The operator introduces the Booking Holdings Fourth Quarter and Full Year 2023 Conference Call and reminds listeners that the call may contain forward-looking statements. He also provides information on where to find the company's earnings press release and introduces the speakers, Glenn Fogel and David Goulden. Fogel reports a solid finish to the fourth quarter with a 9% increase in room nights, which exceeded expectations and grew 11% when excluding Israel from both periods.

In 2024, the company saw a 21% growth in room nights compared to 2019 and delivered record revenue and adjusted EBITDA. They also saw strong growth in bookings for the upcoming summer season. In 2023, the company achieved record results in room nights, gross bookings, revenue, and adjusted EBITDA, with a significant increase in profitability and earnings per share compared to 2022 and 2019.

In 2023, the company had significant growth compared to 2019 in terms of gross bookings, revenue, and earnings per share. This was achieved through investments in building a stronger business and product offerings, such as a scaled up merchant platform and increased alternative accommodations options. The company also improved its abilities in performance marketing and brand spending. These efforts have helped attract new customers and provide a more complete offering for existing customers, aligning with the company's vision of a connected trip.

Booking.com has expanded and improved their loyalty program to benefit more travelers and partners. They have also strengthened their direct relationship with travelers through their mobile app. The company is confident in the long-term growth of the travel industry and is well positioned for future growth. They have returned over $10 billion to shareholders in 2023 and have declared a quarterly dividend. The company has also made progress in their strategic priorities, including advancing their connected trip vision and integrating AI technology. They are focused on building direct relationships with travelers and supporting their supply partners.

The company believes that improving the travel experience for consumers will lead to increased loyalty, direct bookings, and a larger share of total travel spending. This will benefit both travelers and partner suppliers. The company has been making progress in developing the "connected trip" and has already seen improvements on their platform as a result. For example, their emerging platform at Booking.com has led to a more seamless booking experience and an increase in flight bookings. This has also attracted new customers to the platform.

The company is working on expanding their attraction offerings to increase traveler engagement and see the potential for bundling opportunities. They have made progress in their Connected Trip vision and are seeing a growing percentage of transactions through their platform. They plan to continue building this vision with the help of AI technology, specifically generative AI. They have launched Booking.com's AI trip planner in the US and UK markets and are gathering information on customer interactions and questions.

The AI trip planner at Priceline has been improved and tested in other verticals. Priceline's AI travel assistant, Penny, has been enhanced to cover flights, car rentals, and vacation packages and is now available on the homepage. This shows how the team continuously improves their AI-powered products through user interactions. The Penny product has shown promising results in lowering customer service contact rates and improving the overall customer experience. The company is also exploring ways to use generative AI tools to increase productivity for customer service agents and software developers. They also strive to be a valuable partner for all accommodation types on their platform and aim to add value for their partners through incremental bookings and developing new products and features.

The majority of Booking.com's partners are small independent businesses, and they have seen significant improvement in business performance. The company is committed to helping these partners thrive to promote diversity and sustainability in the sector. Their alternative combination offering has been successful in increasing supply and awareness among travelers, with a 19% growth in room nights in the fourth quarter and 24% for the full year. Alternative accommodations now make up 33% of Booking.com's total room nights, and they continue to see growth in supply globally and in the U.S. The company is focused on improving the product for both supply partners and travelers, with a goal of increasing loyalty, frequency, spend, and direct relationships. They have seen strong retention among their peak bookers and an increase in new users to the platform.

The company is seeing an increase in direct bookings through their mobile app and is working to improve the app experience. They are also facing a regulatory issue in Spain where they disagree with the proposed fine. The company believes in a mutually beneficial partnership with their accommodation partners and has a history of working with competition and consumer authorities.

In the fourth quarter, the company plans to file for designation under the DMA suit and will work closely with regulatory bodies to maintain consistent rules. The company is pleased with strong results and expects continued demand for leisure travel. The CFO will review the results and provide insight on first quarter and 2024 trends. Digital services taxes have been reclassified and a table has been provided in the earnings press release to reflect this change.

In the fourth quarter, the company saw strong growth in room nights, with a 9% increase year-over-year and a 21% increase compared to 2019. All regions showed improvement, with Asia leading with mid-teens growth. The average booking window expanded, but not as much as in the third quarter. Mobile app bookings increased and the direct channel saw a higher percentage of room nights. The international mix of room nights also increased. The cancellation rate was slightly higher due to the war in the Middle East, but normalized by the end of the quarter. Alternative accommodations saw a 19% increase in room nights and accounted for about 32% of total room nights. Gross bookings increased by 16%, driven by higher ADRs and positive impacts from FX movements and flight bookings.

In the fourth quarter, ADR growth was impacted by regional mix, but excluding this factor, ADRs increased by 5 percentage points. There was no change in the mix of hotel star ratings or length of stay, indicating consumers were not trading down. Airline ticket bookings were up 46% due to Booking.com's flight offering. Revenue exceeded expectations, increasing 18% year-over-year. Marketing expense increased 9% year-over-year, but marketing and merchandising combined were 15 basis points lower than last year due to lower merchandising expense and better performance marketing ROIs. Q4 sales and other expenses were up 20 basis points compared to last year, mainly due to higher accounts receivable provisions related to delayed collections. This is not expected to be an ongoing issue.

The fixed expenses for the company were up 21% year-over-year, but this was lower than expected due to lower personnel and IT expenses and the DST reclassification. Adjusted EBITDA was higher than expected, but was negatively impacted by a loss related to the devaluation of the Argentinian peso. Non-GAAP net income and earnings per share were up significantly year-over-year. The company is planning to appeal a draft decision and fine proposed by the Spanish Competition Authority and is working to align a travel industry-wide pension plan with their existing plan for employees in the Netherlands.

