Skift Take

As part of its "connected trip" and loyalty strategy, Booking Holdings argued it can convince hotels and other partners to offer up substantial discounts and perks, and this would spur incremental bookings. But do hotels really want to be a cog in building the brand?

Booking Holdings Chief Financial Officer David Goulden said it twice: The company is focused on achieving “industry-leading” profit margins in 2023 or when Covid recedes, and the world gets back to a semblance of “normal.”

That’s somewhat of a challenge to Airbnb, which had an exemplary 2021. In his comments, Goulden did not mention Airbnb specifically. In 2021, Booking Holdings had the adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) edge.

Excluding stock-based compensation for both companies, Booking had the higher adjusted EBITDA margin at 29.9 percent compared with Airbnb’s at 26.6 percent.

When including stock-based compensation for both companies, the gap was even wider: Booking’s was 26.5 percent compared with Airbnb’s at 11.6 percent.

On a GAAP (generally accepted accounting principles) basis on net income margin, Booking (10.6 percent) had a wide lead over Airbnb (-5.9 percent).

In essence, officials from Booking Holdings, which has overtaken Airbnb in market cap $101 billion to $95 billion, were saying what’s all the fuss about Airbnb being the blockbuster company of the moment? We are building a juggernaut, as well.

“Looking beyond 2022, we continue to remain focused on investing to build a larger and faster-growing business with more products than we had pre-Covid that delivers more EBITDA dollars and more earnings per share with industry-leading EBITDA margins,” Goulden said.

Booking Holdings CEO Glenn Fogel chimed in during the company’s fourth quarter and full-year 2021 earnings call along the same lines, and both executives detailed what they are doing to achieve these goals.

“And we are focused on building a larger and faster-growing business with more products that generate some more earnings after the full recovery and for the long run,” Fogel said.

Goulden said he wouldn’t specify what the company’s post-Covid adjusted EBITDA margins might be.

Marketing expenses will have a significant impact on whether Booking Holdings will boost its EBITA margins in 2023 and beyond.

“Marketing expense, which is a highly variable expense line, decreased 2 percent versus Q4 2019,” Goulden said. “Marketing expense as a percentage of gross bookings increased slightly versus 2019, in line with our expectations. The marketing ROIs were a little lower than our expectations due to the negative impact of cancellations late in the quarter, and this was offset by a higher-than-expected mix of direct business.”

Building Verticals

Both Fogel and Goulden tied the strategy into several components of the company’s “connected trip strategy,” which is centered on its mobile app, and aims to provide greater value and service across every step of a trip.

“Step one,” Fogel said, “is build out the verticals,” namely flights and activities, two areas that flagship brand is still relatively in the early days of crafting. Although Booking Holdings $1.2 billion acquisition of hotel wholesaler Getaroom closed in December, Booking’s $1.8 billion purchase of eTraveli is still pending.

However, eTraveli and have partnered to build a flights business over the past two years, and now offers flights in 34 countries.

“On our connected trip vision, we made progress in 2021 as we work to build a robust flight platform on,” Fogel said. “This flight platform gives us the ability to engage with potential customers who choose their flight options early in their discovery process and allows us an opportunity to cross-sell our accommodation and other services to these flight bookers.”

On the attractions front because of partnerships with Tripadvisor’s Viator and TUI’s Musement, now offers tours and activities to pair with about 50 percent of its accommodations’ bookings, up from 10 percent in 2020, Fogel said.

Goulden described how the connected trip strategy includes driving more loyalty, making payments easier, and adding value to stir repeat business and accelerate Booking’s growth.

“We believe that there’s further growth for us in the accommodation business, both on a geographic point of view, expanding our offering into alternative accommodations and adding onto that all the benefits from the connected trip, what we can do on top of that because of payments because of the fact we offer a more complete offering, thinking about more targeted ways to customize a complete solution for our customers, our pricing, payments, customer service,” Golden said.

The company said it was seeing positive trends, especially for summer travel bookings in Europe, although many of these can be cancelled at some point if geopolitical tensions such as Russia and Ukraine or Covid intervene., meanwhile, has been making strides in grabbing market share in the United States.

Web measurement firm Similarweb found that now attracts 10 percent of its website traffic from the United States, up from 7 percent in January 2019. “Booking’s U.S. market penetration is growing due to concentrated advertising and expansion efforts,” a spokesperson said.

Booking said it would lean into brand marketing in the U.S. in 2022, and social media, although the latter is currently at a low level.

The Numbers

Booking Holdings beat analysts’ expectations on both earnings per share and revenue in the fourth quarter, but its stock price was down about 5 percent in after-hours trading Wednesday. Bloomberg reported that “room night reservations on the online travel company‚Äôs platforms fell far short of expectations during the holiday period as the omicron variant continued to disrupt global travel.”

Booking Holdings notched net income of $618 million in the fourth quarter compared with red ink of $165 million a year earlier. Revenue jumped 141 percent to $3 billion.

Correction: When Skift initially reported the adjusted EBITDA margins of Booking Holdings versus Airbnb for 2021, we compared Booking’s margin post-stock-based compensation at 26.5 percent compared with Airbnb’s pre-stock-based compensation at 26.6 percent. Excluding stock-based compensation for both companies, Booking had the higher margin at 29.9 percent compared with Airbnb’s at 26.6 percent. When we included stock-based compensation for both companies, Booking’s adjusted EBITDA margin is much higher at 26.5 percent compared with Airbnb’s at 11.6 percent. 

Uncover the next wave of innovation in travel.
June 4 in New York City
See Who's Coming

Have a confidential tip for Skift? Get in touch

Tags: airbnb, attractions, booking holdings,, connected trip, coronavirus recovery, earnings, etraveli, future of lodging, getaroom, marketing, Musement, payments, tours and activities, viator

Photo credit: Pictured is a Spring Airlines A320 bedecked as as seen on July 7, 2018. Booking sees flights as key to its connected trip strategy. Kwok Ho Eddie Wong /

Up Next

Loading next stories