AI won’t kill Booking - it might make it stronger
Booking Holdings: A world-class compounder hiding in plain sight
Intro
It’s that time of the year again, and my annual trip to Omaha and the Berkshire Hathaway annual meeting was due. I’ve been looking forward to this for months. In Omaha, I attended an investors’ meeting where I was also pitching an idea. Last year I chose Arista Networks, and boy, that was a home run. In the last year, the stock is +106%. I am certainly happy with the addition to my portfolio, and I hope you have joined me on this magnificent ride. You will find the deep dive here:
To get to Omaha, I naturally had to book my flight ticket, accommodation, and a rental car. As you rightfully guessed, I did so online, and that brings me to the main participants of today’s deep dive: Booking. Apart from Amazon, Booking is probably one of the companies where I spent the most money in recent years, since I do a fair share of travelling.
I am sure that most of you are booking travel online. I certainly do. While I check other platforms as well, most of my hotel bookings are done via Booking.com, the main product of the company with the same name: Booking. Booking was also part of my best buys for April, which you will find here:
Roughly three years ago, I wrote about Expedia. Expedia was back then trading at an EV/FCF of just 6.6, and it seemed to be too good to be true. In this case, it was, however, the fairy held her promise, and Expedia almost tripled at its height in February 2026 and is still +139% since I published my article. Find the article here:
If you profited from either Arista Networks, Expedia or one of the many other tips, please consider becoming a paid subscriber. The subscription paid itself off manyfold by one of these former ideas.
If you want to go beyond reading and actually invest alongside me, you can invest in my Wikifolio. Every position reflects the same research-driven, long-term investing approach behind these deep dives — including investments such as Arista Networks, Alphabet, ASML, AMD, and now Booking. You will find it here:
The Company
The roots of Booking go back to 1996 when Jay Walker founded the company in Stamford, Connecticut and launched Priceline.com. The IPO followed in March 1999, and in 2005, the company bought Booking.com. Since Booking.com was so successful, the company changed its name to Booking Holdings in 2018.
Booking has roughly 24,000 employees, out of which 10,800 are based in Europe, followed by 9,500 in Asia/Pacific and 2,900 in the US. The headquarters of Booking.com in Amsterdam is really something:
If you invested early on in Booking, you had one hell of a successful investment. Booking is one of the best-performing stocks in the market.
Booking has a great standing and recognisable brand. More than half of the nights booked came from consumers coming directly to the platform.
You could compare Booking to Mastercard, as a toll booth to travelling. Talking about Mastercard: Find my deep dive here:
Invest at your own risk; this is not financial advice! This is not a recommendation to buy or sell any securities discussed in the article.
The Business
That is how Booking describes itself:
We derive substantially all of our revenues from providing online travel reservation services, which facilitate online travel purchases by travelers from travel service providers (which we generally refer to as "consumers" and "partners," respectively). We also earn revenues from payment facilitation, advertising, restaurant reservation and management services, travel-related insurance offerings, and other services.
The business is segmented into three categories:
Merchant
These revenues are derived from transactions where Booking facilitates the payments from travellers for the provided service. These are made up from travel reservation commissions and transaction net revenues. Most of this revenue is generated by Booking.com’s accommodation reservations.
Booking is actively working on increasing the share of merchant service vs agency bookings. The rationale behind this move is to be even more deeply integrated into the value chain and to further drive the Connected Trip strategy. In 2025, the share of merchant bookings was 70%, up from 63% in 2024. In Q1/26, the merchant bookings reached a new record high with 72%. While this drives revenues, it also means higher personal costs and payment processing costs.
You can see that the value of agency gross bookings declined by 9% compared to 2024, while the merchant gross bookings increased by 25% from a much higher basis.
Agency
Unlike the merchant revenues, Booking does not facilitate the payment from travellers for the service provided and consists mostly of travel reservation commissions.
Advertising and others
These are revenues from KAYAK for sending referrals to partners, OpenTable’s restaurant reservation services, and subcription fees for restaurant management services, and revenues from the other brands for providing advertising space on their platforms.
Strategy
Booking’s strategy is to make it easy for customers to plan, find, book, and pay for their travels while providing a wide range of choices and services. The partners (hotels, airlines, and co) get access to the platform and tools to further drive their growth.
We are executing against our long-term strategy to create an ideal AI-powered traveler experience, offering our customers relevant options and suggestions at the times and in the language they want them, making trips booked with us seamless, easy, and valuable.
