Booking Holdings Inc. Q3 FY2026 earnings call

• AI Integration & Product Development: Management emphasized AI as the most transformational shift since the Industrial Revolution. Key initiatives include expanding AI tools at Booking.com for destination exploration, launching an AI Assistant at Agoda across 21 markets, and developing 'Penny' at Priceline. New standalone AI-native platforms, Lola and Aveo, were launched to test agentic capabilities, inventory aggregation, and personalized itinerary management.
• Operational Efficiency & Cost Discipline: AI is driving significant operational leverage. Customer service costs declined despite higher volumes due to AI agents handling routine requests. Engineering productivity improved with a double-digit decline in cost per merge request. At Agoda, blended AI token costs dropped over 25% between June and September.
• Strategic Market Focus: The US remains a priority with consistent outperformance in room night growth driven by direct channel expansion. Asia is focused on local execution, leveraging Agoda’s expertise and adapting to local payment methods and social platforms. Partnerships with Meta, OpenAI, Google, and Anthropic are expanding distribution channels.
• Loyalty & Connected Trips: The Genius loyalty program is central to retaining travelers, with Level 2 and 3 members representing over 30% of active customers and accounting for a high 50% share of room nights. Connected trip bookings (multi-vertical) are growing three times faster than overall transaction growth, reinforcing the strategy of bundling services.
• Supplier Value Proposition: Booking Holdings continues to provide value to independent and small-to-medium suppliers through global reach, sophisticated data tools, payment processing (supporting 100+ methods in 50+ currencies), and customer service in 40+ languages, enabling partners to access international demand without upfront marketing costs.

The transcript does not provide a breakdown of financial performance by specific product segment (e.g., Accommodations vs. Flights) in terms of absolute revenue contribution percentages. However, it highlights that Alternative Accommodations represented approximately 37% of Booking.com's room nights (up 1 percentage point year-over-year). In other verticals, Flight ticket volume grew 19% year-over-year, and Attraction ticket volume grew 24% year-over-year. Connected trip transactions (multiple verticals per booking) grew nearly 20% year-over-year and accounted for a low double-digit mix of total transactions.

• Q4 Room Nights: Expected to increase between 1% and 3%, reflecting tough prior-year comparisons and near-term disruptions from geopolitical conflicts.
• Q4 Gross Bookings: Expected to increase between 2% and 4% on a reported basis, or 4% to 6% on a constant currency basis.
• Q4 Adjusted Revenue: Expected to increase between 0% and 2% on a reported basis, or 2% to 4% on a constant currency basis.
• Full Year Outlook: Maintained expectation for Gross Bookings, Adjusted Revenue, and Adjusted EBITDA to grow in the high single digits, and Adjusted EPS to grow in the low to mid-teens. This aligns with long-term constant currency ambitions of at least 8% growth for bookings/revenue and 15% for EPS.
• FX Impact: Estimated to negatively impact Q4 reported growth by ~2 percentage points, but positively impact full-year reported growth by ~1 percentage point for gross bookings and ~0.5 percentage points for adjusted revenue.

• Geopolitical Disruptions: The conflict in the Middle East is causing elevated airfares, reduced capacity on certain routes, and localized unrest in European cities, weighing on long-haul travel demand and creating uncertainty for Q4 results.
• Regulatory Uncertainty: Changes in regulatory frameworks, such as the DMA in Europe affecting Google search visibility and potential restrictions on horizontal personal agents under VLOP laws or FCA regulations in the UK, could slow the adoption of AI-driven discovery channels.
• AI Channel Economics: While AI referrals are accelerating, they currently account for less than 1% of room nights. The economic models for new AI agents are still evolving, and there is a risk that traffic fragmentation may not immediately translate into proportional booking conversion if value propositions are not clearly differentiated.
• Competitive Landscape: The emergence of new AI-native travel agents (Lola, Aveo) and partnerships with tech giants creates a dynamic competitive environment where market share dynamics could shift rapidly.

Q: What tangible top-line benefits are emerging from AI investments, and how do newer agents like Muse compare to previous LLMs?

A: CFO Ewout Steenbergen highlighted four key metrics showing improvement: higher engagement (e.g., Booking.com AI search visitors up 10x), higher conversion (Agoda/Priceline AI users convert at ~2x the rate of non-users), higher booking value (Agoda AI users have ~20% higher average booking values), and incrementality (OpenTable’s OpenAI integration drove 190k covers in Sept). Regarding referrals, traffic from all LLMs and new horizontal agents remains below 1% of total room nights, with no significant difference in growth rates between older and newer agents yet observed.

Q: Why partner with Meta’s Muse specifically with Agoda in Asia, and what explains B2B marketing deleverage?

A: CEO Glenn Fogel clarified that partnerships are prioritized based on timing and logistics rather than strategic hierarchy, urging analysts not to misinterpret specific launches as more important than others. CFO Steenbergen explained B2B marketing deleverage: as the B2B business grows, commission structures based on revenue share naturally increase marketing expenses. However, this reflects healthy economics and volume growth, with plans to launch a combined B2B entity in January 2027 that will likely be reported separately.

Q: Is AI-driven travel discovery generating incremental demand beyond existing bookers, or just convenience?

A: Glenn Fogel acknowledged that while current referral numbers are small, AI agents reduce friction in complex purchase processes, potentially converting users who wouldn't otherwise book. He emphasized that Booking Holdings is building its own agentic experiences (Lola, Aveo) to ensure travelers come to them first. Ewout Steenbergen added that diversifying into third-party AI channels provides an economic advantage as these platforms prefer connecting to aggregators like Booking Holdings for real-time data and credibility, rather than building direct supplier connections.

Q: Are horizontal AI agents favoring direct hotel sites over OTAs, and how is Booking maintaining relevance?

A: Glenn Fogel stated that evidence suggests OTAs are actually gaining advantage because they provide superior content reliability, value, and real-time availability. He noted that small suppliers rely on OTAs to be visible in new AI ecosystems. Ewout Steenbergen added that brand credibility is crucial for AI agents, and connecting directly to 4.7 million properties is prohibitively expensive for agents, making Booking Holdings an essential aggregator partner.

Q: How is the Genius loyalty program evolving, and can AI efficiencies allow EPS growth to exceed the 15% target?

A: Glenn Fogel teased improvements to Genius to deepen loyalty without solely relying on supplier-funded discounts, aiming to create a flywheel effect where travelers get more value for using multiple services. Regarding EPS, Ewout Steenbergen noted that while AI is delivering measurable operating value in customer service and engineering, it is too early to adjust the long-term 15% EPS algorithm. He confirmed that Q4 investments are planned for strategic initiatives but expect full-year EBITDA margins to remain stable, with confidence in 2027 outlook based on healthy on-the-book statistics for early 2027.