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Power in room nights, flights, AI and Asia

Power in room nights, flights, AI and Asia

Take skift

The largest travel company believes it has the building blocks for steady, if not dramatic, growth for years to come.

Dennis Schaal

After finishing a strong third quarter, Booking Holdings raised its full-year guidance, pointing to strength in room nights, alternative accommodations, flights, AI, Europe and Asia.

The share price rose more than 6% in after-hours trading on Wednesday evening.

The company’s room nights in alternative lodging outpaced Booking’s core business, growing 14% for these short-term rentals versus an 8% increase for hotels and short-term rentals combined. Short-term rentals made up 35% of accommodation bookings in the third quarter, up 2 percentage points year-on-year.

During the company’s earnings call, CEO Glenn Fogel said the company’s alternative lodging business is about two-thirds the size of “the largest housing player in this market,” Airbnb.

The overall 8% growth in room nights, which exceeded company expectations, was driven by strength in Europe.

Asia accounted for 24% of Booking.com’s room nights, more than before the pandemic. Room nights in Asia saw double-digit growth in the third quarter.

Airline ticket sales, powered by Booking.com and sister brand Agoda, grew 39% year-on-year. A year earlier, growth was 28%.

Bookings with connecting trips, for example where travelers book accommodation plus a flight, increased by 40%.

Advances in AI generation

Fogel said the development of AI across the group’s brands represents “one of the most exciting times” ever for the company.

“This kind of technology is truly transformative,” says Fogel. “And it’s going to make it so much better for all the people in the travel industry, especially the traveler.”

In October, the company’s Priceline brand launched “Penny Voice, which allows Penny to have verbal conversations with travelers and help them plan trips, find hotels and arrange bookings,” he said. “As Priceline continues to improve these offerings, we anticipate that Penny will be able to anticipate needs based on past preferences and interactions and then respond in real time.”

Penny, a voiceless AI travel assistant that launched in June 2023, has had more than 3 million interactions with travelers to date, Fogel said.

Fogel said $3 million sounds big, but it’s small for a company as big as Booking Holdings.

He refused to predict what the financial impact of AI could ever be. “We’re not going to project those types of numbers right now,” Fogel said. “But what I am saying is that it is incredibly important.”

The bottom line

For the third quarter, Booking Holdings recorded a net profit of $2.5 billion, comparable to a year earlier. The company took a $365 million hit this quarter due to a proposed settlement with Italian regulators, but also saw a $250 million cut in U.S. income taxes from a court ruling.

Sales rose 9% to $8 billion.

Based on the strength of the third quarter, driven by higher demand and longer booking windows in Europe, the company increased its full-year guidance for gross bookings and revenue. Gross bookings are now expected to grow by 8%, compared to previously expected growth of 6%. And sales are expected to rise just under 10%, compared to the previous forecast of more than 7%.