CEO Glenn Fogel conceded that it is still early, but the
company is “very happy to be in the first wave of apps with OpenAI.”
NATIONAL REPORT – Booking Holdings shared updates about its
test program with OpenAI during its third-quarter earnings call with financial analysts.
At its developer conference earlier this month, OpenAI
announced the launch of
apps with ChatGPT. Expedia and Booking.com are among its first partners,
effectively creating a new distribution channel and route to plan and
book travel.
CEO Glenn Fogel conceded that it’s
still early, but Booking.com is “very happy to be in the first
wave of apps with OpenAI.”
“I think that says something about us and the value we bring
to partners, that they would do it with us to get going,” Fogel said.
Booking Holdings Chief Financial Officer Ewout
Steenbergen also said that in terms of impact, Booking.com is measuring “faster
search, better conversion, lower cancellation rates and high customer
satisfaction.”
“[These are] very
early signals we’re having around it, but overall, very
encouraged, we are, with what we’re seeing,” he said.
When asked about the online travel agency’s (OTA) strategy
if more people opted to start travel discovery with artificial intelligence
(AI) solutions, Fogel expressed confidence in Booking’s position.
Even though people may change over time how they want to start their travel inspiration discovery, I believe that we will always be there in the area to provide what is really necessary...
Glenn Fogel
“Even though people may change over time how they want to
start their travel inspiration discovery, I believe that we will always be
there in the area to provide what is really necessary, which is going beyond
that and executing and doing the actual transaction fulfillment, working
to make sure they’re getting the best value, the area of making sure you’re
doing the right types of payments, the area making sure you’re following all
the regulations—very complex,” Fogel said.
Steenbergen also addressed the potential economic
impact of a shift, noting that travel clicks from traditional search continue
to increase year over year and the portion of leads from large
language models (LLMs) is small but growing.
“Probably, over time, these two worlds might become more
hybrid because we are seeing, of course, more AI being built into browsers at
this point in time,” he said.
Analysts also asked about hotels looking to bypass OTAs and
how Booking would address such a disruption.
Fogel said this isn’t necessarily a new
problem, as some people already tend to book directly with hotels.
“That will probably happen in an LLM world too,” he said.
“But this idea that this is going to cause a giant shift, I just think
that that’s not the way the world’s going to work—and the
proof is that it hasn’t happened in the whole day of
Google.”
According to Fogel, the company’s approach is to continue to
provide value and build trust to encourage customers to come direct.
As for its own use of AI, Steenbergen said generative AI
will help its connected trip vision “come to life” in the coming years. This
will be achieved by building an intelligence layer that understands and
responds to customer travel preferences.
“If something happens, everything can automatically be
updated. It means that people will be more frequently using our app; we can
become more proactive in what we offer to you, and more and more value can be
created as a consequence,” he said.
U.S. acceleration, growth in Asia
Steenbergen highlighted specific growth in the
U.S. bookings, which “accelerated to high single digits,
supported primarily by stronger outbound travel and momentum in our B2B
business.”
Europe was another region with high single-digit growth,
while Asia and the rest of the world also each delivered low double-digit
growth.
“Our globally diversified portfolio proved its value once
again as we continue to see robust growth in certain travel corridors,
including Canada to Mexico and Europe to Asia, which effectively offset softer
demand in certain inbound corridors to the U.S.,” Steenbergen said during his
opening remarks.
What we're seeing is clearly a payoff of our brand awareness that is getting stronger in the U.S., more familiarity and therefore more customers coming now direct to us in the U.S.
Ewout Steenbergen
Additionally, Booking Holdings saw growth in its direct
channel in the U.S. and normalization of the booking window in the U.S.
However, Steenbergen also noted “slightly lowers ADRs and a shorter length of
stay versus the prior year”—an indication of continued moderation of
discretionary spending.
Steenbergen attributed the growth in its
direct channel in the U.S. to brand awareness.
“What we're seeing is clearly a payoff of our
brand awareness that is getting stronger in the U.S., more familiarity and
therefore more customers coming now direct to us in the U.S.,” he said.
“That is really something that has seen quite a step up in the third
quarter, and we see that as a really positive trend.”
Executives further highlighted growth in Asia, which
was fueled by local regional player Agoda and global-focused Booking.com.
“We're making a lot of investments in terms of our product,
in terms of our marketing, in terms of our supply, and overall we are happy
with the growth we’re seeing,” Steenbergen said, adding that Asia is the
most important market in the long and medium term.
“That is where we will see over the next few decades the
largest growth in the world because the GDP growth is going to be the
highest there. There will be very large parts of the population that
will start to travel and travel more in the future. So, the fact that we
are already the market leader outside of mainland China and being able to be
focused to hold that position is going to be positioning us very well for the
next couple of years.”
Financial results
Booking Holdings, which owns Priceline, Booking.com,
Kayak, Agoda and OpenTable, reported 8% year-over-year growth in room
nights, which reached $323 million. Gross bookings were up as well,
growing 14% year over year to $49.7
billion, while revenue increased 13% to $9
billion.
Net income was up 9% from Q3
2024, reaching $2.7 billion, and adjusted EBITDA grew 15%
year over year to $4.2 billion.
Marketing expenses as a percentage of gross bookings was
4.7%, compared to 5% in Q3 2024.
When asked about social media marketing, Steenbergen said
Booking Holdings continues to “experiment and invest” in these channels and
reiterated that the company approach is disciplined due to fluctuating ROIs.
“We are very much focused on really being able to measure
incremental ROIs in a very clear way. We see different
stages of where the social media channels are; some are leaning
in than others, and so changes will happen there over time,” he said,
declining to share information on individual channel performance.
Steenbergen said that social media spend is “in the couple
of hundreds of millions,” but while that is meaningful, it remains a
smaller percentage of total marketing spend.
Overall, the company acknowledged lingering “uncertainty in
the macroeconomic and geopolitical backdrop” but also said that it is seeing
“continued momentum with steady travel demand trends” in the fourth quarter.
Note: This story first appeared on Phocuswire