Q4 2024 Earnings Summary
- Booking Holdings is effectively leveraging AI technologies to drive cost savings and improve operational efficiencies, with $150 million in expected cost savings in 2025 resulting from AI-driven efficiencies. These savings are already showing up in their numbers and are offsetting higher expenses from the growing merchant business.
- The company's alternative accommodations business is showing strong growth, with 19% year-over-year room night growth in Q4 2024, outpacing traditional accommodations in all regions. Booking.com’s alternative accommodations are now "more than 2/3" the size of the market leader, offering both traditional and alternative options on one platform, which is resonating strongly with consumers.
- Flights bookings increased by 52% year-over-year in Q4 2024, an acceleration from the previous quarter, contributing to their connected trip strategy. Flights are attracting new customers and providing more value, supporting further revenue growth across all verticals.
- Risk of increased competition from AI agents potentially disintermediating Booking Holdings (BKNG): Analysts expressed concerns that AI-powered platforms could bypass BKNG's listings, leading travelers to book directly with hotels, which may reduce traffic to BKNG's platforms. CEO Glenn Fogel acknowledged the risk but emphasized the company's ability to adapt and evolve. ,
- Potential deceleration in room nights growth: BKNG's guidance for Q1 2025 room nights growth is 5% to 7%, lower than the 13% growth reported in Q4 2024. This deceleration could indicate slowing demand or challenges in sustaining previous growth levels. Although management attributes this to factors like the leap year and other headwinds, it raises concerns about future growth momentum.
- Uncertain ROI from investments in AI and partnerships: While BKNG is investing heavily in AI and partnerships (such as with Operator), the CEO mentioned that revenue benefits from AI may take longer to materialize, and the Operator partnership is in very early stages with minimal expected impact on income in the near term. This could imply that significant investments may not yield immediate returns, potentially impacting profitability. ,
| Metric | YoY Change | Reason |
|---|---|---|
Merchant Bookings Mix | Increased from 45% in Q3 2022 to 56% in Q3 2023 | The shift to 56% merchant bookings in Q3 2023 reflects a strategic move towards processing transactions directly, which builds on prior lower levels in Q3 2022; however, it also introduced additional processing costs like personnel and chargebacks. |
Mobile App Bookings | Q3 2023: Increased by 6 percentage points (from low‐50% to over 50%); Q3 2024: Advanced from low‐50% to mid‐50% range | Stronger mobile app usage indicates evolving consumer behavior that started in Q3 2022 and continued to improve, enhancing direct data capture. The upward trend carried into Q3 2024 as the interface and engagement improved further for Q3 2023 and for Q3 2024. |
Alternative Accommodation Bookings | Q3 2023: Room nights increased from 30% to 33%; Q3 2024: Alternative listings grew by 10% leading to a 14% increase in room nights | Growth in alternative accommodations is driven by increased consumer demand and expanded inventory—from 2.8 million properties in Q3 2023 to 7.9 million listings in Q3 2024—thereby accelerating the booking mix increase from 30/33% to a 14% uplift for Q3 2023 and for Q3 2024. |
Geographical Recovery & International Mix | International bookings rose from 45% in Q3 2022 to over 50% in Q3 2023 | A robust geographical recovery fueled by regional surges—Asia up ~35% and Europe growing in low double digits—helped boost the international booking mix, reflecting a continuation of global travel momentum since previous periods. |
Marketing Efficiency | Q3 2023: Marketing expenses decreased by approximately 50 basis points as a percentage of gross bookings; further improvements noted in Q3 2024 | Enhanced marketing efficiency builds upon previous efforts to optimize spend by increasing direct bookings and performance marketing ROI, resulting in a reduction of marketing expenses relative to gross bookings in Q3 2023, and this trend was reinforced in Q3 2024 for Q3 2023 and for Q3 2024. |
Airline Tickets & Rental Car Days | Airline tickets up 57% YoY; Rental car days up 20% YoY (Q3 2023) | Significant service expansion in Q3 2023, with airline tickets surging by 57% and rental car days by 20%, built on growing travel demand and an expanding suite of travel services that complements the core accommodation business. |
Connected Trip Transactions | Increased by over 40% YoY (Q3 2024) | The over 40% YoY growth in connected trip transactions in Q3 2024 highlights Booking Holdings’ success in integrating multiple travel segments, a progression from earlier periods as the platform pushes for deeper customer engagement across travel verticals. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue Growth | Q1 2025 | Expected to grow between 7% and 9% | Expected to be between 2% and 4% | lowered |
Adjusted EBITDA | Q1 2025 | Expected to be between $1.6B and $1.65B (growth 9%-13%) | Expected to be between $800M and $850M, down 5% YoY at the high end | lowered |
Room Night Growth | Q1 2025 | Expected to grow between 6% and 8% | Expected to grow between 5% and 7% | lowered |
Gross Bookings Growth | Q1 2025 | Expected to grow between 7% and 9% | Expected to increase between 5% and 7% | lowered |
Gross Bookings Growth | FY 2025 | Expected to increase by about 8% | Reported to increase in the mid-single digits | lowered |
