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.
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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.”