Booking NASDAQ: BKNG Chief Financial Officer Ewout Steenbergen told attendees at a Barclays conference that the company is navigating near-term disruption from conflict in the Middle East while seeing “really strong” underlying demand trends across other regions and continuing to invest in artificial intelligence, fintech, and other growth initiatives.
Middle East disruption: shorter booking windows and a March cancellation spike
Steenbergen described the Middle East as a critical hub in global travel flows, particularly for Europe-to-Asia routes that rely on major connecting carriers. He quantified Booking’s exposure by noting that “about 4% of our room nights in 2025 were from Middle Eastern bookers,” and “about 3% was Middle East as a destination,” or roughly 7% combined. He added that the company’s definition includes Egypt and Turkey and that “it’s not the whole of the Middle East that is impacted by this conflict,” while also emphasizing the importance of the corridor itself.
Steenbergen said Booking’s first-quarter results were “still quite strong” because the impact was concentrated in March, with more of the effect reflected in second-quarter guidance. He said Booking saw the booking window “definitely started to come in” during March and assumed some moderation in average daily rates in its outlook.
On the quarter’s dynamics, Steenbergen said March included an “uptick in cancellations” as previously made trips were called off. He cited March standalone room-night growth of 1% and said the conflict impact was about 3 percentage points, adding that “if you normalize for that, it’s about 4 points” growth, which he said was in line with the top end of the company’s guidance for the second quarter.
Other regions remained strong, supporting full-year confidence
Steenbergen pointed to continued strength in geographies outside the impacted corridor. He said Europeans traveling within Europe were “up high single digits” in the first quarter, Asians traveling within Asia were “up low double-digits,” and growth in the U.S. and Latin America was “really strong.” Those trends, he said, underpin the company’s full-year outlook even while assuming the conflict lasts four months.
“Under the assumption that one third of the year is being impacted by this conflict in the Middle East, we think that the guidance is actually still very solid,” he said, adding that Booking cannot predict how long the situation will persist.
U.S. outperformance driven by direct growth and brand familiarity
In the U.S., Steenbergen said Booking is seeing improving conditions at the lower end of the consumer market after earlier weakness, citing average daily rates “now flat” and a booking window that is “now stable.”
He also highlighted substantial outperformance versus the broader U.S. market. According to Booking’s third-party data sources, he said the U.S. travel market grew “low single digits” in the first quarter, while Booking grew “low teens,” calling it “probably the widest gap we have seen in a very long period of time.”
Steenbergen attributed the gap to a mix of factors including strong domestic travel, outbound strength, and contributions from B2B. A key driver, he said, is “very strong direct booking growth,” which he framed as the outcome of years of investment in product, supply, performance marketing, and brand. He described a repeat-usage dynamic in which customers migrate from paid channels toward opening the app and booking directly.
AI strategy: partnerships with model builders and stronger direct experiences
Steenbergen said Booking is pursuing an AI strategy focused on both external partnerships and improvements within its own platforms. He said the company is partnering with major model developers, including being a launch partner with OpenAI and Claude, and partners with Microsoft and Google. He said these relationships provide early insight into product roadmaps, consumer behavior learnings, and potential future performance marketing channels, noting that OpenAI is “testing PPC now at this moment” and Booking is part of a small test group.
On protecting direct relationships, Steenbergen said Booking is building “top-of-funnel AI tools” to provide inspiration and itinerary-building experiences comparable to horizontal AI platforms, while leveraging personalization based on prior travel behavior. He emphasized trust, loyalty, and service as differentiators, pointing to the company’s ability to store payment credentials and provide support if something goes wrong.
He also cited existing and planned product efforts, including “Penny,” an AI trip planner on Priceline, and ongoing AI enhancements embedded into Booking.com’s existing user experience. Agoda is developing an AI trip planner, and he said two internal startups are working on more conceptually innovative initiatives, with “a lot of new initiatives” expected to reach the market this year.
Addressing investor concerns that large suppliers might bypass intermediaries via AI, Steenbergen argued that travel fulfillment remains complex, citing real-time availability and pricing, payments across “over 100 local payment methods,” support for “over 50 different currencies,” multilingual customer service, and the management of modifications and cancellations. He also argued that Booking’s value to small, independent properties could increase in a world where visibility in AI chat interfaces is uncertain.
Investment priorities, fintech opportunity, and margin framework
Steenbergen said the company has “ring-fenced $700 million” in gross investments for the year, with a “$300 million net EBITDA impact,” and outlined three focus areas:
- Expanding the core proposition, including advertising, attractions, flights, OpenTable international expansion, and B2B (including combining B2B efforts across its three OTA brands into a new business), alongside localization and “connected trip” initiatives in the U.S. and Asia.
- AI investments, including top-of-funnel tools and foundational work to prepare data and train and fine-tune third-party models, with architectural flexibility to “swap models in and out.”
- Fintech, which Steenbergen called “a really large opportunity,” citing low-70% payment facilitation penetration in the first quarter and $130 billion of payment transactions last year. He said fintech can add incremental contribution margin to existing transactions and support expansion into products such as paying in a traveler’s own currency, supplier-side solutions, insurance expansion, and wallets.
On connected trip, Steenbergen said the company is already seeing benefits, linking repeat usage to multi-vertical booking behavior, app usage, direct traffic, and higher tiers within the Genius loyalty program. He described the economics as reducing incremental acquisition cost by cross-selling additional trip components once a traveler’s destination is known.
On margins, Steenbergen said Booking’s EBITDA margin last year was close to 37% and stressed it is “fully loaded,” including stock-based compensation. He pointed to a transformation program targeting $500 million to $550 million in savings, with about $250 million in run-rate savings by the end of 2025 and the remainder expected to be reflected in 2026, plus about $100 million of discretionary spend pullbacks tied to the Middle East situation.
Steenbergen also reiterated Booking’s “8-8-15” framework: at least 8% growth in gross bookings and revenue, and at least 15% EPS growth, implying operating leverage supplemented by buybacks. On leverage and capital allocation, he said Booking targets approximately 2x gross leverage “through the cycle,” was at 1.8x at the end of the first quarter, and is active in the bond market while facing upcoming maturities. He cited free cash flow “north of $9 billion” last year, continued reinvestment, and shareholder returns through dividends and buybacks, while noting regulatory constraints can affect M&A in certain regions and businesses.
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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