The paragraph is the introduction to Booking Holdings' Third Quarter 2024 Conference Call. It begins with a reminder that the call may contain forward-looking statements subject to risks and uncertainties, meaning actual results could differ. For more details on potential risks, listeners are advised to review Booking Holdings' official documents. The call introduces speakers Glenn Fogel and Ewout Steenbergen, with Glenn Fogel expressing satisfaction over improved topline trends in the third quarter, especially in Europe, which led to room nights, gross bookings, and revenue surpassing expectations.

The company reported strong financial performance in the third quarter, with revenue and adjusted EBITDA both showing significant year-over-year growth. The robust results were attributed to effective marketing, controlled operating expenses, and increased traveler activity, particularly in Europe and Asia. The company's share value benefited from a strong capital return program. Looking forward, they anticipate continued growth in room nights booked due to consistent travel demand. They remain positive about their competitive position and are focused on key initiatives like expanding alternative accommodations, enhancing their connected trip vision, further developing AI capabilities, and boosting their presence in Asia.

The paragraph discusses initiatives by a booking platform to improve the travel experience for users and support supplier partners, particularly small independent accommodations. It highlights a growth in property listings by 10% from the previous year, resulting in increased accommodation choices and a 14% growth in alternative accommodation bookings. The platform offers a diverse range of properties, allowing travelers to choose between hotels and alternative accommodations, which can influence their booking decisions. The company aims to enhance the planning, booking, and travel experience through the "connected trip" concept, emphasizing seamless integration of travel elements and improved value for travelers and suppliers.

Booking.com's Genius loyalty program is expanding beyond accommodations to include other travel services, enhancing value for both travelers and partners through incremental bookings. The company is experiencing significant growth in "Connected Trip" transactions, where customers book multiple travel services on the platform. This trend, which grew over 40% year-over-year in the third quarter, indicates an improved booking experience and increased customer loyalty. The flight booking sector, crucial for many connected trips, saw a year-over-year increase of 39% in the third quarter, driven by booking.com's expanding flight services. The rise in new and returning customers highlights the platform's broader service appeal. AI technology remains central to creating a seamless and personalized connected trip experience, with dedicated AI teams integrating these advancements into Booking.com's platforms.

Booking.com is leveraging proprietary data and AI technology to create personalized offerings for travelers and enhance operational efficiency. Key initiatives include the AI trip planner and smart filter, which have improved search capabilities and response rates to traveler queries. For partners, AI tools assist with writing responses and onboarding, particularly for alternative accommodations. Testing shows improvements in customer service efficiency and experience, and the company anticipates further advancements as they continue developing these AI capabilities.

Priceline has expanded its generative AI travel assistant, Penny, to engage with travelers throughout the entire booking experience, including the introduction of Penny Voice for verbal interactions. The AI is being developed to anticipate and respond to traveler needs based on past interactions. Meanwhile, Agoda is using generative AI across various functions to enhance productivity and development efficiency. Kayak introduced the Ask Kayak tool for personalized travel planning through natural language and launched PriceCheck, a price comparison feature for flight itineraries.

OpenTable has integrated an AI voice bot to assist restaurants in handling phone calls for tasks such as reservations and inquiries, which automatically updates OpenTable software. They've also partnered with Salesforce's Agent Force platform to manage web queries, allowing agents to focus on complex issues. The company is enthusiastic about integrating Generative AI across platforms, despite it being early days, and is confident that AI will enhance products, improve customer interactions, operational efficiency, and contribute to strategic growth, particularly in Asia where the travel industry is expected to grow in high single-digits over the next five years.

The paragraph discusses Booking Holdings' strong performance in the Asian travel market, highlighting that 24% of global room nights were booked by Asian customers, slightly more than pre-pandemic levels. The company's growth in Asia is diversified, with no single country dominating their sales. Success in the region is attributed to their two brands, Agoda and Booking.com, aimed at profitable long-term growth. The positives from strong third-quarter results and a resilient leisure travel demand are emphasized as the CEO transitions the call to the CFO, Ewout Steenbergen, who will discuss financial performance and expectations for the upcoming quarters. Booking Holdings surpassed their third-quarter room night growth guidance by 3 percentage points.

The paragraph outlines the robust growth in room nights for a travel company, driven by improved trends in Europe and an expanded booking window. Regional growth in the third quarter varied, with Europe seeing high single-digit growth, Asia experiencing low double-digits, other global regions achieving mid-single-digits, and the US seeing low-single digits. The company is advancing strategic priorities such as expanding alternative accommodations, increasing direct channel bookings, enhancing its Genius loyalty program, and boosting mobile app engagement. Alternative accommodation growth at Booking.com saw a 14% increase, contributing 35% to the global mix, and the direct channel now represents a mid-50s percentage of total bookings. Mobile app bookings also rose, similarly accounting for a mid-50s percentage, with most coming through the direct channel. The Genius loyalty program has seen increased participation at higher levels.

