We're going to get started. I think one of the last sessions of the conference. We're very pleased to have with us today, Glenn Fogel, CEO and President of Booking Holdings. Booking is the world's leading provider of online travel and related services. The company's mission is to make it easier for everyone to experience the world. Booking has more than 32 million listings across 4.5 million properties, including hotels, homes, apartments, other unique places to stay. Some tree houses in there too.
Absolutely
I believe. It serves global travelers across more than 220 countries through Booking.com, Priceline, Agoda, KAYAK, and OpenTable. Over the last 12 months, 1.3 billion room nights were booked across Booking Holdings. Glenn joined the company in 2000, became the group CEO in 2017, and also expanded his responsibilities to lead Booking.com as CEO in 2019. Welcome, Glenn.
Well, thanks for having me, Doug.
All right. Let's start big picture. There's been this long-running debate just around whether travel is structurally taking share of a wallet versus other discretionary categories. How do you think about whether we're still in this secular growth phase for travel spending globally, or whether you're seeing some of these markets approach maturity?
Long term, travel has always in the past, and I absolutely believe always in the future, will be a growth industry. No matter how you want to measure it, you can look back over a number of enplanements, you can go back and just look at any statistics about total spend on travel. It has exceeded global GDP by 1% to 2% for a very long time. It's obvious to see why. As people get wealthier, they generally want to travel more. You have the basics of people who are too poor to travel, enter a lower middle class, now can afford to travel. About half the people on this earth, so you're talking about 4 billion people, cannot afford to travel. Those people are slowly becoming wealthier, becoming able to travel. That's an absolute tailwind for travel.
You get into our business, where we do stuff digitally. It's hard to measure, but we'll pick round numbers. Maybe a third of the people do not buy their travel digitally. That's another tailwind. Those people who do it non-digitally, they will die, and then the younger people will come in, and they'll do their travel, and that will be digital. That's another tailwind for our business. I absolutely believe, once you have established your basic needs, what are the things that give you the most enjoyment in life? How many people you say, "You know, I'm sick of traveling. I don't want to go anywhere. I just want to stay at home." Nobody practically does that. Everybody wants to travel more. Definite tailwind for us. For us, the bigger issue to me is not the secular industry, which I know.
It's how do we continue to gain share? How do we continue to get more than other ways people can do their travel digitally? That is where we are focused on, and I think we've shown some great progress over more than 26 years, 27th year of doing it.
Okay. We'll certainly get into all of that in a minute. You noted on the call, and you kind of just said it, but people have this deep and enduring desire to explore and connect, and that demand has proven resilient over time. How would you characterize the current health of the global travel consumer today?
Well, don't talk a lot about short term. After we do the call, that's kind of all we're going to say about the short term.
One of the things I really would emphasize, every time I have one of these meetings with you, Doug, or anybody, and I understand the business, I understand how important it is for many people on the buy side to understand, well, what's happening now? What's happening next month? It's important, the quarter. I'm saying, look, my mindset is always, how are we building for the long term? How are we going to increase the value of this franchise over the long run that's going to continue to provide a great return for our long-term shareholders?
I absolutely believe that as long as we focus on making better products, better services that truly are differentiating, so that our customer who is the traveler, that's one of our customers, they absolutely see value benefit to using us or somebody else, and our partners, two-sided marketplace, two customers, that partner, the hotels, the airlines, the car rentals, the attractions, all those things, are we providing a better service for them to work closely with us, work so that we are giving them benefit? As long as we continue to do that, as we have done for a very long time, we will continue to do well. Look, do I want every quarter to be better than the quarter before? Of course I do. Is that something I can control? No. I cannot control a war. I can't. I'd like to.
There's always tsunamis, pandemics, it goes on and on. That's the nature of the world and the nature of travel. When you look long term and it averages out, it's very good.
Okay. Just given some of the near-term headwinds from the Middle East conflict, some macro uncertainty, how are you thinking about just pace and prioritization of investment into strategic growth areas when you think about things like Connected Trip and AI payments, geographic expansion, for example?
