Reported a strong start to 2024 with nearly 300 million room nights booked in Q1, a 9% increase year-over-year.
First quarter revenue reached $4.4 billion, up 17% year-over-year.
Adjusted EBITDA for Q1 was approximately $900 million, a 53% increase year-over-year.
Adjusted earnings per share in Q1 grew 76% year-over-year.
Generated $2.6 billion in free cash flow during the quarter.
Ended the quarter with $16.4 billion in cash and investments.
Operational Insights
Observed resiliency in global leisure travel demand, with healthy growth for upcoming peak summer travel season bookings.
Room night growth in Q2 is expected to decelerate due to factors like less expansion of the booking window and geopolitical impacts in the Middle East.
Connected transactions, which involve bookings across different travel verticals, increased by over 50% year-over-year in Q1.
Air tickets booked on platforms rose 33% year-over-year in Q1, primarily driven by Booking.com’s flight offering.
Global alternative accommodation listings reached about 7.4 million, an 11% increase from Q1 last year.
Strategic Priorities and Innovations
Focused on strategic priorities including building towards a connected trip vision, expanding merchant offerings, developing AI capabilities, and enhancing the Genius loyalty program.
Reported strong growth in direct bookings and an increase in the average number of trips booked per traveler.
Introduced AI-driven tools such as Booking.com’s AI trip planner and Kayak’s generative AI-powered features.
Genius loyalty program seeing success in moving travelers to higher tiers, indicating increased loyalty and frequency of bookings.
Market and Future Outlook
Expecting room night growth in Q2 to be between 4% and 6%, with gross bookings growth projected to be between 3% and 5%.
Anticipating second quarter revenue growth to be between 4% and 6%, with adjusted EBITDA expected to be between approximately $1.7 billion and $1.75 billion.
Despite challenges, the company maintains a positive outlook for 2024 without updating the full-year commentary at this time.
Question and Answer
Q2 2024 Guidance and Booking Window Trends
Question
What factors influenced the Q2 2024 guidance, and how has the booking window trend shifted? Is there any concern about the impact on the full-year outlook?
Answer
The Q2 guidance reflects a pull-forward of room nights from Q2 into Q1, a less expanded booking window, and a stronger impact from the Middle East, partially offset by the benefit of Easter.
Despite quarter-to-quarter noise, the combined results for the first half of the year and the full-year guidance remain strong and consistent.
Q1 and Q2 face tougher comps, but the second half of the year is expected to benefit from easier comparisons.
ROI in Paid Marketing Channels and Connected Trips
Question
Why is the ROI higher in paid marketing channels, and is it due to efficiency improvements or overall platform performance? Can you quantify the percentage of total transactions that are connected trips and discuss the trend?
Answer
The higher ROI in paid marketing channels is attributed to continuous optimization, growth in direct channels, and the effectiveness of marketing programs.
The percentage of connected trips as a share of total transactions is in the high single digits and growing rapidly, driven by increased customer value, higher loyalty, and repeat bookings across multiple verticals.
Regional Mix and Performance Marketing Channels
Question
Can you provide an update on the regional mix and any changes observed? Are there any insights on performance marketing channels following the implementation of the Digital Markets Act (DMA) in Europe?
Answer
Europe saw high single-digit growth, Asia experienced mid-teens growth, and the U.S. achieved low single-digit growth in Q1.
The company continues to prioritize the U.S. market and has seen success, particularly in alternative accommodations, where it is making progress and improving the product.
The higher ROIs and marketing leverage observed in Q1 are attributed to internal actions, improvements in paid marketing approaches, and the growth of direct channels, with no significant impact from the Google DMA changes.
Genius Frequency and Membership Growth
Question
Can you quantify Genius frequency or bookings compared to non-members and discuss the path of customer progression through upper loyalty tiers? What factors contributed to the low single-digit room night growth in the U.S., and are there any specific observations for this region?
Answer
The company does not provide specific numbers on Genius membership but highlights the program’s growth and the value it delivers to both travelers and supplier partners.
Genius members tend to book more frequently and exhibit higher repeat rates, contributing to the flywheel effect of increased value and customer retention.
In the U.S., the sequential improvement from Q4 was encouraging, with the highest growth observed in alternative accommodations and more international bookings than domestic.
