Maturing industry innovators like to pretend they still to have wide room to expand. So Booking Holdings, which is two decades old, prefers to talk about how it has only “a single-digit market share in the very large global accommodations market.”

Cold facts undercut this spin. On Thursday, the conglomerate — which includes Agoda, Booking.com, Kayak, Priceline, OpenTable, and other brands — reported second-quarter financial metrics that showed that the torrid growth of its early years has ended.

Booking Holdings reported a decline in its pace of adding bookings of accommodation (meaning hotels and alternative lodging). It had only a 12 percent year-over-year gain in accommodation room nights booked, to 190.5 million, in the three months to June 30.

In an unusual move, Booking executives said Wednesday they needed an additional evening to make sure the room nights rate was correct and delayed its earnings call by a day for a recount. It said its rooms booked growth rate beat the guidance it had given investors for the metric, which was true. But the guidance was unusually low given the company’s historical performance.

Looking ahead, the company forecast its accommodation room nights booked rate for the third quarter would be between 6 percent and 9 percent. That would be the lowest rate in memory and disappointing given that it will be a strong season for the financial reporting of summer travel in the northern hemisphere.

Compare the low accommodation room nights booked pace to the second quarter of last year, when the company saw a 21 percent increase in room night growth — which at the time had been its slowest bump in several years.

Compare the sluggishness also to 24.4 percent rooms booked growth rate in the second quarter of 2016 and 26.2 percent in the comparable period in 2015.

The rooms booked rate decline is notable because hotels in many destinations worldwide saw record occupancy levels in the second quarter of 2018 and many hotel groups reported strong growth.

Executives said somewhat improbably and without numbers that travel may have been reduced because parts of the northern European market were suffering unusually hot weather and many people were sitting at home watching the World Cup.

This spring, Booking Holdings said it expected to have grown its listings of vacation rentals to 5 million listings, which it said would beat Airbnb’s total. On Thursday the company said it had met this goal and that it now has 5.5 million in homes, apartments, and other unique places to stay — up 23 percent, year-over-year.

Given the additional lodging inventory, the slowdown in room nights booked is also striking.

A Slowdown of Choice

The deceleration in room rate growth is partly deliberate.

Speaking during the company’s second-quarter earnings call Thursday, CEO Glenn Fogel said, “I am never happy no matter how fast we’re growing, I always want to do more. But part of our belief is that [when] choosing profit versus growth, you can always buy more growth, but is that long-term benefit for the franchise?”

In other words, Booking Holdings had decided to “sacrifice growth in order to optimize returns on performance ad spend,” according to Goldman Sachs Investment Research analyst Heath Terry in a July 24 research note. Performance-based advertising refers to online ads, such as the paid ads atop Google search results.

Terry said the company’s move was a response to “increasing competition on both the supply and demand side of the market.

The deceleration in growth is also due to the expanding size of Booking Holdings. Officials have warned for years that its growth would decelerate because of the so-called law of large numbers — meaning that, it’s harder for a company to beat its quarterly metrics as it gets larger.

Both a toggling back in ad spend and tougher comparisons because of size are also key reasons why the company’s rival, Expedia Group, reported that the number of room nights booked through its brands rose only 12 percent from the same period a year earlier, in the second quarter of 2018. That was down from 21 percent in the same period a year earlier.

“The OTAs [online travel agencies] have historically skewed in favor of room nights and revenue growth over margin, but that balance now appears to be tilting towards margin over room nights with both Booking Holdings and Expedia Group now talking about efforts to rationalize spend,” Jake Fuller, a research analyst at Guggenheim Partners, wrote in a recent report.

Booking Holdings CEO & President Glenn Fogel Is Speaking at Skift Global Forum. Register Now

Ongoing Momentum

For the three months ending June 30, Booking Holdings revenue increased 16.9 percent from the same period a year earlier to $3.537 billion.

Net income rose 35.7 percent year-over-year to $977 million. That means the company enjoys margins at the operating level that are above or near the recent peaks of its online travel peers and that are roughly five times above the average for non-travel public companies based in the U.S.

Recent Acquisitions

Executives offered few details on the company’s July acquisition of online travel company HotelsCombined that it hopes to close by the end of the year. Some analysts had been puzzled by it.

“The strategy is ‘scale matters,'” said Fogel. “We bring in these [smaller] competitor companies that have a customer base [we don’t have], and perhaps they do certain things that we don’t do as well. And perhaps we can optimize in terms of the amount of people we need to run the entire organization through some synergies to be gotten.”

On the company’s April acquisition of FareHarbor, an enterprise software company serving tour operators, Fogel said he expected his brands would eventually offer tours and activity products more prominently.

China Strategy

Executives offered a little additional light on their decision to make a strategic investment of $500 million in Chinese car-hailing giant Didi Chuxing that promised to push the conglomerate’s hotel offers to Didi users.

“Our strategy [in China] is to maximize our opportunity to develop our own brand there and at the same time establish partnerships with the company’s great customer base,” Fogel said. He also said that, in China, Google cannot be a supplier of customers to us because it’s not present in a large way there.

Fogel said of his China strategy that he wanted Booking.com and Agoda to become full-service providers. When it comes to ground transportation in China, rental cars are not commonly used. Fogel said the Didi deal would let users of the Booking.com or Agoda apps and book ground transportation powered by Didi.

Fogel added that the Didi deal will also work to build recognition of its brand name among Didi customers through various marketing programs. He also believed that the equity investment in Didi would return value to the company.

For more on Booking Holdings’ overall strategy, see Skift’s interviews with CEO Glenn Fogel from this spring: “Booking Holdings CEO on the Foolishness of a Short-Term Focus” and “Booking Holdings CEO: We’re on the Road Toward Going Full-Service.”

On Thursday, Booking Holdings forecast a third-quarter revenue growth of between 8 percent and 11 percent, which would also represent a slowdown over past performance. Startup-like growth rates can’t last forever.

Photo Credit: Booking Holdings CEO Glenn Fogel appeared in July 2017 at the Fortune Brainstorm Tech conference in Aspen, Colorado. The company reported its second-quarter earnings for 2018 on Wednesday. Jordan Curet / Flickr