about the full year ahead, we're encouraged by the strong trends we're seeing in Q1 so far. However, we do expect continued volatility in our top line trends, which makes it very difficult to predict how the top line will progress during the year and how the full year will turn out. Assuming a moderation in growth from current levels and taking into account the more difficult comparisons as we move through the year, our full year commentary assumes low-teens gross booking growth versus 2022. Of course, it's early in the year, but this is our best estimate at this point in time.
For the full year, we expect our 2023 revenue as a percentage of gross bookings to be about 50 basis points higher than in 2022, which will result in year-over-year revenue growth as higher than our year-over-year gross bookings growth. We expect the negative impact on timing to mostly go away in 2023, and we also expect that our payments mix will continue to add the take rates. Partly offsetting these are continued increase in the mix of flights in our business, and increase in merchandising spend versus 2022. We expect marketing and merchandising combined as the essential [phonetic] gross bookings will be about the same as in 2022.
We expect our more fixed expenses in 2023 to grow about 20%, which is similar to the growth last year. We expect these more fixed expenses to grow more slowly in future years. As a result, we expect to deliver a record level of EBITDA in 2023 while continuing to expand our EBITDA margins by a couple of percentage points versus 2022. In closing, we are pleased with our Q4 results and the early trends we're seeing in 2023. We remain confident that our strategic priorities will enable us to provide better services for our travels and partners. We continue to remain focused on building a larger and faster-growing business than we have pre-COVID that delivers more and faster growing EBITDA dollars and more and faster growing earnings per share with industry-leading EBITDA margins. We'll now move to Q&A. So Chris, can you please open the lines?
