Investment Research Analysis Risk Management Booking.com

Company Overview 

Booking.com, founded in Enschede, Netherlands, in 1996, is a Dutch online travel agency for lodging reservations & other travel products and a subsidiary of Booking Holdings (Parent company). It is headquartered in Amsterdam. The website has over 28 million listings and is available in 43 languages, which means it provides global services. Now, the CEO of Booking.com is Gleen Fogel.

Qualitative Analysis

Founders

Geert-Jan Bruinsma:

• Graduated from the University of Twente (Master of Science) in 1994. He was a member of AIESEC during college. (AIESEC is an international youth-run, non-governmental and not-for-profit organization that provides young people with leadership development, cross-cultural internships, and global volunteer exchange experiences.)
• After graduation, he became the founder of Bookings.nl (now called Booking.com) in 1996.
• After selling it to Priceline Group (now called Booking Holdings) in 2005, he worked in the business development apartment at Booking.com in 2011.
• Then, he left it and became the co-founder of Staying in 2016 and the founder of Potter & More in 2109.

Board of Directors

Source Bookings.com

Robert J. Mylod Jr. (Chair of Board):

• Robert J. Mylod Jr. has served on the Board since May 2017, as Chair of the Board since June 2020, and is a member of the Compensation Committee.
• Mr. Mylod is the Managing Partner of Annox Capital Management, a private investment firm he founded in 2013. Prior to joining, Mr. Mylod was a Principal at Stonington Partners, a private equity investment firm.
• Mr. Mylod currently serves as a member of the board of directors of Redfin and as a member of its audit committee and serves as a member of Dropbox’s board of directors and as a member of its audit and compensation committees. He is the Chairperson of the board of directors of Vroom, Inc. and serves as a member of Vroom’s audit and compensation committees. Between October 2015 and April 2017, Mr. Mylod served as a member of the board of directors of Autobytel, a company that facilitates the buying and selling of cars online.
• Mr. Mylod served as a member of the board of directors of EverBank, a U.S. savings bank providing online and mobile banking and financial services, and served on EverBank’s compensation committee and as the Chairman of the nominating and corporate governance committee from 2012 until 2017. Mr. Mylod served as a member of the board of directors of Novocure, a cancer treatment company, and on its audit committee, from 2012 to 2017, and on its nominating and corporate governance committee from 2015 to 2017.
• Received an A.B. in English from the University of Michigan and an M.B.A. from the University of Chicago Graduate School of Business

Gleen D. Fogel (Chief Executive Office and Director):

• Glenn Fogel has served as the Chief Executive Officer and President since January 2017 and the Chief Executive Officer of Booking.com since June 2019.
• Prior to that, he was a trader at a global asset management firm and prior to that was an investment banker specializing in the air transportation industry. Mr. Fogel is a member of the New York State Bar (retired).

Timothy (Tim) M. Armstrong (Director):

• Timothy (Tim) M. Armstrong has served on our Board since January 2013 and is a member of the Compensation Committee.
• Mr. Armstrong is Founder and CEO of the dtx company, a direct to consumer enablement company he established in 2019. From 2009 to 2018, Mr. Armstrong served as the Chairman and Chief Executive Officer of AOL as well as the CEO of Oath (Verizon’s media brand portfolio, including Yahoo! and AOL) after Verizon’s acquisition of AOL in 2015.
• From 2000 to 2009, Mr. Armstrong served as President, Americas Operations and Senior Vice President of Google Inc. Before joining Google, Mr. Armstrong served as Vice President of Sales and Strategic Partnerships for Snowball.com and as Director of Integrated Sales and Marketing at Starwave’s and Disney’s ABC/ESPN Internet Ventures. Mr. Armstrong serves on the board of Wheels Up, an aviation company. Mr. Armstrong is the Chairman of the Board of Trustees at Greenwich Academy and also serves as a trustee of the USA Olympic and Para-Olympic Foundation.

Mirian Graddick-Weir (Director):

• Has served on our Board since June 2018, and is Chair of our Compensation Committee and a member of our Audit Committee.
• Prior to joining Merck, she served as Executive Vice President of Human Resources and Employee Communications of AT&T from 2004 to 2006 and served as its Executive Vice President of Human Resources from 1999 to 2004. Dr. Graddick-Weir was responsible for the design, planning and administration of all Human Resources functions, including compensation, benefits, recruiting and training, for AT&T’s 47,000 employees.
• She joined AT&T in 1981. She currently serves as Chair of Yum! Brands’ nominating and corporate governance committee and as a member of its management planning and development and executive/finance committees.

