The operator introduces the Booking Holdings' Second Quarter 2024 Conference Call and reminds listeners that the call may contain forward-looking statements. Booking Holdings' speakers for the call are Glenn Fogel and Ewout Steenbergen. The company's second quarter results exceeded expectations for room nights and revenue.

In the second quarter, the company saw an increase in revenue and adjusted EBITDA, driven by a normalized travel market. The number of room nights booked also increased, but at a slower rate than in the first quarter. The European market showed a slight slowdown, but the company is still performing well. Looking ahead to the third quarter, there may be a further slowdown in room night growth due to a shorter booking window and moderate market growth in Europe. The company remains confident in the long-term growth potential of the travel industry and their competitive position.

The company is focused on long-term success by executing strategic initiatives and driving cost efficiency. They have seen progress in various initiatives, such as expanding their merchant offering and developing AI capabilities. They aim to deliver a better travel experience for customers and benefit their supplier partners. They are encouraged by growth in supply partners and are committed to supporting smaller and independent businesses. Their alternative accommodation offering has also seen growth, with a greater selection of listings and an increasing mix of room nights booked. They continue to make improvements to benefit both travelers and supply partners.

Booking.com is focused on providing a better planning, booking, and travel experience for its travelers in order to increase direct bookings. They are seeing growth in the number of total active travelers and an increase in direct bookings compared to room nights acquired through paid marketing channels. The company is also investing in social media and their Genius loyalty program to encourage more travelers to book directly with them. They have seen success with higher direct booking rates and booking frequency from their Genius Level 2 and 3 travelers, who now make up nearly 30% of their active travelers. In addition, they have increased the benefits for their travelers by 15% year-over-year, primarily driven by accommodation bookings.

Booking.com is seeing significant growth in benefits and other elements of travel, such as car rental discounts and testing of Genius benefits for flights. They will continue to enhance their loyalty program and work towards their long-term vision of the connected trip, which includes using AI technology and expanding their merchant capabilities. The mix of merchant gross bookings at Booking.com has also increased, exceeding their expectations.

In the second quarter, Booking.com saw growth in transactions connected to other verticals, with air tickets booked on the platform increasing by 28%. They are confident in their long-term outlook for the travel industry and believe they are well positioned for future growth. The CFO will now review the results and provide thoughts for the third quarter and full year.

The second quarter results for the company showed a 7% increase in room nights, exceeding their guidance. Growth was seen in all regions, with alternative accommodations growing faster. Direct relationships with travelers and loyalty on their platforms have also increased. Mobile bookings and the Genius loyalty program have also shown growth. Outside of accommodations, airline ticket bookings also increased in line with expectations.

In the second quarter, bookings increased by 4%, which was lower than the 7% room night growth due to negative impact from changes in FX and lower ADRs. The decline in ADRs was mainly due to a higher mix of room nights from Asia. Excluding regional mix, ADRs were flat compared to the previous year. Gross bookings growth was in line with expectations, but lower ADRs and lower flight ticket prices had a negative impact. Revenue grew by 7% and exceeded expectations by 1%, but was negatively impacted by changes in Easter timing and FX. Adjusting for these factors, revenue would have grown by 11%. Marketing expenses increased by 8% and were slightly higher as a percentage of gross bookings compared to the previous year, mainly due to timing and increased spending on social media. Adjusted sales and other expenses were also slightly higher as a percentage of gross bookings due to a higher merchant mix and transaction taxes.

In the second quarter, the company's fixed expenses were lower than expected, leading to higher adjusted EBITDA and adjusted EPS. Adjusted EBITDA grew by 7%, and adjusted net income was up 3%. The company's cash and investments balance also increased due to free cash flow generated in the quarter. For the third quarter, the company expects room night growth to be between 3% and 5%, with a similar booking window as last year.

The company has seen a slight decrease in market growth in Europe, but their performance remains stable. They expect third quarter gross bookings growth to be between 2% and 4%, with a slight negative impact from changes in FX. ADRs are expected to be down slightly, but this will be offset by a slight benefit in flight bookings growth. Adjusted EBITDA is expected to be flat year-over-year due to deleverage and increased expenses. For the full year, gross bookings growth expectation has been adjusted to faster than 6%, with slower growth in flight bookings due to lower ticket prices. However, strong growth is still expected in flight tickets overall. Accommodation ADRs are expected to be flat to slightly down on a constant currency basis.

The company expects revenue growth of more than 7% due to outperformance in the first half of the year and higher revenue from payments. The decline in flight ticket prices has a smaller impact on revenue compared to gross bookings. The company also expects adjusted EBITDA and EPS to grow at a faster rate than previously expected. They remain focused on executing strategic initiatives and are excited about their long-term vision for the connected trip. In regards to the European travel market, the company's performance has remained steady, indicating potential market share gains. Glenn Fogel will now take questions from analysts.

The speaker agrees with the current state of the travel business and their goal is to gain market share regardless of market fluctuations. They have seen steady growth in Europe and are not seeing a trade down in star ratings or length of stay globally. They remain confident in the future despite any moderation in the market.

