Online travel agency Booking Holdings delivered a strong fourth quarter, driven in no small part by changes in its payments strategy and digital booking capabilities, notably its mobile app.
On its Q4 2022 earnings call Thursday (Feb. 23), Booking Holdings CEO Glenn Fogel noted that “for the first time, we saw room nights across all of our major regions above 2019 levels for the quarter.” The Q4 totals contributed to “an all-time high” of nearly 900 million room nights booked on its platforms for full-year 2022 — an improvement of 52% versus 2021.
Detailing progress on strategic priorities for the company, whose portfolio includes Booking.com, Priceline.com, Agoda, Rentalcars.com, KAYAK, and OpenTable, Fogel pointed to lift provided by the company’s payments shift from an agency model to a merchant model.
“In the fourth quarter, we processed 42% of Booking.com’s gross bookings on a merchant basis, and are pleased with our progress in this area,” Fogel said. “Moving booking.com from agent to merchant drives important benefits for both our supplier partners and our travelers. For our supplier partners, offering a payment solution adds value in several key ways, including providing access to additional traveler demand by enabling alternative payment methods, reducing cancellations, decreasing operational workloads, and enabling fraud protection.”
In terms of the benefits to travelers in paying for trips under the merchant model platform “allows many consumers to pay how they want to pay, and we believe it ultimately helps deliver a more seamless and frictionless booking experience.”
CFO David Goulden said airline tickets booked with the company’s “flights” product in Q4 “were up about 249% versus a small base in 2019, and up about 61% versus 2021 driven by the continued expansion of booking.com’s flight product.”
On its Connected Trip initiative, which enables travelers to book flights, accommodations, and more on its platforms, Fogel said, “We’ve expanded our offering into travel verticals other than accommodations, with a focus on flights. In the future, we will work to link relevant travel components together to provide a more seamless and flexible booking and travel experience. We believe that result of this initiative and the improved consumer experience we will drive increases in customer engagement and loyalty to our platform over time.”
Highlighting the U.S. market, he said higher usage of Booking.com and Priceline contributed to U.S. room night growth “of almost 30% and gross bookings growth of about 60% in 2022 versus 2019. On a volume and consumer spend basis, we have grown our U.S. business to be meaningfully larger than it was prior to the pandemic.”
The company is further enhancing its strength in U.S. travel and accommodations by marketing to improve awareness of the brand, “introducing and ramping up our flights product, scaling the adoption of payments, and working closely with our accommodation partners to ensure we are delivering incremental value to them,” he said.
Customers booking directly on Booking.com platforms “reached its highest level ever in the fourth quarter,” he said, adding that “our goal over time is to further increase our direct mix through several initiatives, including continued efforts to enhance the benefits of our Genius loyalty program, further building out our Connected Trip vision to increase engagement with our customers, and driving more of our customers to download and utilize the mobile app.”
The mobile app is a centerpiece of the OTA’s planning. Fogel said “The mobile app is an important platform as it allows us more opportunities to engage directly with travelers,” and said the app is “the center of our Connected Trip vision.”
Roughly 45% of room nights were booked through apps in 2022, he said, adding that last year “Booking.com’s app remained the number one downloaded OTA app globally, and for the first time moved into the number one position in the U.S.,” according to third-party app data.
Alternative (non-hotel) property options are an increasing part of Booking.com’s accommodations mix, and the company is expanding in that segment.
Goulden commented on that, saying “for alternative accommodations at Booking.com our room night growth rate was about 15% in Q4 versus 2019, and the global mix of alternative accommodation room nights was about 29%, which was a couple of percentage points higher than Q4 2019 and Q4 2021.” He also noted that “about 42% of Booking.com’s gross bookings were processed through its payment platform in Q4, versus 30% in Q4 2021.”
Goulden said that in January 2023, “We booked over 95 million room nights, our highest monthly amount ever, and about 10 million more nights than our previous monthly record set last May. January 2023 room nights were up 60% on a year-on-year basis.”
On a side note, Goulden announced that he’ll retire in early 2024.
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