Booking and Airbnb Have a $22 Billion Wad of Cash — How Will They Spend It?

Four major online travel companies had around $34 billion in cash and equivalents on the books at the end of 2022 — and that’s considerably more liquid dinero than they had at the end of pre-Covid 2019.

Share repurchases, which boost shareholder value, are definitely high on the agenda in 2023 for most of these companies even though these transactions became a flashpoint because of all the employee firings they carried out leading up to and during the height of the pandemic. Investor Warren Buffet has a different view on share repurchases.

But beyond the share repurchases, Booking Holdings, Airbnb, Trip.com Group and Expedia Group, among other online travel companies, have substantial monies on the books for merger and acquisition activity, and other investments in growth and technology.

Booking Holdings had the largest rainy day fund at $12.2 billion at the end of last year, and added $1.4 billion to the stockpile this month by completing the sale of its shares in China’s delivery app and hotel aggregator Meituan. Airbnb was cash rich with $9.6 billion, Trip.com Group had $8.7 billion when it last reported its cash trove as of September 30, and Expedia Group coveted $4.1 billion. (See accompanying chart.)

Online Travel Companies’ Cash and Cash Equivalents as of December 31, 2022 versus 2019

Company	Cash 2019	Cash 2022	% Change
Booking Holdings	$7.3 billion	$12.2 billion	67.10%
Airbnb	$2 billion	$9.6 billion	382%
Trip.com Group*	$8.5 billion	$8.7 billion	2.4%
Expedia	$4.6 billion	$4.1 billion	-(11%)

Source: Financial filings

* The chart shows Trip.com Group cash and equivalents as of September 30, 2022; the company will report year-end results in a week.

What are Booking Holdings, Airbnb, Trip.com Group and Expedia Group, among others, going to do with their riches?

Booking Holdings Eyes eTraveli Group Acquisition

With $12.2 billion of cash and cash equivalents on the books as of the end of last year, and $1.4 billion added to the cash cushion this month from its Meituan share sale, Booking Holdings has plenty of strategic options.

Mergers and acquisitions — one in particular — are definitely on Booking Holdings’ agenda in 2023 if it can get the regulatory go-ahead in Europe. In November 2021, the company announced its intent to acquire its flight technology partner, Sweden’s Etraveli Group, for around $1.7 billion, but the European Commission is still mulling the deal. By all accounts, subsidiary Booking.com’s several years old flights business, which is available in more than 50 countries, is going strong, and the acquisition would further its so-called connected trip strategy.

Share repurchases are a Booking priority. It has $3.9 billion left on a $15 billion share repurchase authorization, and after that intends to get started on a new $20 billion go-ahead from its board of directors.

“We expect to complete the share repurchases under a cumulative $24 billion authorization within the next four years, assuming that travel continues to recover and grow from here,” Chief Financial Officer David Goulden told analysts last week.

That leaves plenty of room for additional acquisitions, which of course can be financed, as well, in a combination of cash and stock. Booking has made plenty of smallish tech acquisitions over the years so these types of deals, as well as paying down debt, always have potential.

With Booking is seemingly making strides in its bid to take market share in the U.S., a potential deal to acquire app-only and flights-oriented Hopper, with its youngish customer set and $5 billion valuation from a year ago, wouldn’t be an original idea for Booking’s leadership. But Booking is already poised to bolster its flights business with the pending acquisition of eTraveli Group so it has enough on its plate.

CEO Glenn Fogel knows that sometimes the best deal is no deal as mergers and acquisitions tend to be complicated and risky business.

Airbnb Will Do Share Repurchases and Eye Acquisition Opportunities

Airbnb co-founder and CEO Brian Chesky said in February that the company is “beginning to really ramp up” its experiences business, which it downplayed during the height of the pandemic. But don’t expect a big acquisition of a company like Viator, owned by Tripadvisor, or GetYourGuide because their approach conflicts with Airbnb’s host-run tours scenario.

Airbnb could also up its stake in Tiqets after leading a $60 million round in 2019 and taking a minority stake, although this sort of move wouldn’t be game-changing.

With nearly $10 billion in cash hanging around, a smaller tech-oriented tours and activities transaction, or perhaps something in the luxury sector could be a possibility. There are several property management companies that could be for sale, but Airbnb, as chiefly a booking site, is in a much more lucrative business than the labor-intensive property management sector.

“Acquisition of tours, activities and experiences companies such as GetYourGuide or Klook are unlikley for Airbnb,” said Skift Research’s Pranavi Agarwal. “Airbnb Experiences, unlike its competitors, is more focused on unique locally hosted peer-to-peer local experiences versus the more commercialized business of selling tickets to major attractions. The focus will be on incorporating experiences into their existing rental stay product with all being host orientated.”