Wei Hopeman (Director):

• Wei Hopeman has served on our Board since June 2019 and is a member of the Nominating and Corporate Governance Committee.
• Ms. Hopeman is a Managing Partner of Arbor Ventures, a venture capital firm focused on investing in fintech companies around the world, which she co-founded in 2014. From 2010 to 2014, Ms. Hopeman served as Managing Director and Head of Asia for Citi Ventures.
• Prior to Citi Ventures, Ms. Hopeman spent time in various other banking and private equity roles, including as the Chief China Representative for Jefferies & Co. and as a technology banker at The Goldman Sachs Group.

Charles H. Noski (Director):

• Charles H. Noski has served on our Board since March 2015, as Lead Independent Director since June 2020, as a member of our Audit Committee since June 2020, as Chair of our Nominating and Corporate Governance Committee since June 2020 and previously served as Chair of our Audit Committee from June 2016 – June 2020.
•  In 2012, Mr. Noski retired as a Vice Chairman of Bank of America Corporation, to which he was named after previously serving as that company’s Executive Vice President and Chief Financial Officer. Prior to this, Mr. Noski served as Chief Financial Officer, Corporate Vice President and as a member of the board of directors of Northrop Grumman Corporation.
• Prior to Northrop Grumman, he was Vice Chairman of the board of directors and Chief Financial Officer of AT&T Corporation. Before that, Mr. Noski led Hughes Electronics Corporation in various senior executive roles, including as Vice Chairman and as President and Chief Operating Officer. Mr. Noski began his career at Deloitte & Touche LLP where he was named Partner.
• In 2019, Mr. Noski was elected to the board of directors of Wells Fargo & Company, and currently serves as Chairman of the Wells Fargo board, chairs its audit committee and is a member of its governance and nominating committee.
• In 2020, Mr. Noski was elected to the Hewlett Packard Enterprise board and is a member of its finance and investment committee. From 2003 to 2019, Mr. Noski served as a member of the board of directors of Microsoft Corporation and was the Chairman of Microsoft’s audit committee and a member of its governance and nominating committee. Mr. Noski was also Chairman of the board of trustees of the Financial Accounting Foundation from 2016 to 2019 and a former member of the board of directors of the National Association of Corporate Directors. In addition, Mr. Noski served as a member of the board of directors of Avon Products, Inc. from 2012 to 2018.

Nicholas J. Read (Director):

• Nicholas J. Read has served on our Board since June 2018 and is a member of the Audit Committee. Mr. Read has served as Chief Executive Officer of Vodafone Group Plc since October 2018 and as a member of its board of directors since 2014.
• Prior to becoming its Chief Executive Officer, Mr. Read served as Group Chief Financial Officer of Vodafone Group Plc April 2014 to July 2018. Since joining Vodafone in 2001, Mr. Read has held a variety of senior roles, including Chief Financial Officer and Chief Executive Officer of Vodafone Limited, the U.K. operating company.
• Prior to becoming Group Chief Financial Officer, Mr. Read served as Regional Chief Executive Officer for Africa, Middle East and Asia Pacific for five years and was a board member of the Vodafone publicly-traded subsidiaries Vodacom, Safaricom and Vodafone Qatar and Vodafone’s joint ventures VHA in Australia and Indus Towers in India.
• Prior to joining Vodafone, he held senior global finance positions with United Business Media Plc and Federal Express Worldwide. Mr. Read is a Fellow Chartered Management Accountant and a Chartered Global Management Accountant, with a BA (Hons) in Accounting and Finance.

Thomas E Rothman (Director):

• Thomas E. Rothman has served on our Board since January 2013, as a member of our Audit Committee until June 2020 and is a member of our Nominating and Corporate Governance Committee since June 2020.
• Mr. Rothman has served as Chairman of Sony Pictures Entertainment Motion Picture Group since March 2015, where he oversees Columbia Pictures, TriStar Pictures, Imageworks and Sony Pictures Animation, along with other entities. From September 2013 to February 2015, Mr. Rothman was Chairman of TriStar Productions.
• Previously, Mr. Rothman served as Chairman of Fox Entertainment Group Inc., a media company and subsidiary of News Corp. from 2000 to 2005 and as its Chairman and Chief Executive Officer from 2005 to 2012. Mr. Rothman served as President of Twentieth Century Fox Film Group from January 2000 to August 2000, and served as President of Twentieth Century Fox Production from 1995 to 2000.
• In 1994, Mr. Rothman founded and served as President of Fox Searchlight Pictures. Prior to that, he served as President of Worldwide Production for the Samuel Goldwyn Company from 1989 to 1994. Mr. Rothman also served as an associate and then partner with Frankfurt, Kurnit, Klein & Selz, a law firm, from 1982 to 1987. Mr. Rothman serves as a member of the board of directors of the Sundance Institute and the American Film Institute, both emeritus.
• He is also a member of the boards of the California Institute of the Arts (CalArts), Brown University (emeritus), and was appointed by President Obama and confirmed by the U.S. Senate as a member of the National Council of the Arts, the governing body for the National Endowment for the Arts.