I was just talking about how important it is to build for the long term. One of the things I absolutely believe is don't let the short-term volatility make you do things that are going to be hurtful for the long term. That's so obvious to say, but sometimes it's harder to do. Sometimes you feel the pressure. You think, "Gee, maybe we should pull back a little bit on this. Yeah, I know it's going to be great and a real big value, but it's not going to come for another year, so maybe we just pull it back a little bit." I believe that's a fundamental mistake for a company. If you really believe in the long term, if you really believe that this product's going to be better, don't you want to have it out to your consumer sooner?
Don't you want it to be better there sooner? Yeah, we do it. Now, we have a great advantage, though. This is what's so wonderful. Boy, you almost want to ask a quiz to the town.
You can.
Do you remember worst year of travel ever? 2020, right? Pandemic, right? We still made almost $1 billion in EBITDA. Well, a little under $900 million. I'm rounding off. How did we do that? How did you do that? By the way, we were the only large company I know of that actually made money, let alone almost $1 billion. How did we do that? So much of our costs are variable. It's almost automatic. If there's no demand, I ain't going to spend a lot of money on performance marketing when there's no demand. Okay? That way, I don't have to then say, "Oh, things are bad. Let's not spend the money on this project," which I know is really important. I don't have to do that. That's the answer.
I believe in the future is always going to be determined by your investments in making better products and services. Don't be one of those people who's just trying to hit this quarter.
Okay. Let's shift gears, talk about AI. You've expressed strong conviction that AI is a net positive for booking. Just as AI-driven discovery emerges as a new traffic channel, how do you think about where AI share of funnel comes from? What happens to traditional search and how you pull in net new users? Is there risk to competing at all with your direct channel? How do you think about all those dynamics?
I think about those things all the time because what we're trying to do is predict the future. We're still very early. We're in America, so I can say very early innings, and everybody understands what I'm talking about. You go to France, they have no idea what you mean. We definitely believe in the first thing you pointed out, that AI is an absolute net benefit to our future. I absolutely believe that. I see what we're building. I see how we're doing it, et cetera. There's so many things that are changing, though. Are people using chatbot AI, chatbots, OpenAI's ChatGPT, or is it Gemini, or any one? Are people using that for travel discovery, exploration? Absolutely. In fact, I bet if I asked you all here, have any of you not done that, I don't think we'd get a hand.
How many of you then actually went straight and booked off of that? I know the answer to that one, too. Zero. Because you can't do it yet anywhere privately. Maybe some of you We were one of the earliest ones that had the app at. In fact, we were the 1st ones at ChatGPT with that opening. You'd go, you actually had to come to us. We do the booking. You don't book off of that. The question will be, though, over time, how will this change? That's why we are working very closely with every single player. I'm not talking just about the U.S. ones. We're in Boston, the U.S., U.K. Most of the people here, if I say, "Tell me a large language model," and they'll come up with the usuals.
I'll say, "You ever use Qwen?" "Eh, nah." "What?" "ERNIE." "Eh, I don't know." "Anything on Falcon?" "No." I can go on and on around the world. DeepSeek. Maybe some of you probably testing it for your own things. That's one of those issues that we want to work with everybody so that if there is a way, we together, working, which we're working with some of them, I think we're doing pretty good. We get the people spilling off of that onto us. That's great. It'll also be nice if we don't pay as much as we pay Google right now. On top of that, I want to increase. 65% of the people right now, 65% of the people are coming to our Booking.com site direct right now. I want that to go up. I want that to get even higher.
I want us to be what we're doing internally with all the things we're building in the AI world, in better products and services, or the things we are doing in terms of creating our other services, building up our Genius program much better. The Connected Trip, I talk about all the time, and AI is going to help, is helping a great deal on that, all those things. That too. The most important thing is right now being so early is being agile, being able and nimble. Change it around, making sure we're putting the investments in the right places. Enough poker chips on the table so that we can make sure whichever way it flows out, it'll happen. It's described. I was head of strategy and head of corporate development, who had a lot of different jobs.
