Booking Holdings (BKNG) - 2025 Goldman Sachs TMT Conference
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Date: September 11, 2025
Management Present:
Ewout Lucien Steenbergen – Executive VP & CFO
Financial Performance
“We’re already at the highest EBITDA margins of any of the travel competitors… approximately 35% EBITDA margins last year. And this year, our guidance is another 125 basis points expansion on top of that”.
Productivity program delivering ~$150M savings in 2025, with “at least another $300 million that we will realize mostly in 2026”.
Free cash flow: trailing 12 months was ~$9 billion.
Payments business is a “north of $100 billion kind of business… strategically very important and an underpinning of the connected trip”.
Guidance and Future Trends
Market trends described as “steady”, which is positive given industry cyclicality.
ADR outlook: “Over time, ADR should grow more or less in line with inflation. Short term, there can be some fluctuations”.
Take rates remain stable: “Accommodation take rates are very stable… flights put some pressure… payments adds to the take rate. So overall, it’s stable on a net basis”.
CFO stressed focus on balancing efficiency gains with reinvestments into growth areas like AI, fintech, and connected trip.
Capital Allocation
“Very consistent, no changes” in framework. Target leverage: gross 2x, net 1x.
Capital priorities:
Organic reinvestment in growth.
Inorganic opportunities (limited in Europe by antitrust).
Return of capital via dividends & buybacks.
Buybacks are “price sensitive… might go up and down in some periods, but over time that is averaging out”.
Macro & Demand Trends
Europe: “in a good place. Europeans book earlier, book against higher prices”.
Asia: “healthy growth… Asia is in a very good position”.
U.S.: “a little bit better sequentially… but not completely out of the woods yet,” citing shorter booking windows, length of stay, and ADR softness.
Ongoing U.S. consumer bifurcation: “top end does much better than the lower end”.
AI & Connected Trip
Today: Connected Trip is “low double digits of overall bookings” and grew 30% YoY.
Future: GenAI will enable full trip orchestration—personalized itineraries, automatic updates if flights are delayed, contextual upsells like Louvre tickets or OpenTable reservations.
AI applications today:
Customer service: “average cost per booking coming down very rapidly and customer satisfaction scores going up”.
Smart filters: natural language input reduces cancellations.
Partnerships with OpenAI, Google, Microsoft, Amazon, Salesforce to test AI-driven lead generation.
Long-term: building best-in-class agentic AI experience to keep direct traffic.
Competition, Brand & Loyalty
Alternative accommodations: “We’ve outgrown the market leader in this space now for 16 out of the last 17 quarters”.
8.4 million alternative listings, +8% YoY.
“37% of overall room nights” now from alternative accommodations, up from ~10% a few years ago.
Loyalty program: 55% of bookings come from Genius Tiers 2 & 3 customers.
Marketing: 90% spend on performance, 10% on brand.
Social media marketing spend up 25% YoY in Q2 2025, with evidence of incremental booking lift.
10 Notable Quotes
“The overarching vision… is the connected trip, making it easier, more seamless to have all the parts of a trip all hanging together.”
“Alternative accommodations is growing very rapidly… 8.4 million listings at the end of the second quarter globally.”
“Our payments business is already a north of $100 billion kind of business.”
“The way we describe the market is the word steady, and steady is good for our industry.”
“Over time, ADR should grow more or less in line with inflation.”
“We’ve outgrown the market leader in this space now for 16 out of the last 17 quarters.”
“Connected Trip grew 30% and is now low double digits of our overall bookings.”
“AI in customer service is driving costs per booking down very rapidly while satisfaction scores go up.”
“We are already at the highest EBITDA margins of any travel competitors… ~35% EBITDA margin.”
“Trailing 12 months free cash flow was around $9 billion as a company.”
Q&A Summary
Q: Strategic priorities?
A: Connected trip, direct traffic/loyalty, vertical expansion (flights, alt accommodations, attractions, cars, OpenTable), geographic growth (Asia, U.S.), payments/fintech, and disciplined capital strategy.Q: Consumer health?
A: “Steady” globally; Europe strong, Asia improving, U.S. mixed with upper-income consumer stronger than lower-income.Q: ADRs & take rates outlook?
A: ADRs should grow with inflation long-term; take rates stable, with flights a drag but payments a lift.Q: Alternative accommodations strategy?
A: Continue supply growth, 8.4M listings (+8% YoY), still significant U.S. upside, and proposition benefits from unified hotel + alt accommodations platform.Q: Role of AI?
A: Already impacting customer service costs and cancellations; future will be transformative in creating a fully integrated connected trip.Q: Margins outlook?
A: Highest in industry; expansion continues with productivity savings and scale leverage, while reinvesting in growth.Q: Capital allocation?
A: Stable framework—organic growth first, then inorganic (constrained in Europe), then shareholder returns via dividends and buybacks.
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