Differentiation and Growth Strategies in the U.S.
Question
Given the various strategies employed in the U.S. market, such as brand spending, paid search, the merchant product, and AI, what do you believe will be the most significant driver of future growth and differentiation within the online travel category?
Answer
The company acknowledges the success of its current strategies and the incremental growth they have generated, particularly in the U.S. market.
The potential for transformational differentiation lies in the continued development and implementation of AI and technology, particularly Gen AI, to address traveler frustrations and enhance the booking and travel experience.
The company sees AI as a key driver of future growth and differentiation, offering a unique value proposition to both travelers and supplier partners.
ADR Trends and Summer Travel
Question
Can you comment on ADR trends by region and any observed variations across different markets? Are there any updates on ADR expectations for 2024, and what are the trends for the upcoming summer travel season, particularly in Europe?
Answer
In Q1, ADRs increased in Europe, while remaining flat in North America and Asia, resulting in 1% overall growth on a constant currency basis.
The company reports healthy growth for summer travel bookings but does not provide specific quantification.
Trip Planner and User Behavior
Question
Can you share any insights on how users with access to the trip planner feature are behaving and the potential implications for top-of-funnel activity and connected trips?
Answer
While the number of users utilizing the trip planner is currently limited, the company is actively developing and learning from user interactions to understand its potential and refine its capabilities.
The trip planner has the potential to significantly impact top-of-funnel activity and drive connected trip bookings by simplifying the travel planning process and offering personalized recommendations.
Structural Growth and Fixed OpEx
Question
In the ongoing debate about the structural growth algorithm for online travel, what areas do you believe present the most compelling opportunities for investment to drive faster revenue growth and exceed investor expectations? Can you also discuss the factors contributing to the increase in fixed OpEx relative to bookings growth and any shifts in the business that have made it more capital-intensive or necessitated greater headcount?
Answer
The company expresses confidence in its long-term growth prospects, citing the shift from offline to online bookings, increased consumer spending on experiences, and the underestimation of opportunities in direct, alternative accommodations, and Gen AI.
The company sees structural growth opportunities in these areas and aims to lower the growth of fixed OpEx from 2025 onwards, with increased operating leverage expected in the coming years.
Room Night Trends and Attractions Offering
Question
Can you discuss the size of the transitory impacts in Q1, such as the Easter shift, geopolitical disruptions, and booking window trends, and their implications for underlying room night trends? Additionally, what investments have been made in the attractions offering, and how is supply being managed to unlock its full potential? How does the connected trip concept facilitate bookings for attractions, which are often made closer to the trip date?
Answer
Positive factors in Q1 included an expanding booking window, healthy demand in Europe, and less impact from the Middle East, partially offset by the negative impact of Easter.
The company primarily sources attractions supply through third-party partnerships with companies like Viator and GetYourGuide, with the recent acquisition of Fair Harbor enhancing its offerings for smaller attractions.
The company is prioritizing flight and ground transportation supply before fully developing the attractions offering, but sees potential in leveraging the connected trip concept to drive bookings for attractions, which are often booked closer to the trip date.
Alternative Accommodations Supply and Consumer Behavior
Question
Given the faster growth in alternative accommodations, can you provide more insights into the supply side, particularly the quality of the 7.4 million properties listed and how they differ from other platforms? Can you also discuss consumer behavior and the mix between bookings for alternative and traditional accommodations?
Answer
The company does not distinguish between alternative and traditional accommodations in its approach, believing that offering both on the same platform provides a strong value proposition to consumers who often consider both options during their booking process.
While the company believes its alternative accommodations inventory is of high quality, it acknowledges the need for further development, particularly in certain types of properties and geographic areas.
The company sees opportunities to expand its alternative accommodations supply, particularly in high-end homes and certain regions, through partnerships with individual property owners and multi-property managers.
U.S. Market and Summer Events
Question
How does the unit economics of the U.S. accommodations business compare to Europe, considering factors such as brand recognition, marketing expenses, ADRs, and take rates? Additionally, how might major events in Europe, such as the Olympics, impact travel demand and behavior?
Answer
The company does not disclose detailed unit economics by region due to competitive reasons and does not plan to do so in the future.
The company emphasizes its long-term focus on increasing value and expanding its customer and supplier base, rather than concentrating on short-term events like the Olympics.