One of the jobs I talked a couple times this morning about is head trader, Morgan Stanley asset management for a guy named Barton Biggs. Before that, I was an M&A banker for a long time, dealing with the air business. One of the things when I was head of here at what was then The Priceline Group, one of the things I recognized was, well, there are a lot of different ways to do travel. I went out, and we bought Active Hotels and Booking.com because they had an agency play in Europe. Agency very different than merchant. Priceline was merchant only. When I get something in Asia, I said, "You know, I want to get Agoda, which is a merchant player in Asia." Why? People have said to me, "This isn't our company on the board.
Well, why do we have to do that? Booking has stuff in Asia. Why do you want to duplicate? Well, it was the same thing when I had bought Active and I wanted to buy Booking, and they said, "Well, we already have Active. Why are you buying Booking?" I wanted to maintain that flexibility. It was so early. We're talking 2005, 2006, 2007. I'm buying early because I don't know which way the future's going to go, so I got to make sure I got everything covered. Luckily enough, they're all doing great. That's good. That's the same thing right now. You're saying, what is this going to be in the future? I don't know the answer yet.
I do know I need to maintain that flexibility and be doing all the different things, working with all the LLMs, building up on our own stuff on our own, and using AI to create a better experience. Come back in five years, Doug, and we'll say, "This is the one that it ended up being. I'm really glad I chose to invest in that one, too.
When you think about this, though, and we kind of struggle with this for a lot of different companies across our coverage, with companies obviously who want to leverage all the channels that you talked about, all the AI providers, and we'll see what happens, how that all develops. Then, of course, building out the products on your own channel. How do you think about what the functionality looks like between the two, what advantages you might have from the direct AI products versus those going through some of the LLMs, essentially?
Let's separate it out. Let's move back from the AI only. Let's say, what are the general things? Because that's really a question comes up a lot. This is much more complicated than a lot of people really understand because, well, everybody is a traveler. They say, "Well, I can see the travel part." It's harder to understand the partner side and the amount of effort work that goes involved in maintaining the connectivity, the content, keeping it all together, and working with the partners to create different pricing, different types of things to offer up to help them do their businesses the best. You got hoteliers right now in the Middle East who we are dealing with all the time, right now, our account managers talking to them day by day. "Look, here's where we are. This is what we see as demand.
This is what we think you can do. There's only so much. Here's how we think you can maximize. Okay. That's something a lot of people don't understand. It's not just throwing a bunch of content into a ChatGPT and hope to God it works. That's not the business. The reason we have 4.5 million properties that deal with us, the reason we have all those listings, is because we provide a value to them, a service to them. If we did not, they would not go to all the trouble of being part of it. Doing those things together is really helpful. Now, throw on top of that personalization. Everybody says, "Well, Google knows everything about you." They don't know everything about you. Here's something they don't know.
They don't know what I can offer to you because you are a Genius Level 3, and that's why you should be booking with us, because I'm giving you these benefits that nobody else is getting. Google doesn't know that. We know that. Now, do you think I'm going to tell Google? No, I'm not telling them. That's a reason. I can go through so many different things. One of the benefits of Connected Trip is being able to give an opportunity to our suppliers to get more business by offering up something that is an opaque product that is not going to cannibalize their regular parts of their business. I got, for example, a car service right now.
Well, what they don't want to do is lower their standard rate for everybody, but they're more than happy to give us a lower price for somebody who's buying a hotel with us, which we can then offer over to our customer. Customer wins because they got the cheaper car service. Car service wins. They got the incremental. We win because we got a little money from both of them. This is win-win-win. AI, one of the benefits is, along with, we say AI. I say AI, every single person here is immediately, I am certain, going to GenAI, right? There's a lot of things. Our ML models, our machine learning models on what the right pricing, what the right thing we should offer at the right time, how we should rank stuff.
All of this AI, call it globally, and only until things put together, is creating a more scientific way to offer up the right offers to people at the right time. Here's the thing. Because we are the biggest, because we have the most data, what is the most important thing in AI is having data that you can then train, can then do models off of. It's a win-win-win. It's a flywheel that just keeps on spinning faster. That's why I am so positive. That's why I say to people, they say, "My God, aren't you worried about AI?" I'm saying it's the greatest thing ever for us. It's so much better than it used to be. This is a net positive, and it's weird when people say, "Oh, aren't you?" I'm like, "No, I see it much better.
