Booking NASDAQ: BKNG Chief Financial Officer Ewout Steenbergen said the company’s second-quarter performance reflected resilient travel demand, with booking trends improving from June after consumers initially delayed plans amid conflict in the Middle East.
Speaking at a conference, Steenbergen said travelers became more cautious in March through May but ultimately did not abandon summer trips. Demand strengthened as the direct effects of the Middle East conflict on inbound and outbound travel in the region began to normalize, he said.
The remaining effect was more indirect, particularly through oil and jet fuel prices, airline capacity and airfare. Steenbergen said consumers in Europe and Asia shifted toward domestic and intra-regional destinations rather than long-haul or intercontinental travel. However, he said the change represented a shift in destinations rather than a decline in overall demand.
“The word that is describing the theme of the quarter was resilience,” Steenbergen said, adding that Booking viewed its second-quarter results as “very solid.”
U.S. Travel Strengthens as Platform Evolves
Steenbergen said the U.S. was Booking’s strongest major travel market during the second quarter, reversing a period in which it had lagged other large regions. He said the company was seeing strength across customer segments, rather than the bifurcated consumer environment seen in prior years.
He described Booking’s evolution from a primarily transactional hotel-booking platform into a broader travel marketplace. The company now offers alternative accommodations as well as flights, attractions, rental cars, rideshare and restaurants, he said.
- About two-thirds of Booking’s traffic now comes directly to its marketplace, according to Steenbergen.
- The company facilitates payments on a low-70% share of its transactions.
- Customers are increasingly returning through the Genius loyalty program, he said.
Alternative accommodations remain a significant growth opportunity, particularly in the U.S., where Booking’s relative position is smaller than in Europe and Asia, Steenbergen said. The company reported 8% year-over-year growth in listings during the quarter, reaching 9.1 million listings.
Booking is working to improve supply, product familiarity and its U.S. market position in alternative accommodations, he said.
Connected Trip and AI Initiatives
Steenbergen said Booking’s Connected Trip strategy—combining components such as flights, accommodations, rental cars and attractions—already represents a low double-digit percentage of total transactions and is growing faster than individual bookings.
The approach can improve unit economics because Booking may acquire a customer once and subsequently cross-sell other trip elements, he said. The company also sees the strategy as part of a broader flywheel involving direct traffic, repeat customers, loyalty benefits and bookings across multiple travel categories.
Artificial intelligence is expected to enhance the Connected Trip experience by helping coordinate changes across travel components, Steenbergen said. For example, AI tools could notify a hotel of a delayed flight, adjust a restaurant reservation or recommend itinerary changes based on weather conditions.
Booking is also using AI-based planning tools across its brands. Steenbergen cited Priceline’s Penny as one product currently live, while Agoda is expected to launch a similar offering. Booking.com is incorporating AI features into its existing user experience rather than making a wholesale redesign, he said.
Traffic from large language models remains “significantly below 1%,” including paid and unpaid traffic, Steenbergen said. While consumers are using such tools for travel research, he said they continue to complete bookings on platforms they know and trust because travel purchases are high-value and consequential.
Booking is working with large language model providers and is a launch partner in OpenAI testing, Steenbergen said. He expects such platforms to increasingly use pay-per-click auction models, potentially expanding the number of performance-marketing channels available to Booking.
Efficiency Gains and Capital Allocation
The company is also deploying generative AI internally. Steenbergen said total customer-service costs are declining, while customer-service cost per booking has fallen by more than 10% year over year. He attributed the improvement to agentic interactions that can shorten resolution times and improve customer satisfaction.
Within engineering, Booking has seen about a 30% increase in merge requests put into production through the use of AI tools, he said. Although AI token and licensing expenses have risen, average cost per merge request has declined meaningfully when including both labor and AI costs.
Steenbergen said Booking’s transformation program identified an additional $100 million in savings opportunities, primarily in procurement. The company has sought to consolidate purchasing across brands, including cloud computing and server procurement.
He said Booking has industry-leading EBITDA margins on a fully loaded basis and intends to continue balancing efficiency initiatives with investments in growth. The company generates more than $9 billion in free cash flow, according to Steenbergen.
On capital allocation, Steenbergen said Booking prioritizes organic investment, followed by selectively pursuing strategically attractive acquisitions. He said the company remains cautious on merger-and-acquisition valuations. Booking repurchased $7.3 billion of its shares in the first half of the year, taking advantage of what Steenbergen characterized as attractive levels.
Steenbergen said the company’s marketplace remains durable because it serves both travelers and a fragmented supplier base. Booking has 4.7 million properties on its platform, he said, and nearly 90% of room nights booked on its marketplace come from alternative accommodations, independent hotels and smaller hotel chains. He added that customers in Genius loyalty levels 2 and 3 account for nearly 60% of bookings while representing about 30% of customers.
About Booking (NASDAQ:BKNG)
Booking Holdings Inc is a global provider of online travel and related services. The company connects consumers with accommodations, flights, rental cars, restaurants and travel experiences through a portfolio of digital brands and websites.
Its principal brands include Booking.com, which offers lodging, transportation and travel experiences; Priceline, which provides online booking services for hotels, flights, rental cars and vacation packages; Agoda, which focuses primarily on travel bookings in Asia and other international markets; KAYAK, a travel metasearch engine; OpenTable, a restaurant reservation and management platform; and Rentalcars.com, a global car rental service.
Booking Holdings serves customers, travel providers and restaurants across numerous countries and regions, with a particularly extensive international presence.
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