Revenue Growth | FY 2025 | Expected to grow just below 10% | Reported to increase in the high single digits | lowered |
Adjusted EBITDA Growth | FY 2025 | Expected to grow between 13% and 14% | Expected to grow in the low double digits – roughly a couple of percentage points faster than revenue | lowered |
Adjusted EBITDA Margins | FY 2025 | Expected to expand by a bit more than 1 percentage point | Expected to expand by slightly below 100 basis points | lowered |
Adjusted EPS Growth | FY 2025 | Expected to grow in the high teens | Expected to grow in the low double digits and, on a constant currency basis, in the mid-teens | lowered |
Constant Currency Growth Rates | FY 2025 | no prior guidance | Targeting at least 8% growth for gross bookings and revenue, and 15% for adjusted EPS | no prior guidance |
Reported Gross Bookings and Revenue | FY 2025 | no prior guidance | Expected to increase mid-single digits (reported) and high single digits on a constant currency basis | no prior guidance |
Capital Expenditures | FY 2025 | no prior guidance | Expected to be about 2% of revenue, similar to 2024 | no prior guidance |
Transformation Program Savings | FY 2025 | no prior guidance | Embedded in guidance is about $150 million in cost savings | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue Growth | Q4 2024 | 7%–9% year-over-year | Increased from 4,784In Q4 2023 to 5,471In Q4 2024 (≈14.4% YOY growth) | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
AI and Generative AI Investments | Consistently discussed from Q1 to Q3 as transformative with mixed ROI and early-stage revenue impact, emphasizing operational efficiency improvements and experimental applications | In Q4, the focus sharpened on cost savings and operational efficiency (e.g., customer service improvements and meeting transformation program targets) while still highlighting long‐term revenue potential | Consistent emphasis with a shift toward clearer efficiency benefits and cost-focused metrics in Q4. |
Alternative Accommodations Growth | Across Q1–Q3, strong growth was noted along with discussions of supply challenges and complex U.S. market issues (including inventory gaps and marketing hurdles) | Q4 highlighted robust listing and room night growth without an explicit focus on prior marketing or supply challenges | Sustained growth continues, but Q4 sees less emphasis on supply/marketing challenges, suggesting either improvement or deprioritization. |
Direct Bookings and Customer Loyalty Programs | Q1–Q3 consistently noted the expansion of direct bookings and the growing role of the Genius loyalty program tied to higher direct booking rates and improved marketing efficiency | Q4 reported even stronger direct channel performance through mobile app contributions and expanded loyalty benefits across travel verticals | A steady positive trend with increasing direct engagement and loyalty, reinforcing strategic focus. |
Flights Growth and Connected Trip Strategy | In Q1–Q3, flight bookings and the integration of flights into a broader connected trip experience were consistently mentioned, with steady year‐over‐year growth and integration of AI enhancements | Q4 showed an accelerated flight growth (52% YoY in Q4 vs. 39% in Q3) and deeper integration of AI to enhance the connected trip across multiple travel components | Accelerated growth and stronger integration of the connected trip vision reflect heightened strategic momentum in this area. |
Fixed Operating Expenses and Cost Management | Q1 reported elevated OpEx growth (around 11%) due to investments, while Q2 and Q3 emphasized controlled growth (5%-10%) and initiatives to improve operating leverage through AI and cost benchmarking | In Q4, fixed operating expenses rose by 9%—better than earlier expectations—and a transformation program was announced to deliver significant future cost reductions | A gradual improvement in cost management with a clear forward-looking transformation plan indicates increasing focus on efficiency. |
U.S. Market Challenges and Inventory Limitations | Detailed in Q1–Q3 with concerns over lower brand recognition, higher marketing load, and specific inventory gaps especially in high-end U.S. segments and challenges with supply parity | Not mentioned in Q4 earnings discussions | Previously highlighted issues have dropped from Q4 discussions, suggesting either a temporary de‐emphasis or progress toward resolution. |
International Partnerships and Asia Market Development | Q3 (and to lesser extents Q1–Q2) noted modest impacts from partnerships (e.g., with Grab) and strong Asia market growth driven by local adaptations and diversified regional performance | Not mentioned in Q4 earnings discussions | A previously discussed theme that has been dropped in Q4, indicating a lower focus or deprioritization in the current period. |
Emerging Competitive Threats from AI-Powered Disintermediation | Not explicitly discussed in Q1–Q3; earlier periods focused on leveraging AI rather than on external threats | Q4 features explicit discussion of potential threats from agentic AI disintermediation, with reassurance from leadership and emphasis on leveraging proprietary data and partnerships | A new concern emerging in Q4, highlighting the potential for significant long-term impact as AI disrupts traditional booking channels. |
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Agentic AI Competition and Partnerships
Q: How will Agentic AI impact your business and partnerships?
