An investor in Booking Holdings has criticized the company’s capital allocation strategy, arguing that its aggressive share buyback program has increased financial risk.
CMF Capital, a Booking Holdings investor since 2019, sent a letter via email on March 2 to the company’s board of directors detailing concerns about the online travel agency’s (OTA) position following its fourth-quarter 2025 earnings release. CMF shared the letter with PhocusWire.
“The market’s reaction to Booking’s latest financial update is a stark warning,” the investor wrote, pointing to a recent share price drop following the company’s guidance for 2026. “Investors no longer see the ‘strong balance sheet’ you claim in your current presentation. Instead, they see a highly leveraged company with no margin for error.”
CMF Capital argues that Booking’s share repurchase program has significantly reduced shareholder equity over time. According to the letter, the company’s equity ratio declined from about 39% in 2019 to 11% by the end of 2022 and has since moved into negative territory. The investor said this leaves the company more vulnerable in a downturn, particularly given the cyclical nature of travel demand.
PhocusWire has reached out to Booking Holdings for comment.
The letter referenced previous correspondence between CMF Capital and Booking Holdings executives dating back to 2023, when the investor shared similar concerns.
“If a new crisis hits tomorrow, BKNG faces a completely different and far more dangerous situation than in 2020,” CMF Capital responded at the time, noting that higher interest rates would make raising capital more difficult in the event of a crisis.
Online travel companies, including Booking Holdings, Expedia Group and more recently Airbnb have prioritized returning capital to shareholders through buybacks, arguing their asset-light business models generate strong free cash flow. As the OTA market has matured, OTA strategy has further shifted from mergers and acquisitions to buybacks.
Booking Holdings previously defended the company’s capital structure. In correspondence referenced in the letter, former CFO David Goulden wrote that the company believes its strategy is supported by “a highly variable expense structure, long track record of solid operating results, substantial liquidity and strong free cash flow.”
Beyond financial concerns, the investor raised questions about operational execution. CMF Capital described a months-long attempt to resolve an invoicing issue that remained unresolved even after being escalated to Booking Holdings CEO Glenn Fogel.
“If a long-term investor with prior direct access to the CEO cannot achieve resolution, it is reasonable to assume that ordinary customers have an even lower likelihood of resolving similar issues successfully,” the letter reads.
CMF Capital is urging Booking Holdings to suspend its share buyback program and instead use cash flow to reduce debt and rebuild shareholder equity.
“Booking does not need buybacks to be an attractive investment,” the investor wrote. “Cash flow should be utilized to reduce debt until a significantly positive equity ratio is achieved.”
The firm said it believes strengthening the balance sheet would help attract long-term investors and better position the company to withstand potential shocks to the travel sector.