What are the efficiency gains and the biggest areas internally that you're benefiting from right now?
Everybody knows the obvious ones, right? Everybody has their people using Claude Code, and your technology is being done at a much cheaper price, and it's much better, and it is. It really is. Either your savings come because you don't need as much in terms of personnel, or you're able to develop things you need to do faster to provide better products, and you balance between those things. That's fine. Everybody knows that one. Other one, obvious one, everybody's talking about it, and it is absolutely true, and Ewout Steenbergen mentioned this a couple times in the calls. Customer service. Customer service costs going down per contact, reducing contacts, and what's really interesting is higher customer satisfaction with an actual AI interaction instead of a human. That's really good. Anybody here use OpenTable here? Anybody? Oh, that's good. Okay.
Of course.
How many times do you actually ever call for a reservation? You made a phone call, right? Yeah, probably did. I know you did. Okay, here's the interesting thing, though. You may even talk to an AI, and you didn't know it, because that's part of things we've been building out and developing with other third party, doing open with OpenTable and restaurant stuff. Well, throughout, when you call us for a customer service contact on your booking.com, and having it answered, that is a voice that sounds like a human. You think it's a human, but it's not a human. That's really inexpensive when it's coming out of token instead of a person, right? It comes back with better answers, makes it so much better.
How many times First of all, I dare say everybody here has called customer service on a travel problem and waited forever, and it's so frustrating. Kills you, right? That's because you do your staffing to have an optimal number of wait minutes. You don't want to do it so everybody can pick up immediately. That would cost a fortune. With AI, you can do it so people do pick up. It does pick up immediately, and it's not much more cost. That's a real improvement. Then you call in the old style, and the person finally picks up, and they tell you, "Oh, I'm sorry. I have to put you on hold and talk to somebody else." Which you basically, at that point, you're ready to throttle somebody.
With AI, with it knowing so much more, it actually comes up with a solution faster. These are really big things. Then you go beyond all the things I mentioned about content, bringing it together, and look, Connected Trip things. I've said this story before, so if you've heard it, I'm sorry. The fact is, everybody goes to Amsterdam as a tourist. You want the canal ride, and you want to go to the Rijksmuseum. You want to see The Night Watch. Okay. You want to go to the museum, though, on the rainy day. You want the boat ride on the sunny day. Amsterdam rains a lot, so it's like With AI and all that, and Connected Trip, you come in, you booked it.
Let's say you had the boat was going to be on Wednesday, the museum was going to be on Thursday. It's Tuesday. It's not hard to know what the weather is, all this stuff. We're reaching out. We're saying, "We think we should switch this around because the weather." 1 push the button, click yes, and we'll switch it, and here are the dates, times. We'll switch the tickets, all that, no cost to you. Really, that's the type of things we're going to be seeing down the road. It'll be so much. That'll be the reason somebody says, "I use Booking," because you're walking around cities with a travel agent in your pocket. That's your phone. You're having that one-on-one relationship all the time that makes it so much better for you. That's what we're seeing coming down. That's what we're building.
We're building a much better thing. I can't improve the boat ride. I can't improve the narration by the person who's doing the boat ride. I can make it a lot better so you do it on a day that'll be most enjoyable.
Okay. Let's talk more about Connected Trip. Connected Transactions, I think, grew high teens in 1Q. They're now a low double-digit percentage of Booking.com's-
Transactions
overall transactions.
Yep.
You've been at this for a number of years, and the products kind of keep getting better. Numbers are obviously increasing, but what are the one or two biggest friction points to overcome till you really see step function kind of increase?
Yeah. Okay.
with Connected Trip?
I am very proud of what the team has built, from nothing to something. We had no flights a few years ago. Last quarter, 28% increase, and we're now, I think, if you exclude ctrip.com's domestic flights, we may be the biggest third-party seller of flight tickets from nothing. It's off. It is so early, again, I'll use again, early innings. Why not? It says everything. We are so far from where we're going to be, and anybody who's been on our sites knows that because you don't see it. I don't see it. I'm like, "I'm in a city. Why aren't I getting more things to be? Why aren't I getting more push notifications to something better with a special deal?" We've done nothing practically with OpenTable. It kills me, but again, Rome wasn't built in a day and neither is our company. I'm in Mayfair.
