Booking NASDAQ: BKNG Holdings CEO and President Glenn Fogel said the online travel company remains focused on long-term product investment and market-share gains, even as the travel industry faces near-term uncertainty from geopolitical conflict and macroeconomic concerns.
Speaking at an investor conference, Fogel said he continues to view travel as a durable growth market, citing a long-term history of travel spending outpacing global GDP by 1% to 2%. He said rising wealth around the world remains a structural tailwind, particularly because “about half the people on this earth” still cannot afford to travel.
Fogel also pointed to continued migration from offline to digital travel booking as another long-term driver for Booking Holdings. He estimated that roughly one-third of travelers still do not buy travel digitally, creating additional opportunity for the company’s platforms, which include Booking.com, Priceline, Agoda, KAYAK and OpenTable.
“For us, the bigger issue to me is not the secular industry,” Fogel said. “It’s how do we continue to gain share?”
Fogel Emphasizes Long-Term Investment
Asked about current travel demand and near-term headwinds, Fogel declined to provide incremental short-term commentary beyond the company’s earnings call. Instead, he emphasized that management is focused on building the franchise for long-term returns.
Fogel said Booking Holdings should not allow short-term volatility to derail investment in strategic products and services. He cited the company’s variable cost structure as an advantage, noting that even in 2020, which he described as the worst year ever for travel because of the pandemic, Booking Holdings generated just under $900 million in EBITDA.
“If there’s no demand, I ain’t going to spend a lot of money on performance marketing when there’s no demand,” Fogel said. He said that flexibility allows the company to avoid cutting back on important long-term projects when demand weakens.
AI Seen as a Net Positive
Fogel said Booking Holdings sees artificial intelligence as “an absolute net benefit” to the company’s future, though he cautioned that the industry remains in the early stages of understanding how AI will affect travel discovery and booking behavior.
He said consumers are already using AI chatbots for travel discovery and exploration, but that direct booking through those tools is not yet broadly available. Booking Holdings is working with multiple large language model providers globally, Fogel said, while also building AI capabilities into its own products.
Fogel said 65% of users currently come directly to Booking.com, and he wants that figure to increase. He said the company’s direct relationship with customers, its Genius loyalty program, and its supplier relationships provide data and offers that outside search providers or AI platforms may not have.
“Google knows everything about you,” Fogel said. “They don’t know what I can offer to you because you are a Genius Level 3.”
Fogel also described internal AI use cases, including software development and customer service. He said AI can lower customer service costs per contact, reduce overall contacts and in some cases improve customer satisfaction. He gave examples of AI voice interactions that can answer customer inquiries more quickly and at lower cost than traditional call center models.
Connected Trip Still in Early Stages
Fogel said Booking Holdings remains in the early stages of developing its “Connected Trip” strategy, which aims to combine accommodations, flights, rental cars, attractions, restaurants and other services into a more integrated travel experience.
The conference moderator noted that connected transactions grew in the high teens in the first quarter and now represent a low double-digit percentage of Booking.com’s overall transactions. Fogel said he is proud of the progress, but believes the opportunity remains largely untapped.
He highlighted the company’s flight business, saying Booking Holdings had no flights offering a few years ago and posted a 28% increase last quarter. Excluding Ctrip.com’s domestic flights, Fogel said Booking may now be the largest third-party seller of flight tickets.
Fogel said OpenTable remains an underused opportunity within the Connected Trip strategy. He described a potential scenario in which Booking.com knows a traveler is staying in an expensive London neighborhood, while OpenTable knows that traveler likes restaurants, allowing the company to present targeted dining offers.
“That’s just one little opportunity,” Fogel said. “It’s so big.”
He said the Genius loyalty program can further enhance Connected Trip by allowing suppliers across verticals to make special offers to high-value travelers in a closed user group.
Margins, Capital Returns and M&A
Asked about margins after several years of EBITDA margin expansion, Fogel said the company has flexibility but must balance growth investments with discipline. He said lower marketing costs from higher loyalty and direct traffic could support margins, while expansion into non-hotel verticals may pressure margin profile because those businesses generally carry lower margins than hotels.
Fogel said Booking Holdings’ capital allocation priorities remain investing in the business, pursuing M&A where management has high confidence in returns, and returning excess cash to shareholders. He said the company has bought back about 40% of its outstanding shares over the past dozen years and emphasized that repurchases have reduced the share count.
“If we don’t” see strong internal or M&A opportunities, Fogel said, the company should return cash to shareholders “because they can deploy it better than you can.”
Long-Term Growth Targets
Fogel reiterated confidence in Booking Holdings’ long-term ambitions for 8% constant-currency gross bookings growth, 8% revenue growth and 15% adjusted EPS growth, while stressing that results will be volatile over shorter periods.
He said the confidence is based on expected global GDP growth, continued growth in travel, further digital adoption, product improvement, efficiency gains from technology and share repurchases. He also cited recent U.S. performance, saying the company has increased its U.S. growth rate for four quarters and recently reported low-teens growth.
“In the long term, yeah,” Fogel said of the growth goals. “It’s almost, why should I not be?”
About Booking NASDAQ: BKNG
Booking Holdings Inc is a global online travel company that operates a portfolio of consumer brands and technology platforms that facilitate the search for and booking of travel services. The company's businesses focus on accommodations, transportation and related travel services through consumer-facing websites and apps as well as partner distribution channels. Booking Holdings was originally founded as Priceline in the late 1990s and adopted the Booking Holdings name in 2018; it is headquartered in Norwalk, Connecticut.
Its core offerings include online reservations for hotels, vacation rentals and other lodging; flight and car rental search and booking; and ancillary services that support travel planning and on-property experiences.
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