The goal of our Connected Trip vision is to offer a differentiated and personalized travel planning, booking, payment, and in-trip experience for each trip, enhanced by a robust loyalty program that provides value to travelers and partners across all trips.
A Connected Trip is when a customer books more than one vertical (hotel, flight, rental car, etc.) for the same trip. In 2025, Connected Trips made up a low double-digit percentage of Booking.com’s total transactions.
This statement was made by Glenn Fogel regarding the question of how Booking will roll out agentic capabilities:
So a lot of talk about agentic travel, agentic commerce. You can't almost have a conversation without using the word agentic. So you know what we've been building for a long time. And let me move this into a bigger picture because I've been talking about this for -- God, before the people talking about all sorts of neural networks and large language models, I've been talking about trying to create that personal travel agent digitally, using technology to replace what was that human travel agent, where we'd be able to personalize and using all we know, all the data and be able to come up with a better solution for the travelers and also a better way that our partners could then lean in and be able to get more business by offering the right thing, the right offer to the people at the right time.
CFO Ewout Steenbergen shared a very nice example of how AI can help Booking to evolve the booking (pun intended) experience for the consumer.
But if you think about generative AI, this is really the opportunity for us. We can make the real Connected Trip come to life over the next couple of years. And what I mean with that is building an intelligence layer that all these elements of the trip naturally fit together are interrelated, all personalized, based on what we know and what you like to do and how you like to travel and where you like to dine. If something happens, everything can automatically be updated. It means that people will be more frequently using our app.
Shift to Online
Booking will continue to grow based on two drivers: Global travel spending keeps increasing, and the move from offline to online benefits Booking (more on that later).
Some words on the regional split: Bookers from Europe represented roughly 50% of the room nights booked in 2025, Asia about 25% and the U.S. a low double-digit (read 10-13%) percentage. B2C direct mix was in the mid-60% range. Asia and the U.S. delivered low double-digit growth in 2025, whereas Europe and the rest of the world were up high single digits. Asia will be the most important market going forward, as the CFO Ewout Steenbergen explained in this statement:
Asia is, of course, from a medium- and long-term perspective, the most important market. 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.
Who profits?
I have included this chapter for the first time in an article because I came to the realisation that this is a very important point. Companies that offer a product but at the same time cause harm to their customer will face issues at some point. Think of tobacco companies. At the end of the day, their customers are worse off than if the product had never existed in the first place.
For Booking, we have to look at the end-consumer and the companies offering their service on the platform. End consumers benefit from better prices and opportunity visibility, and that is why they are coming back. There is a wide range of hotels to choose from, many of which you would never find anywhere else. At the same time, you see customer reviews, and you can directly compare prices for your desired location and time horizon.
Travel service providers (hotels, airlines…) benefit from having exposure to a wide audience. There is one caveat, though: Since Booking is so all-powerful, Booking drives prices down. Booking.com has a parity clause, which states that the price of a hotel room cannot be lower on the hotel’s own website than on Booking.com since such an option would allow the hotel to use the Booking.com service from the hotel’s side as free-riding. This clause has been in the courts, and I have talked to multiple hotels that complain about the large takerate from Booking.com. Booking.com commission (take rate) is between 10-25% for hotels, an industry with a historically low margin profile.
Products
Booking, the company serves its customers through five primary consumer-facing brands. Booking.com, Priceline, and Agoda all focus on Accommodations, ground transportation (read taxis and rental cars), flights, and activities, while Kayak is all about Meta Search (mostly for flights), and OpenTable focuses on Restaurants.
Booking.com is headquartered in the Netherlands. It offers reservation services for 4.4 million properties in more than 220 countries, with about 500,000 hotels and 4 million homes and apartments. On top of that, it offers flights and in-destination tours and activities, as well as car reservation services and ground transportation services.
Priceline is headquartered in Norwalk, Connecticut, and focuses on discount travel reservations with a focus on North America for accommodations, flights, rental cars, as well as vacation packages and cruises.
Agoda focuses on consumers in the Asia-Pacific region and is headquartered in Singapore with a similar portfolio to Priceline.
KAYAK is also headquartered in Norwalk and offers meta search to compare travel initiatives and prices from hundreds of online platforms at the same time.
OpenTable is the odd one out here since it does not focus on travel. Instead, it is all about online restaurant reservations with a focus on the US. OpenTable is headquartered in San Francisco.
Booking.com's Genius loyalty program rewards regular customers with perks such as better room rates, free breakfast or room upgrades. These customers book more frequently with Booking. In 2025, the Level 2 and 3 (the highest level) represented 30% of the active base while accounting for more than 50% of room nights.