It's one of the most expensive parts of the whole world. I'm staying at Claridge's. It's so expensive, I got to take out a mortgage. Okay? I'm there. There are incredible restaurants in Mayfair, and they would love to have me because they know I would pay a fortune there. They want me to go there. I'm a transient. They would pay, but they don't know I'm there. Booking knows I'm there because I booked it through Booking, and OpenTable knows I like food. How do we put it together? By the way, I like Cabernets. That restaurant knows that from OpenTable. Somehow the restaurant to OpenTable to Booking to me should be offering me, "Glenn, come by this restaurant, and you will get this beautiful '64 Rothschild," whatever. That's the way it should be. It's not yet. That's just one little opportunity.
It's so big. Yes, where are we? We are so early, it's like we're not even Forget early innings. We're still putting on our clothes in the clubhouse. That's all upside. That's all upside, and I see it coming. The fact when it does work really well, when I do see those connections, or I do see that offer coming to me in the Connected Trip, that's wonderful, and that's a beautiful start.
What role does Genius play in Connected Trip?
It adds it all in. It's a superpower on top. It superpowers everything. For example, Genius was originally started out as a way for hotels to be able to offer a discounted price in an opaque way, a hidden way, a closed user group way, so it wouldn't be cannibalizing things, and it was being offered only to people who were very frequent travelers who we were able to show to the hoteliers there's real value here because these people are high-spending people. You'll do better again than they did. It wasn't coming out of our pocket. The hotels were just cutting the price. They were happy, we were happy. Now we're doing more. Now it's not just hotels. Now we're going across all the verticals. Being able to combine it all, and then be able to offer more.
Look, everybody here probably has a Platinum or special credit card where you get special things, and you're probably all frequent flyer members of different, probably all the airlines, et cetera. Well, we're building something right now. I want to build something that is even better. I know it's going to be hard to get people who already have a couple million points on an American Express Platinum, to get you to switch out because you're already stuck there because you want to use those points on that. There's so many people out there who don't have that, particularly in the rest of the world. We're not talking America. Don't forget, America, U.S., relatively small part of our business, most of it is the rest of the world. Those people are not yet locked into those things at all.
Bring those people in in a way that they really see a true advantage. Connected Trip Genius together, offering them things they wouldn't get elsewhere, and then go on to that, the AI way to do it. I've talked this before, and I urge you all. A competitor of yours, won't mention names, at a different shop, did an analysis of all the AI trip planning type things, came out and said Priceline's Penny was the best. Okay. I urge you all to go to Priceline Penny, put in a really complicated thing. Say, "I'm thinking about going on a trip this summer with my family. I got three kids, and one kid is actually away at school, so he's going to fly from another city, and I'm not sure whether or not we can take the dog or not," and really complicate it.
Put it in. See what comes out. I'm telling you, it's going. It's not perfect yet, there's still things come out, I'm like, "Oh, my God, that's horrible." I'm telling you, I did it last night with a complicated trip for myself and my family, I did that, I used the exact same prompting language. I did the same, I copied it to an LLM one. We've got partners. Another one. I think anybody else would say ours was better, giving better results, better ways to do it, better ways to book it. Test it yourself. Just do it. You'll see, we are so early in that, too, we'll be seeing more of those things coming down the road over time.
I absolutely am confident that we are producing something that truly is better, and that's how you win in the long run, is a better service, a better product.
Okay. When you think out over, let's say, 3 to 5 years, and think about the growth vectors really driving the top line, so when you think across geographic expansion, Connected Trip, payments, new verticals, how do you rank those vectors in your mind?
Which one's going to be the biggest one? Is that what you mean?
Yeah.
Yeah. One of the things we used to always say in the back was, and we stole it, I don't remember who said it first, is that, in God we trust, everybody else brings data. An old saying from a long time ago, and we still believe that.
I don't try and predict the future in that area. I just make sure that we are being agile and testing them all out and seeing which one. Yes, we put more money into one versus the other, but not telling anybody else this. We definitely are making sure that we are covering the entire playing field, so we are not surprised.