The company expects a slight increase in pension plan costs in the Netherlands but it will not have a significant impact. They had a net income of $222 million in the quarter and saw growth in room nights and gross bookings for the full year. Revenue and take rates were also up compared to the previous year. Marketing and merchandising expenses as a percentage of gross bookings decreased due to efficiencies and a higher direct mix, but still remained higher than in 2019. EBITDA and non-GAAP earnings per share also showed significant growth compared to the previous year.

In the fourth quarter of 2023, the company's cash and liquidity position decreased due to share repurchases but was partially offset by free cash flow. In 2023, the company repurchased over $10 billion worth of shares and plans to continue repurchasing shares in the future. They have also announced a quarterly dividend of $8.75 per share, which will complement their share repurchase program and attract more investors. The company's capital return program will mostly consist of share repurchases, and they aim to complete their $24 billion share repurchase authorization by the end of 2026. They also have a target gross leverage of 2x and a goal to eventually reach 1x net leverage. The initiation of a dividend does not change these targets.

The company is returning to its historical guidance approach and expects solid growth in the first quarter due to strong travel demand. They anticipate room night growth to be between 4-6% and gross bookings growth to be between 5-7%. Revenue growth is expected to be between 11-13% due to the Easter shift. Adjusted EBITDA is expected to be between $680 million and $720 million, with a 19% year-on-year growth and a slight increase in EBITDA margin. The company also discusses their longer-term growth ambitions.

The company is aiming for constant currency growth rates in gross booking revenue and earnings per share that are higher than 2019. They expect to achieve this with investments made in the business. FX rates and the war in the Middle East may have a negative impact on growth, but they still expect to grow slightly faster than 7% in 2024. Revenue and adjusted EBITDA are expected to grow, with adjusted EBITDA margins expanding. The company is pleased with Q4 results and expects 2024 to be another strong year. The call then moves to Q&A with an analyst from Bank of America/Merrill Lynch.

In this paragraph, Justin asks David and Glenn about the company's performance and their thoughts on the impact of AI on the business. David confirms that January's growth exceeded expectations and may have been influenced by the shift of Chinese New Year. Glenn emphasizes the importance of AI and mentions the company's early progress in this area, but acknowledges that it is still too early to predict the full impact. He also highlights the company's financial position and resources as advantages in exploring the potential of AI.

The speaker discusses the advantages of the company's size and scale in creating models and products for the travel industry. They also mention the impact of the Middle East and strong results from last year on Q1 room night growth. The speaker also thanks a departing colleague and answers a question about marketing and merchandising.

David Goulden and Glenn Fogel discuss the current state of merchandising and advertising at Booking.com. They mention that merchandising has reached a steady state and will be a source of leverage for the company in terms of EBITDA margin expansion. They also note that the competitive environment remains competitive, but they are pleased with their performance. Glenn Fogel adds that the company uses data and AI to merchandise strategically, rather than giving away money.

The speaker discusses the potential for AI technology to improve the travel experience and increase profits for both travelers and suppliers. The questioner asks about the company's guidance for margins and marketing spend, as well as the decrease in buybacks in Q4. The speaker responds that the direct mix increase will be the biggest driver of leverage for EBITDA margin, and they plan to continue aggressive marketing while offsetting costs with ROI.

The speaker discusses the impact of leverage on marketing and merchandising and its effect on EBITDA margins. They also mention the buybacks in Q4 and how they are influenced by share price. The full year outlook reflects a normalization of trends in 2024 and considers the tough comp and Middle East impact. The company is confident in their business and expects to grow faster than 8-8.15% on a constant currency basis, despite the slowdown in the Middle East. The reported number, including FX shift, is 7-7.4%.

The speakers addressed two questions regarding the U.S. market. The first question was whether the reported flat growth in the U.S. included alternative accommodations, to which the response was that alternative accommodations did grow, but it is a smaller portion of the overall business in the U.S. The second question was about future investments in the U.S. market, to which the speaker stated that they have already shown strong growth and are confident in their position in the travel market.

In the paragraph, the speaker expresses their satisfaction with the company's growth and the team's performance in 2019. They mention the opportunity for growth in the U.S. alternative accommodations market and the importance of working closely with hotel partners. The speaker also mentions plans to increase the supply of alternative accommodations in the U.S. and to include all verticals in the loyalty program by 2024.

Glenn Fogel discusses the company's efforts to increase the supply of alternative combinations, including targeting larger property managers and eventually focusing on single properties. He expresses his disappointment at the lack of single properties currently available, but sees it as an opportunity for growth. The company has seen a 12% increase in listings and a high growth rate of return on the combination, which Fogel is pleased with.

Glenn Fogel is discussing the expansion of their loyalty program, Genius, to include all travel verticals. They plan to experiment with different ways to incorporate flights, car rentals, and other services into the program. This will be done using data and AI to provide value to travelers and increase direct bookings. The program is primarily funded by partners who see value in providing discounts or other benefits to attract travelers.

The speaker talks about the importance of doing things scientifically and in a way that benefits supplier partners. They will continue to experiment with this approach and believe it will work well in all areas. They also discuss their plans for Connected Trip, which is still in its early stages but showing signs of success. They believe it will take time to scale and show results in terms of bottom line and loyalty. They point to the growth of flights as a positive sign for the company.

In the paragraph, the speaker discusses the progress of the company's verticals and the challenges they face in developing them. They mention the growth of the car rental business and the need to build models and partnerships to ensure success. They also thank their partners, customers, employees, and shareholders, and give a special thanks to the retiring CFO, David Goulden. The speaker concludes by expressing their commitment to the long-term vision of the company.

This summary was generated with AI and may contain some inaccuracies.