In the third quarter, Booking.com and Agoda experienced significant growth in airline ticket bookings, increasing by 39%, and rental car days booked, increasing by 16%. Gross bookings rose by 9%, surpassing expectations, primarily due to an increase in flight bookings, although partially offset by a slight decrease in constant currency accommodation ADRs. Revenue for the quarter reached $8 billion, also growing by 9% year-over-year and exceeding guidance. Revenue as a percentage of gross bookings was consistent with expectations at 18.4%, with increased payment revenues driven by a higher merchant mix. Marketing expenses grew by 6% year-over-year but were lower as a percentage of gross bookings due to improved marketing efficiency.

In the third quarter, sales and expenses held steady at 2% of gross bookings compared to last year. Adjusted fixed expenses rose by 7% year-over-year but were lower than expected due to reduced IT and G&A expenses, some of which may move to the fourth quarter. The focus remains on managing fixed expenses to enhance operating leverage and support strategic investments. Adjusted EBITDA grew 12% to $3.7 billion, exceeding expectations due to higher revenue and lower fixed expenses, leading to a slightly improved EBITDA margin of 45.8%. Adjusted net income increased by 9% to over $2.8 billion, and adjusted EPS rose 16% to $83.89 per share, aided by a reduced share count. GAAP net income was $2.5 billion, impacted by a $365 million accrual for potential Italian tax settlement and offset by a $250 million decrease in US tax liability. The cash and investments balance ended at $16.3 billion, down from the second quarter due to $2 billion in capital returns, $1.1 billion debt repayment, and partially offset by $2.3 billion in free cash flow.

In the fourth quarter, the company anticipates room night growth of 6-8% and gross bookings growth of 7-9%. Revenue growth is expected to be 7-9%, with adjusted EBITDA between $1.6 billion and $1.65 billion, reflecting a 9-13% increase. This growth is attributed to marketing leverage and a stronger direct mix. For the full year, gross bookings are projected to rise by about 8%, a revision from a previous expectation of over 6%, and revenue growth just below 10%. There's a slight negative currency impact expected. Fixed operating expenses are estimated to grow around 10%, and adjusted EBITDA growth is anticipated between 13-14%, improving from previous expectations. Adjusted EBITDA margins are expected to increase by over one percentage point, and adjusted EPS should grow in the high-teens. Overall, the company is pleased with its third-quarter results and optimistic about future performance.

In the paragraph, Glenn Fogel discusses the impact of AI on the company's financials during a Q&A session. He expresses excitement about AI's potential to transform the travel industry, enhancing customer experience and partner services. However, he acknowledges that it's still early to quantify AI's financial impact, even though some efficiencies are being observed. Additionally, he defers a question about fourth-quarter factors affecting bookings to Ewout.

The paragraph discusses the company's progress and strategic outlook related to AI, highlighting the significance of leveraging AI for future success. Although they have a relatively small number of users compared to overall customer interactions, they are focused on the long-term transformational impact of AI. The company emphasizes their advantages, such as capital, experienced personnel, and data, to develop unique services. The speaker encourages people to try their AI products and acknowledges mixed personal experiences while expressing optimism about their progress. Additionally, Ewout Steenbergen comments on a positive outlook for the fourth quarter, expecting continued favorable trends.

In the paragraph, the speaker discusses the outlook for the fourth quarter, noting that comparisons will be easier due to past events, such as the Middle East conflict, and that specific events usually don't affect their long-term results. They observe that the strong performance from August and September continued into October, and they anticipate a shorter booking window in the fourth quarter, suggesting some bookings may have shifted from the fourth to the third quarter. Additionally, they have accounted for uncertainties in the global geopolitical environment in their forecasts. This is followed by a question from Mark Mahaney regarding the performance in Asia and whether recent successes in that region are due to their actions or the market's recovery, as well as a mention of a 35% figure related to AA in the mix.

The paragraph discusses the growth and success of Agoda, particularly in the Asian market. Glenn Fogel highlights how Agoda has been effective in localizing services to cater to diverse customer needs across various Asian countries, including offering different payment methods and securing local inventory. Despite some regions in Asia recovering slower from the pandemic, the market is growing rapidly. Fogel credits the Agoda team for their efforts in improving services and adapting to local preferences, which has contributed to an increase in bookings in Asia.

The company is pleased with the growth in their alternative accommodations segment, noting a 14% increase in listings and currently having 7.9 million listings. They have consistently outperformed their biggest competitor in this area over several quarters. The business is significant, representing around two-thirds of the market of the largest competitor. The company is focused on expanding inventory to meet customer demand, recognizing substantial growth potential, particularly in the U.S. market, and sees significant room for further expansion in certain regions.

The paragraph discusses a question-and-answer session during a call, where Dae Lee, standing in for Doug Anmuth, inquires about the business performance in Europe and the broader U.S. macroeconomic views. Ewout Steenbergen responds by noting a reacceleration in growth in Europe from August, attributing this to both market improvements and the company's strong platform offering numerous purchasing options. He mentions that despite a temporary slowdown in July, there is an underlying demand improvement for their products and services in Europe, facilitated by the convenience of their app for travel bookings.

