Booking Holdings closes 2021 with improved revenue, profit

Despite the impact of the Omicron variant late in the year, Booking Holdings says its revenue and profit in Q4 came in higher than expected, at $3 billion for revenue and $940 million for adjusted EBITDA. 

The figures are much higher than 2020 and are inching closer to 2019 figures when revenue in the fourth quarter was $1.2 billion and adjusted EBITDA was $1.3 billion.

In a call with analysts to discuss the results, Booking Holdings CFO David Goulden says the quarterly revenue came in stronger than expected due to higher average daily rates, which were up about 9% on a constant currency basis, primarily in Europe and North America and in higher-demand leisure destinations. Goulden says higher adjusted EBITDA is credited to the higher than expected revenue and lower than expected operating expenses related to fixed expenses. The company’s operating expenses totaled $8.5 billion for the year.

Gross travel bookings in Q4 2021 were $19 billion – nearly matching the Q4 2019 figure of $21 billion. Net income in the quarter was $618 million, compared to net income of $1.2 billion in Q4 2019.

For the full year 2021, Booking Holdings’ financial figures are also moving closer to full year 2019.

Revenue for the full year was $11 billion, compared to $15.1 billion in 2019, and gross travel bookings were $76.6 billion, compared to $96.4 billion in 2019.

Adjusted EBITDA was still about half its pre-COVID amount - $2.9 billion in 2021 versus $5.9 billion in 2019.

Marketing expenses for the fourth quarter 2021 were $974 million and for the full year $3.8 billion.

Booking Holdings CEO Glenn Fogel says the company saw a “consistently higher mix of our customer booking direct with us” in 2021 compared to 2019.

“Our direct mix improved even as we leaned into performance marketing channels during the year. We will continue to lean in to performance marketing channels at appropriate ROIs as we look to bring more customer demand to our platform during the recovery,” he says.

“In addition to performance marketing, we will be utilizing brand marketing particularly in markets where we are looking to raise consumer awareness of our customer-facing brands.”

Connected trip progress

Fogel says the company is making progress on its connected trip strategy, with about 27% of Booking.com’s gross bookings processed through its payment platform, up from 22% in 2020 and 15% in 2019. 

The company is also continuing to improve Booking.com’s mobile app, which Fogel says it is the “center” of the connected trip experience. 

Mobile bookings represented about two-thirds of total room nights in Q4 and the full year 2021, and the majority of those were coming through the company’s apps. Goulden says the direct channel increased as a percentage of room nights in Q4 and full year 2021 relative to both 2020 and 2019. 

Along with improving the app, Fogel says the connected trip strategy relies on building out the verticals of flights, attractions and ground transportation. 

“Our goal is to make it so seamless, so frictionless that when people are using Booking.com they find it easier and offering more value,” Fogel says.

Regarding the flight product, Fogel says the company’s acquisition of Etraveli Group will help it accelerate development by bringing “critical flight expertise and technology in-house.” When the acquisition closes later this year, Etraveli will operate as an independent company within Booking Holdings.

Booking.com’s flight platform is now live in 34 countries, which represent about 70% of Booking.com’s room nights booked in 2019, and 25% of its flight bookers are new customers to the site. 

All of these efforts relate to loyalty, says Fogel, noting that Booking.com has expanded it Genius loyalty program by opening the lowest level of benefits to any customer that creates an account and logs in when booking. Earlier this year the company launched a third, higher tier of benefits for customers that made at least 15 bookings in the past two years. 

“These improvements to our Genius program are indicative of our efforts to move beyond just the transaction and increase our focus on value for the customer,” he says.

“We aim to increase loyalty, frequency, spend and our direct relationship with our customers over time.”

Cautious optimism

Fogel says he is excited about the integration of the Getaroom team following Booking Holdings' acquisition of the Dallas-based company for $1.2 billion, which closed in December. 

“I am confident that the combined strategic partnership business of Priceline and Getaroom will improve B2B distribution for hotel partners, while offering a robust accommodation tech stack for affiliate partners to help further enhance our offerings in North America,” he says. 

When asked if the company’s plan to expand its partnership with Majorel to handle much of its customer service – a move that has been the subject of criticism – is being done primarily to cut costs, Fogel says it is more about operational efficiency.

“We still believe absolutely in the importance of great customer service,” he says.

“We hope to build a very big company. The idea of then having to build a very big internal customer service operation is just not the best use of our resources, our managerial capabilities. This is something that is better done by people who are experts in that.

Fogel says the company has seen that people have a deep desire to travel when it is possible, with gross bookings on the books in Western Europe and North American now ahead of where they were at this time in 2019 – although he notes a higher percentage today are cancellable.

“As we look ahead to 2022, I am encouraged by the quick rebound in bookings we have seen so far this year and the level of summer travel on our books. While we expect to see some volatility in trends as a result of the ongoing effects of COVID, I am confident in the continued recovery in travel demand globally,” he says.

“Overall we believe we are well positioned to continue capturing travel demand. And we will continue our work executing against our strategic priorities. As I have said before, we are thinking about our business beyond just getting back to 2019 levels of demand, and we are focused on building a larger and faster growing business, with more products that generate more earnings after the full recovery and for the long run.”