Sumit Singh (Director):

• Sumit Singh has served on our Board since June 2022. Mr. Singh has held Chewy’s CEO position since March 2018, and also serves on the company’s Board of Directors.
• In 2019, he led the company through its initial public offering. Mr. Singh was subsequently named to the 2020 “Bloomberg 50,” Bloomberg Businessweek’s annual list of innovators, entrepreneurs, and leaders who have changed the global business landscape over the past year, and to other notable lists such as NRF Foundation’s “The List of People Shaping Retail’s Future 2022.” Prior to joining Chewy, Mr. Singh held senior leadership positions at Amazon, and prior to Amazon, Mr. Singh served in senior management positions at Dell Technologies Inc. He has over 20 years global leadership experience that spans e-commerce, technology, retail, and logistics.
• He holds a Bachelor of Technology degree from Punjab Technical University and a Master’s in Engineering from the University of Texas at Austin, as well as an MBA from the University of Chicago Booth School of Business.

Lynn M. Vojvodich (Director):

• Lynn M. Vojvodich has served on our Board since January 2016 and is a member of the Nominating and Corporate Governance Committee and Compensation Committee.
• Ms. Vojvodich is an advisor to start-up and growth-stage technology companies. She served as Executive Vice President and Chief Marketing Officer of Salesforce from 2013 to February 2017.
•  Before joining Salesforce, Ms. Vojvodich was a partner at Andreessen Horowitz, a leading venture capital firm, where she helped companies build their go-to-market strategies. Previously, she was the Chief Marketing Officer at Terracotta Inc., a leader in in-memory and cloud-enabling technology.
• Ms. Vojvodich has also served in various roles at organizations including Bain & Company and Microsoft.
•  Ms. Vojvodich has served as a member of the board of directors of Dell Technologies since April 2019, Ford Motor Company since April 2017 and Figma, a cloud-based design software company, since December 2019. Ms. Vojvodich began her career as a mechanical engineer in a hard hat working on the design and construction of Gulfstream jets and offshore oil structures.

Venessa A. Wittmam (Director):

• Vanessa A. Wittman has served on our Board since June 2019 and is the Chair of our Audit Committee. Ms. Wittman has been the Chief Financial Officer of Glossier, an online beauty product company, since April 2019.
• She previously served as Chief Financial Officer of Oath, a subsidiary of Verizon, during 2018. Ms. Wittman served as Chief Financial Officer of Dropbox from 2015 to 2016 and as Chief Financial Officer of Motorola Mobility, a subsidiary of Google, from 2012 to 2014.
• From 2008 to 2012, Ms. Wittman served as Executive Vice President and Chief Financial Officer of Marsh & McLennan Companies, a global professional services firm.
• Prior to Marsh & McLennan, Ms. Wittman held a number of other senior finance roles during her career. Ms. Wittman currently serves on the board of directors of Impossible Foods Inc., a sustainable foods company, and is the audit committee chair, as well as a member of the board of directors of Oscar Health.
• From 2014 to 2019, Ms. Wittman was a member of the board of directors of Ulta Beauty, a cosmetics and beauty supply retailer, and served on its audit committee. She also served as a member of the board of directors of Sirius XM Holdings from 2011 to 2018.

Source Bookings.com

From 2022 Proxy Statement, the Vanguard Group and BlackRock, Inc. play an important role in Booking Holdings. They respectively hold 7.7% and 6.4% percent of shares.

Executive Team

Source Bookings.com

Peter J. Milliones, Jr. (Executive Vice President and General Counsel):

• Peter J. Millones Jr. has been the General Counsel since January 2001 and the Executive Vice President since April 2003. He previously served as Vice President and Associate General Counsel from March 2000 to January 2001 and as our Corporate Secretary from January 2001 to April 2018.
• Prior to that, Mr. Millones was with the law firm of Latham & Watkins LLP. As part of his responsibilities, Mr. Millones oversees our executive compensation programs.

David I. Goulden (Executive Vice President and Chief Financial Officer):

• David I. Goulden joined us on March 1, 2018 after leaving Dell Technologies in February 2018 and is our Executive Vice President and Chief Financial Officer.
•  Prior to joining Booking Holdings, Mr. Goulden served in numerous senior executive positions at EMC Corporation and then Dell Technologies (following EMC’s acquisition by Dell), including as Dell’s President, Infrastructure Solutions Group (beginning in 2016), EMC’s Chief Executive Officer of Information Infrastructure (2014-2016), EMC’s President and Chief Operating Officer (2012-2014) and EMC’s Chief Financial Officer (2006-2014).