A: Glenn Fogel addressed concerns about Agentic AI competition, emphasizing BKNG's history of adapting and evolving over 25 years. They are developing a travel-specific AI agent and collaborating with major tech players to remain industry leaders. While aware of partnership risks, they believe collaborations can reduce cost of acquisition and provide mutual benefits. Ewout Steenbergen added that working with multiple agents can lower acquisition costs, enhancing overall economics. -
AI Impact on Costs and Revenue
Q: When will AI noticeably impact your top or bottom line?
A: Glenn Fogel explained that cost savings from AI are already materializing, especially in customer service efficiencies. They automate tasks like call summarization and reduce hold times with AI agents. Revenue benefits will take longer but are promising due to their data advantage and expertise in travel complexity. Ewout Steenbergen highlighted that sales and other expenses remained flat at 2% of gross bookings, showing AI efficiencies offsetting higher payment expenses. They expect $150 million in transformation program savings in 2025, with AI contributing significantly. -
Alternative Accommodations Growth
Q: What drives your strong alternative accommodations growth?
A: Ewout Steenbergen noted higher growth in alternative accommodations across all regions compared to traditional ones. Success is due to great supply expansion and offering both traditional and alternative options on one platform, allowing travelers to compare and choose the best fit. Glenn Fogel added that their homes area represents more than two-thirds of the leader's room nights, showcasing significant scale and a competitive product. -
Merchant Mix Shift Benefits
Q: How does merchant growth translate to margins and loyalty?
A: Glenn Fogel stated that embracing the merchant model is crucial for their connected trip vision and payment platform foundation. It allows them to offer customers preferred payment methods, like Alipay for Chinese travelers, improving customer experience. Acting as the payment intermediary can make transactions cheaper for travelers and suppliers, and BKNG can earn in the process. With $166 billion in total transaction value in 2024, there's significant profit potential as merchant bookings grow. -
Marketing Leverage and Ad Costs
Q: Can you elaborate on expected marketing leverage trends?
A: Ewout Steenbergen expects marketing leverage to continue in 2025, driven by increased direct traffic and higher performance marketing ROIs from optimization. They are investing in social media channels, especially with a close partnership with Meta, achieving attractive incremental ROIs. This strategy brings in incremental travelers rather than those who would have booked anyway. -
Airlines Growth Potential
Q: What's the outlook for your airline product growth?
A: Glenn Fogel is excited about the 52% growth in flight bookings, an acceleration from 39% in the previous quarter. While growth won't continue accelerating indefinitely, they aim to maintain strong growth by enhancing traveler service and integrating flights into their connected trip offering. Adding more markets isn't the primary driver now; instead, it's about providing value so travelers choose them over others. -
Room Nights Growth and Guidance
Q: Why is room nights growth decelerating in Q1?
A: Ewout Steenbergen explained that Q1 guidance of 5–7% room nights growth reflects factors like tougher comps from Q4 2024, which benefited from easier comparisons due to the October 7 attacks in 2023 and booking window expansion. There's also a leap year headwind compared to last year. Normalized, they see low double-digit growth in gross bookings, revenue, and EBITDA, hitting their long-term targets. -
M&A Interest
Q: Any updated thoughts on larger M&A deals?
A: Glenn Fogel reiterated that they don't comment on M&A unless there's a transaction to discuss. -
Operator Partnership
Q: What are your expectations from the Operator partnership?
A: Glenn Fogel noted that the partnership with Operator is in very early stages, and they won't disclose economics. It's about collaborating with a respected AI partner to learn and explore mutual benefits. They aim to improve over time, building upon initial efforts.