In the paragraph, Kevin Kopelman asks a follow-up question about ad spend dynamics, to which Ewout Steenbergen responds that they expect leverage in the second half of the year due to expansion in the direct mix. He also highlights their investment in social media channels and the attractive ROI they are seeing there. The next question from Justin Post is about the travel market and alternative accommodations. Glenn Fogel responds that they expect 3-5% growth in bookings, but Europe has a tough comp against last year's reopening. He also mentions the strong growth in alternative accommodations and their focus on featuring them on their website.

The company believes that the travel market is influenced by GDP and that as GDP goes up, more people will travel. They also believe that their growth algorithm is intact and that although there may be volatility and macro events, they will continue to provide a better service in the long run. The company has been working on building an alternative accommodations business and has caught up to their competitors. In the last quarter, their homes business grew faster than the biggest player in the industry for 11 out of the last 12 quarters.

The speaker is unsure if their 12% growth rate will continue and is focused on providing customers with a reason to use their product. They do not care where the customer stays as long as they get what they want. The profitability of different options is not important, but rather ensuring customer satisfaction. The speaker also discusses the recent tightening of the booking window and the potential impact of tech issues on the travel industry.

The speaker is not concerned about fluctuations in window size and instead focuses on spending marketing money wisely to ensure good conversion rates. They cannot control when people decide to book or tech issues that may disrupt travel, but they were not significantly affected by the recent Delta incident. The speaker also hopes that companies will test their products and have backups in place to avoid disruptions in the future. The next question is about the demand environment.

The speaker discusses the shift from goods to services in the economy and questions whether it is a permanent change or if demand will return to a balance. They believe that as people become wealthier, they tend to spend more on services as opposed to goods, which aligns with their own observations.

The speaker discusses the "Instagram effect" and how it may be influencing people to travel to certain parts of the world. They also mention the company's progress in using social media for marketing and their decision to shut down some ineffective marketing strategies. The new marketing director also shares his positive experience with the company so far.

The company is emphasizing the importance of diversifying paid channels and utilizing algorithms to optimize their paid marketing dollars. They have a strong loyalty program that differentiates them from their competitors and leads to a high rate of repeat bookings. The company's ad revenue is currently under monetized at 0.7% of gross booking, presenting an opportunity for growth and expansion. Ewout will address this opportunity.

The speaker discusses the success of Booking.com's loyalty program, Genius, and its impact on the company's business. They highlight the high percentage of active users who are at Level 2 or 3 of the program and how it leads to more direct and frequent bookings. The program is beneficial for both travelers and partners, as it provides incremental demand and flexibility. The speaker also mentions the potential for expansion into other areas such as car rentals and flights, as part of the company's connected trip vision. The program is data-driven and uses AI capabilities to provide the best solutions for both sides of the marketplace.

The company is seeing growth in its advertising revenues and is exploring opportunities to further increase this line of business. The growth is driven by various factors such as the use of apps, alternative accommodations, and expansion into new markets. The CEO also mentions the potential of generative AI and other opportunities for growth. The CFO mentions that connected trip bookings are up by 45% and account for a high single-digit percentage of the mix.

The speaker confirms that the basket size of a trip increases when customers purchase multiple items, and this affects their customer acquisition strategy and lifetime values. They have found that customers who use the connected trip feature have a higher repeat rate and come back direct. The convenience factor and frustration of travel are driving the need for a one-stop shop for all travel needs.

Ewout Steenbergen, the speaker, discusses the benefits of GenAI and the progress being made with it. He believes it will differentiate their company and attract more customers, creating a "win-win-win" situation. In response to a question about the softer travel environment and its impact on pricing, Steenbergen explains that they are focusing on operating leverage and utilizing their scale to run more volume through their fixed infrastructure. This will allow them to invest in growth initiatives, improve EBITDA margins, and return capital to shareholders. They have already done some reorganizations and are carefully managing head count.

The company is focusing on expense benchmarking and reducing fixed OpEx to low double digits for the full year guidance. They are also investing in alternative accommodations, but do not feel they have reached supply parity with their competitors in the U.S. yet. The company is working on improving the product and experience for customers.

The speaker believes that paragraph 25 presents a great opportunity for their company, especially for those living in the New York area. They want to improve their offerings for summer rentals and increase trust in their site. The speaker also addresses a question about their B2B mix, stating that they are encouraged by the growth of their B2B business and have strong propositions in the market. They also mention their focus on alternative accommodations.

Booking's unique proposition of offering both traditional and alternative accommodations on the same platform positions them well in the competitive market. They are agnostic about which type of accommodation customers choose and focus on providing the best options for travelers. The booking window has not expanded as much, possibly due to a mix of cross-border and domestic bookings. The U.S. online growth has picked up, but it is not clear if it is driven by alternative lodging.

Glenn Fogel and Ewout Steenbergen discuss the increase in booking window in the second quarter for Booking Holdings. Ewout explains that for the company, it doesn't matter when travelers book because they will eventually travel and the company will recognize the revenues. Glenn adds that the company's focus is on providing travelers with what they need and they are pleased with the overall performance of the U.S. business in the second quarter.

In this paragraph, the speaker discusses the importance of being a good partner to hotels and providing them with the necessary demand. They also mention the importance of the connected trip, which includes flights, ground transportation, and attractions. The goal is to provide a better experience for travelers and more opportunities for supplier partners. The speaker also expresses a desire to improve in the American market.

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