Booking is implementing more payment methods and can now process more than 100 payment methods across over 50 currencies. This makes the platform increasingly attractive for partners. increasing adoption of our payments platform and capabilities;
Booking.com is actively working on growing the alternative accommodations offering. Of the 4.5 million total properties, 4 million are alternative accommodation properties. The total room nights booked for alternative accommodations was 36% in 2025. This is a direct move to compete with Airbnb and Vrbo (owned by Expedia). Here is an overview of the kinds of accommodations you can find on Booking.
The Industry
Global spending on travel recovered nicely after the COVID-19 pandemic. This holds both for business travel spend.
The global Leisure tourism industry is also showing great growth.
And so do the OTA (online travel agencies), of which Booking is one of the best-known ones.
Often, you can take references from your own behaviour about the state of a company. I remember using TripAdvisor very often in the early 2010s, but stopped using it in favour of Google Maps and other alternatives. The stock tells a similar story. A steady decline since 2015. Are there any other companies where you observe a similar behaviour?
The Technology
Some words on AI
There is some fear that AI and vibe coding will threaten and replace most SaaS companies in a rather short time period. To be honest, I don’t think so.
Even if you build a better platform, you still need to
a) get people to discover it
b) get people to use it
c) get the hotels to be part of your offering
d) offer a good-to-great customer service and
e) still compete with the OGs of the travel industry.
Because of all these points, I don’t see these threats anytime soon. Travel booking is also not a major pain or need that will be automated by any of the large tech companies. Even Google Hotels and Flight search has yet to post a serious threat to Booking. While I use it to discover prices, I still end up booking my trips with Booking.com. A small anecdote: Get that tiny hotel in Provence (France) to join your new app, after it has been listed on Booking.com for ages.
CEO Glenn Fogel addressed the threat of AI for Booking in more detail in the Q4/25 earnings call. Below you will find his very insightful statement:
And then we have thousands and -- we have several thousand people who are our partner services people. So part of them are just keeping the technology up so we can get all that information, have it live and bring it. The other thing is dealing daily with these property managers to make sure that we’re helping them succeed in their business. It’s not as though you just put it up and all of a sudden it works or -- no, and we’re bringing them new ideas, new rates coming up with being part of Genius or we say, gee, we have some geography rates bring our mobile rates. That is a constant thing that we’re going back and forth and whether it’s one-to-one conversations or we’re doing it other types of communications, but it’s helping their business be successful. The idea that the large language players are going to be doing that, I don’t know about that. And then you get into the area of payments. You want to be merchant of record, payments, Ewout talked about how important that is. Well, that’s really complex.
And we have over 100 different payment methods, more than 50 currencies. Now why is that? Because the supplier has no idea how to take these strange payments that the customer wants to give. They want their payments to come to them in a certain way. By the way, the traveler wants to pay in a certain way. That’s another issue of complexity that I don’t think -- my opinion, I don’t think that the large language models are going to enter that whole space and all that issue. And then by the way, just so you know, regulations on the payment here is tremendous. In fact, there’s regulation of the whole thing. You want to be involved in the travel business and you want to be dealing with merchant of record and you want to be dealing with combined -- because in Europe, you got -- I mean, just the combination of abbreviations, you got to deal with DSA, DMA, DFA, EU, AIA, P2B, DAC7, I can go on and on, and that’s just the EU. That’s just the EU. And then, of course, the national regulations, we’re dealing with over 200 countries you got to deal with.
So do we think that the large language models are going to be entering and want to enter down the funnel down to where we are? I don’t think so. And then even if that did happen, even if they were thinking about going in there, the question is what does the customer want to be there. Ewout was just talking about that loyalty issue, talking about Genius, talking about how many people come to us direct also. Those people come to us because they actually find value using us.
Booking is making use of the new tools: GenAI for improved customer and partner experience, as well as improved efficiency within the organisation. Here is what the CEO, Glenn Fogel, said about AI in the most recent earnings call.
In 2025, we focused on rolling out agentic capabilities across our brands that enhance the full traveler journey, helping customers discover and plan trips through natural language search, make more informed booking decisions with smart filters and summaries and get better, faster support before and during their trip through interactive AI agents.
…deploying the technology in the places where it can have a meaningful impact for customers and partners in addition to continuing to collaborate with leading AI companies such as OpenAI, Google, Microsoft, Amazon and others.
CFO Ewout Steenbergen stated that Booking is already seeing real P&L impact from applying AI for customer service, while hinting that most companies still have nothing to show for it.
