Booking Holdings: Riding the Momentum Wave in the Travel Sector

Q2'23 Earnings Review

Booking outperformed market expectations across key metrics:

• Revenue of $5.46B Vs $5.17B expected, beat by $287M or 5.55%

• Adjusted EBITDA of $1.78B Vs $1.47B, beat by $306M or 20.8%

• Non-GAAP EPS of $37.62 Vs $29.16, beat by $8.46 or 29.01%

Q2’23 Key Financials and KPIs

Source: Booking Holdings 10-Q reports, Booking Holdings Q2’23 Earnings release, StockOpine analysis

Before diving into the results, it is worth noting that Q2’22 is a tough comparable period due to the strong travel rebound following the Omicron variant in Q2 last year.

Nights booked for the quarter reached 268 million, reflecting an increase of 8.8% year-over-year, while the Company attained its highest quarterly gross bookings (GBV) ever at $39.7B, up 15%. This surge in demand underscores a sustained appetite for travel, justified by a continued acceleration in nights booked in July 2023 (relative to Q2’23 growth).

Source: Booking Holdings Q1’23 Earnings release, StockOpine analysis

Regionally, Asia lead the growth with a substantial 40% year-over-year increase in room nights, while Rest of the World experienced a growth in the low double digits. Europe was up by a couple of points and the U.S. experienced a minor decline, largely attributed to the tough comparisons of 2022.

Source: Booking Holdings Q2’23 Earnings release, StockOpine analysis

Growth in GBV (15%) was higher than nights booked growth (8.8%) due to a 5% higher accommodation constant currency ADRs and due to a couple of points from flight bookings, partially offset by a percentage point of negative impact from FX movements.

The growth in ADRs remained strong despite the impact of an increased mix of room nights booked in the lower ADR region of Asia. Excluding the regional mix effects, constant currency ADRs displayed a year-over-year growth of about 9%.

“Despite the higher ADRs in the second quarter, we have not seen a change in the mix of hotel star-rating levels being booked or changes in length of stay that could indicate that consumers are trading down.” David Goulden, CFO

* ADR was calculated by dividing Gross Bookings with Nights Booked. It should be noted that Gross bookings include all travel services (i.e., accommodation, car rentals, and flights).

Source: StockOpine analysis

Alternative Accommodation

Alternative accommodation nights grew faster than the hotel category at 11% year-over-year, while the mix of alternative accommodation room nights on Booking.com rose to 34%, 2% points higher than Q2’22 and 1% point relative to Q1’23. In comparison, Airbnb also experienced an 11% year-over-year increase in nights and experiences booked during Q2’23.