Booking Holdings Reports Strong Growth Amid AI Integration

Booking Holdings has reported promising early results from its partnership with OpenAI, demonstrating potential growth in AI-driven travel booking. The company also highlighted significant growth in the U.S. and Asia, despite ongoing economic uncertainties.

Booking Holdings recently shared insights into its collaboration with OpenAI during the third-quarter earnings call. The company is among the first to partner with OpenAI in launching apps within ChatGPT, creating a new channel for travel planning and booking. CEO Glenn Fogel expressed satisfaction with being part of this initial wave, indicating the value Booking.com brings to its partners. The company is monitoring key metrics, including faster search, better conversion rates, and improved customer satisfaction, as CFO Ewout Steenbergen highlighted.

Adapting to AI in Travel Discovery

As AI solutions become more prevalent in travel discovery, Fogel remains confident in Booking Holdings’ ability to adapt. He emphasized the company’s role in executing transactions, ensuring value, and navigating complex regulations. Steenbergen noted that while traditional search continues to grow, a small but growing share of leads comes from large language models (LLMs). He anticipates a hybrid model as AI becomes more integrated into browsers.

Challenges from Direct Hotel Bookings

Analysts raised concerns that hotels might bypass online travel agencies (OTAs). Fogel acknowledged that direct bookings are not new and are unlikely to cause a significant shift in the market. He pointed out that, despite Google’s presence, a major shift has not occurred, reinforcing the importance of providing value and building trust with customers to encourage direct bookings.

Growth in the U.S. and Asia

Steenbergen reported notable growth in the U.S., driven by outbound travel and B2B business momentum. Europe also experienced high single-digit growth, while Asia saw low double-digit growth. The company’s diversified portfolio helped offset softer demand in certain inbound U.S. corridors. Steenbergen attributed the growth in the U.S. direct channel to increased brand awareness, which led to greater direct customer engagement.

Focus on Asia’s Market Potential

Executives emphasized the importance of the Asian market, with local player Agoda and global-focused Booking.com driving growth. Steenbergen highlighted ongoing investments in product, marketing, and supply in Asia, viewing it as a crucial market for future expansion. With expected GDP growth and increased travel, maintaining a strong position outside mainland China is seen as vital for long-term success.

Financial Performance Highlights

Booking Holdings reported an 8% year-over-year increase in room nights, with gross bookings up 14% to $49.7 billion and revenue rising 13% to $9 billion. Net income grew by 9% to $2.7 billion, and adjusted EBITDA increased by 15% to $4.2 billion. Marketing expenses accounted for 4.7% of gross bookings, slightly down from the previous year.

Marketing Strategy and Outlook

The company continues to experiment with social media marketing, focusing on measuring incremental ROIs. While social media spending is significant, it still accounts for only a small portion of total marketing expenses. Despite uncertainties in the macroeconomic and geopolitical landscape, Booking Holdings remains optimistic about continued travel demand in the fourth quarter.

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