GenAI is everywhere except for in the P&L. I'm very proud that we can point to a line item in the P&L where we actually do have meaningful results on the efficiency basis because as we said during the call, our absolute number in terms of customer service costs are down and our bookings are up approximately 10%. So we have about a 10% decline in customer service cost per booking.
Booking’s own apps are a major source of revenue. In 2025, 55% of room nights booked came directly from mobile apps. These bookings are great, since the customer usually goes directly into the app and has his/her profile at hand. The Booking.com app is regularly in the top 10 in the travel category in the app store and has top-notch reviews with 4.8 out of 5.
The significant majority of room nights booked on our mobile apps are direct, and we continue to see favorable repeat direct booking behavior from consumers in our mobile apps, which allow us more opportunities to engage directly with them.
The Management
CEO Glenn Fogel joined Booking in 2000 and was named CEO of Booking in 2017. I love it when CEO’s have a long history with the company and know the company inside out. The CFO, Ewout Steenbergen, is relatively new to the board and joined Booking in 2024.
The fact that CFO Ewout Steenbergen made the following statement makes him already sympathetic to me:
As we have said before, we believe stock-based compensation is a real operating cost. And as a result, we consistently reflect it in all of our profit metrics, and we strongly believe this should be an industry standard in reporting.
As of December 31, 2025, the share repurchase program’s remaining authorisation was $21.8 billion.
Some words on the insider trades. You will notice that the C-level and board members are constantly selling shares and never buying any. Some people interpret this as a bad sign. When you look into how the compensation is structured, you can see, however, why this makes sense: CEO Glenn Fogel’s base salary is ~$1 million, and his stock-based compensation was roughly $40 million each in 2023 and 2024 and $26 million in 2025. Naturally, he sells shares to fund his lifestyle (I guess most would handle it the same way). Therefore, I don’t mind the constant selling of shares.
Competitors
About 70% of all travel bookings are being done online today, while the remainng 30% are still being concluded offline at “traditional” booking vendors. Online keeps growing at a steady pace
The online bookings are split roughly into 40% with online travel agencies (OTA) such as Booking or Expedia, while 60% are booked directly at airlines or hotels.
Expedia and Airbnb are some of the most obvious competitors in the Western world, but neither has the same business quality as Booking does. Airbnb has been one of the larger disappointments in recent investment history. After more than 5 years, the stock is back to where it was at the time of the IPO.
A more serious competitor is Trip.com, also known as Ctrip. Trip.com is a Chinese competitor, and I have used it when I was travelling in China more than 10 years ago. Increasingly, Trip.com is targeting the Western markets as well.
Some more words on the competition in Booking’s own words.
We compete globally with both online and traditional travel and restaurant reservation and related services. The markets for the services we offer are intensely competitive and constantly evolving. Competing offerings can be launched at a relatively low cost, with the pace of innovation increasing and the cost to do so decreasing as a result of Gen AI. Our current and potential competitors include the largest global technology companies, which have significantly more consumers, consumer data, and resources than we do, and may be able to leverage other aspects of their businesses to compete more effectively with us.
Risks
New competitors (see above)
Extended government regulation both for the online platform, as well as more attention for the expansion of the payment offering.
Large-scale pandemics, as we all learned during the COVID lockdowns, are not particularly helpful for a company facilitating travel bookings.
Economic uncertainty and geopolitical tension can also dampen the demand for travel and leisure. However, these effects will be felt across the whole economy. Wars are also not the friend of the traveller, and the ongoing conflict in the Middle East has had an impact on Q1/26. Glenn Fogel addressed the impact of the Middle East conflict in the earnings call late April:
We estimate that the Middle East conflict impacted our room night and gross bookings growth by approximately 2 percentage points, accounting for directly impacted countries in the region as well as bookers whose travel was affected by the conflict.
As a result of the conflict and the impact that it has on Booking, management tightened spending and saw a slight impact on the overall year results.
Operational Metrics
In 2025, 68 million airline tickets were booked, up 37% year over year. The growth in Q1/26 vs Q1/25 for airline tickets was a strong 28%. The overall growth of airline tickets booked through Booking.com is astonishing.
Attraction tickets booked on the platform increased by almost 80% (starting at a smaller base)
The Fundamentals
Bookings quarters show a great deal of seasonality. While the expenses are relatively similar in all quarters, the revenue is recognised when the travel begins. This is the highest in the summer months of Q3, when both Europe and North America are on their summer holidays. You can nicely see it in the revenue graph:
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