The paragraph discusses a company's marketing strategy and performance, particularly in Europe. It notes high return on investment (ROI) due to specialized expertise and algorithmic optimization of marketing spend across various channels, including performance marketing and social media. The company anticipates that merchandising as a percentage of bookings will remain consistent with the previous year throughout 2024. Additionally, they expect continued marketing leverage in the fourth quarter due to the growth of their direct channels.

In the paragraph, Eric Sheridan from Goldman Sachs asks about the return on fixed investments and future business growth. Ewout Steenbergen responds by highlighting their dual approach: seeking efficiencies for operating leverage and identifying optimal reinvestment opportunities for growth. He points out their slowed hiring, with headcount growth reduced from 13% to 3%, and emphasizes the role of AI in enhancing future efficiencies.

The paragraph discusses the company's strategic focus on optimizing procurement, real estate, and operating models to enhance agility and efficiency. They express pride in their investments in emerging areas like payments, fintech, and geographic expansion, particularly in Asia and the U.S., where they are growing faster than the market. The speaker emphasizes disciplined resource allocation to target attractive growth opportunities. Glenn Fogel adds that past investment decisions, which were questioned at the time, are now showing benefits, highlighting that Booking.com has transitioned from a purely agency business with no payment operations to broader capabilities.

The paragraph discusses the strategic shift of a company towards diversifying its offerings beyond just hotels, emphasizing the importance of adapting to changes in the market for long-term success. It highlights the effort to carefully allocate resources to productive areas while ceasing investment in less necessary aspects. The speaker expresses pride in the company's adaptability over 25 years and stresses the importance of financial prudence for shareholders. The segment ends with a query from Lee Horowitz about the impact of the company's growing presence in alternative accommodations on the customer base, to which Glenn Fogel admits a lack of specific data or analysis.

The paragraph discusses the strategy of offering alternative accommodations, particularly in Europe, where awareness of these options is high. The author believes this attracts new customers who might have chosen other sites. The focus is on creating a connected trip experience by integrating various travel components like flights, ground transport, and attractions. The aim is to use data and AI to provide optimal services for travelers while benefiting suppliers with more customers and profitability.

The paragraph involves a discussion between Lee Horowitz and Glenn Fogel about the potential for a company to leverage fixed operating expenses (OpEx) in the coming years. Fogel acknowledges the opportunity for the company to drive operating leverage not just in 2025, but beyond, while also highlighting the balance between finding efficiencies and reinvesting in growth initiatives, including those related to generative AI. Despite the successful growth and cash flow generation of the company, the exact balance between operating efficiencies and reinvestment is uncertain, but the potential for further efficiencies remains significant. The paragraph concludes with the operator indicating the next question will come from Tom White of D.A. Davidson.

Tom White questions the company's recent success in leveraging social media as a demand source for travel, which had previously been inefficient. Glenn Fogel responds, highlighting the positive outcomes from recent social media investments, despite them being a small portion of the overall marketing budget. The improvement is attributed to collaboration with social platforms to achieve shared goals. Fogel emphasizes that continued investment depends on sustaining the desired return on investment (ROI), noting past challenges in scaling without losing efficiency.

The paragraph features a discussion about the company's current and future marketing strategies, emphasizing the role of AI in enhancing advertisement effectiveness and ROI. The conversation highlights that while the absolute spend on social media advertising is still small, it constitutes a significant portion of the year-over-year increase in marketing expenses. Additionally, the dialogue addresses the company's brand growth in the U.S., particularly during events like the baseball playoffs, and acknowledges existing complexities in working with property managers compared to competitors. Efforts are being made to simplify these processes, viewing it as an opportunity for improvement.

The paragraph features a conversation between Ewout Steenbergen and others, discussing business growth and marketing strategies. Ewout mentions stable growth in the U.S. at low to mid-single digits, suggesting that investors shouldn't be overly concerned as it reflects stability over the past two quarters. The conversation then shifts to Glenn Fogel, who is asked about the potential impact of Generative AI (Gen AI) on online bookings and existing partnerships with super apps like Grab in Asia. Glenn emphasizes the complexity of Gen AI and highlights the advantage of having resources and data to experiment with its applications.

The paragraph discusses the speaker's belief that their company, likely in the hospitality or hotel sector, has a competitive advantage due to its resources and strategic partnerships, like the one with Salesforce. They emphasize the importance of combining hotel data to offer personalized experiences. The speaker is confident in their company's leading position in this growth area. They also mention partnerships in Asia, stating they have minimal impact on business numbers there. Naved Khan and John Colantuoni from Jefferies ask questions about booking windows and market share in North America. Ewout Steenbergen responds, noting that although the booking window provides some benefits to growth, its impact should not be overestimated.

The paragraph discusses the company's performance in the third quarter, highlighting a slight growth benefit and outperforming the market in North America due to various investments. These investments include increasing listings, focusing on alternative accommodations, and enhancing brand familiarity through events like the World Series. The company sees itself as a challenger in the U.S. market, viewing this as an opportunity for growth. The paragraph concludes with Glenn Fogel thanking partners, customers, employees, and stockholders for their support in building the company's long-term vision.

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