Airbnb Chief Financial Officer David Stephenson told analysts during the company’s fourth quarter earnings call in mid-February that the company will likely be buying back more of its shares early in 2023, but mentioned the potential for acquisitions.

“Buybacks are likley to be the main use of cash this year, with half a billion dollars of their $2 billion share repurchase program (which was announced in August 2022) left to be executed,” Agarwal said. “However, Airbnb is still very much a growth company, with vision to expand into new verticals outside short term rentals, such as experiences, hotels and long-term stays. Whilst investors can expect future buyback programs, I think we can certainly expect management to pursue M&A opportunities in these new segments, particulalry experiences.”

Airbnb, which recorded its first full-year of positive net income ($1.9 billion) in 2022, has been disciplined about focusing on its core short-term rental business since early 2020, when it ceased investing in its experiences and hotels businesses, for example. It may exercise caution about casting a much wider wider net in 2023.

“We have $500 million left on the existing repurchase approval, and we anticipate that will be executing early in the year,” Stephenson said. “But clearly, we’re also in — still in growth mode — like we are using this balance sheet to make sure that we can invest in growth for the business in the future. Clearly keep enough cash for potential M&A opportunities, which could exist. And then to the extent that we can return stock and cash to shareholders through share repurchases that will be our primary vehicle that you would anticipate this year.”

Trip.com Group Had $8.7 Billion in Cash

Like its peers, Trip.com Group could execute some share buybacks in 2023, and look at potential acquisitions given its $8.7 billion in cash on hand at the end of September.

Trip.com Group touted opportunities in the Middle East during Skift Global Forum East in Dubai in December, and has ample ambitions in the region. It could conceivably snap up a local player in the Middle East to spearhead growth, but will undoubtably be heavily focused on reviving existing operations as China rebounds from Covid-19 in 2023.

Will Expedia Group Be Too Preoccupied For Deal-Making?

Expedia Group has been busy eliminating or downplaying brands in its portfolio over the last few years as it tries to simplify its operations, so major merger and acquisition activity would probably not be a high priority this year. But never say never, as the saying goes.

In addition, the company has two big initiatives in the works for 2023: It needs to transition its Vrbo vacation rental unit onto the Expedia tech platform, and it plans to launch a new loyalty program encompassing its major brands later this year. Why muck up the works with a big-time acquisition?

Expedia Group Chief Financial Officer Julie Whalen told analysts last week that the company plans to continue “opportunistically” repurchasing its stock in 2023.

Expedia Group had $4.1 billion in cash and cash equivalents on hand at the end of 2022. It was the sole company of the four we looked at that had less cash on hand at the end of 2023 than in 2019.

“This liquidity, combined with our strong free cash flow levels enabled us to maximize our return of capital to shareholders during the quarter by further accelerating our share buybacks to approximately $350 million or 3.7 million shares in the fourth quarter,” Whalen said. “This resulted in approximately $500 million and 5.2 million shares being repurchased since the end of September 2022. Even after these buybacks, we enter 2023 with ample levels of shares remaining under our existing authorization for future repurchases at approximately 18 million shares.”

Tripadvisor As An Under the Radar Acquirer?

Tripadvisor laid plans in early 2022 to potentially spin off its tours and activities brand, Viator, but those plans were seemingly shelved when market conditions deteriorated, and in the interim the company hired a new CEO, Matt Goldberg, who started there in July.

Goldberg hasn’t fully articulated his plans, but one veteran investor said he wouldn’t rule out Tripadvisor pursuing a roll-up strategy and trying to acquire Berlin’s GetYourGuide to spearhead Tripadvisor’s tours and activities business.

Viator was the fastest-growing entity in Tripadvisor’s business last year, having generated 171 percent more revenue in 2022 than it did in 2019. While GetYourGuide has raised $886 million in funding, according to Crunchbase, it is likely a smaller business than Viator, and would be affordable for Tripadvisor, especially if GetYourGuide shareholders retained shares in the post-merger business, the investor maintained. Tripadvisor had $1 billion in cash and equivalents on hand at the end of 2022.

He conceded that it would likely have to be a down round for GetYourGuide to make that happen. There is no indication, though, that GetYourGuide is in anything but growth mode, casting some doubt on this scenario.

Buyer or seller? Of course, it is not out of the question that Tripadvisor itself could be acquired in 2023.

Update: We updated this story to reference Airbnb’s minority stake in tours and activities platform Tiqets.