Okay. EBITDA margin expanded about 200 basis points per year, really over the past several years. How should investors think about sustainable margin trajectory from here, particularly just as you balance reinvestment in AI and other products versus leveraging some of those fixed costs?
Yeah. It's really hard because, and I know it, as a banker, we're putting together models and trying to guess what should it be going this long time ago. It's hard, and I understand the need for people to get a sense of that. I would say this. We can make those margins whatever we want them to be, and the question is, what's the balance?
What do you want to do? How fast do you want to grow? What products do you need to build? Then you have to do your own guessing, which is as we build this out, how much does this increase loyalty, increase direct, thereby we don't have to now pay as much for marketing, perhaps.
Sure.
On the other hand, though, you have the flip side that all the other verticals except hotels has a much lower margin profile. There are a lot of complications that go into that.
I would say you're asking to give guidance to the investors. I would say that our CFO has said it very clearly in the calls, and I will defer to the way he says it. I think that's the best way. I won't repeat it. I will say that I know that it's important for us to continue to be agile and make investments when they're important and also to recognize, though, as a shareholder myself, I am also very cognizant of the need to maintain discipline. At the end of the day, it's free cash flow. Grow that one. Grow that one really well, Glenn. We'll all be really happy.
Mm-hmm. Okay.
Buy back shares, too, with the free cash flow.
Yeah. Well, let's hit that on capital returns. You do pay a dividend.
Yeah.
You've repurchased I think about $6.5 billion in stock each of the last 2 years. $18 billion in authorization at the end of 1Q. How do you think about optimal capital return framework, just given that free cash flow generation, the growth opportunities, and where does M&A fit in?
Yeah. The way we've always looked at it is first build the business. Are there opportunities that we think deploying cash for investment internally is going to produce a great return that we think is really good? Are there M&A opportunities that we have high confidence will also be a good thing? If we don't, make sure that you're paying back cash to your shareholders because they can deploy it better than you can. That's been for 27 years. Well, not 27 because we didn't have cash in the beginning, but later when we started getting cash, we started doing that. I believe that's still the way to do it. I believe the way we've done it over the last couple of years has been wonderful. Buying back 40% of the outstanding shares over the last dozen years.
I'm really pleased with what we've done there. I'm glad we didn't waste the money, one. Two, what I'm really glad is that when we buy back shares, they really reduce the total outstanding. In a lot of companies, that doesn't quite work. They're buying a lot of shares, but for some reason it doesn't seem to be dropping. Why is that? What's happening? Oh, they're giving a lot of new shares out, too. We don't do that, and we make it very clear that all of our expenses, stock-based compensation, it's a real expense. We make certain that everybody understands that. Cash or stock, to a shareholder, it's a cost. We make sure we're very clear about that.
Okay. Maybe just last question, which kind of sums it all up. You have this long-term growth ambition, for constant currency, 8% gross bookings growth, 8% revenue growth, and 15% adjusted EPS growth. What drives your confidence in that long-term growth ambition?
Well, I think one of the things is the very important term in there is long. You heard that? Long-term.
Right? Because I can't predict what's going to happen tomorrow in the Middle East. Look at the numbers last year. Whoa, we blew those numbers away, didn't we? In all those numbers. The year before that, too. If you're looking short term, there'll be volatility. I don't know what's going to happen next week, next month, next quarter, next year. Over the long term, I'm fairly confident that global GDP is going to grow at this %. I'm fairly confident, I'm very confident that travel will grow, that digital will increase, all those things, all those reasons. We just need to continue to improve the product to take share as we have done. Did you see our U.S.? Did you look at that?
For four quarters, increasing our U.S. growth rate, low teens, last one we just announced. From where in the past we were nothing and now doing. We are improving the product, improving the service, making people do it. Continue to do those things. We will continue to do that. Throw on top of that the efficiencies through better technology and all that, and then throw on top of that buying back shares helps in your EPS, helps make sure you get up to that number. In the long term, yeah. It's almost, why should I not be?
Okay. All right. Great place to leave it there. Thank you.