Paulo Pisano (Chief Human Resources Officer):

• Paulo Pisano serves as the Chief Human Resources Officer of Booking Holdings Inc. and as Senior Vice President and Chief People Officer of Booking.com.
• Prior to joining Booking.com in early 2020, Paulo was the Chief People Officer at Galp, a globally integrated energy company.
• Previously, he served as the SVP and Chief Talent Officer at Pearson, following his post as Head of Organizational Effectiveness at Barclays.
•  Paulo holds an MBA from INSEAD and an NED diploma through the Financial Times.

Product Positioning

Booking Holding Inc. is an online travel agency (OTA). There are several brands owned. It offers these services through six primary consumer-facing brands: Booking.com, Priceline, agoda, Rentalcars.com, KAYAK, and OpenTable. Also they continue to increase the collaboration, cooperation, and interdependency among brands to provide consumers with the most comprehensive services and maximize the benefits of their scale.

• Booking.com. is a one site service and reservation brand. Offering accommodation reservation services for hotels, motels, resorts, homes, apartments, and other unique places to stay and pre-booked taxi and black car services.
• Rentalcars.com. Rentalcars.com operates as part of Booking.com and offers online rental car reservation services. They also offers pre-booked taxi and black car services.
• Priceline. Priceline is a leader in the discount travel reservation business, offering online travel reservation services and mainly focusing on North America.
• Agoda. Agoda is a leading online accommodation reservation service catering primarily to consumers in the Asia-Pacific region.
• KAYAK. KAYAK provides an online price comparison service to easily search and compare travel itineraries and prices.
• OpenTable. OpenTable is a leading brand for booking online restaurant reservations.

The advantages are the simplification of the travel booking process and the invention of travel packages to further optimize the search process of travel bookings.

Competitive Analysis Globally

As disclosed by the annual report in the last 3 years, Google, Apple, Alibaba, Tencent, Amazon, and Facebook are current and mainly competitors which have significantly more customers or users, consumer’s data, and financial and other resources than Booking does.

Google has integrated information and reservation products into Google Maps, also Google is the leading internet search service and has leveraged its search popularity to promote its travel services and reduce “customer acquisition cost”.

In terms of personnel, booking’s success in markets across Europe, the United States, and Asia has led to increased efforts by competitors and others to hire booking’s employees which lead to competition for talent in booking has intensified so that they have to increase the personnel expense of talent to attract and retain key talent. Also the competition for talent is exacerbated by an increased willingness of certain companies to offer flexible and remote working policies, which expands the pool of candidates from which our competitors may attract talent.

In terms of market share, there are major differences between the European and Asia-Pacific markets and the U.S. market. In the U.S. booking has a larger market for tourism and therefore is more standardized and centralized.

Yahoo Finance

The above table shows the total revenue of Booking’s major competitors in 2021. One of the more noteworthy ones is that Expedia’s total revenue of $8598millions opens a significant gap with the other competitors and is the most similar to Booking’s total revenue. Also  Expedia is booking’s strongest competitor in Europe Region where Expedia has similar travel packages and travel booking services as booking

Break-even analysis

In this section, break-even analysis is used as a financial calculation that weighs the costs of a new business, service or product against the sales revenue to determine the break even point. In other words, it reveals the point at which Booking Holdings Inc. will have sold enough units to cover all of the costs.

Below is the result of our break-even analysis:

As we can see, the balance between revenue and cost was relatively risky during the year of 2020 when the COVID-19 started. After 2020, there was a quick recovery as the revenue climbed back to match the normal level before the pandemic. Also, the level of fixed costs (labor, payroll, advertising, etc.) and variable costs are relatively stable throughout the years.

Discounted Cash Flow Model Projections

In this section, we projected unlevered free cash flow into the future 5 years (2022-2026).

Source YahooFinance

Before revealing the result and analysis, there are some assumptions to be disclosed:

• Assume 20% growth rate of EBITDA through 2022-2024 and 4% for 2025
• Long-term growth rate of 4%
• WACC as discount rate at 8%
• Formula: NWC  = Inventory + A/R – A/P
• EBITDA multiple of 17.1x according to the 2022 Forecast by Statista

In the last row, the sum of PV of 5 years’ cash flow is $12,503 MM. Then we calculated the enterprise value by first determining the terminal value in 2026 using two separate methods: 1.) Growth in Perpetuity Method and 2.) EBITDA Multiple Method

1.) Growth in Perpetuity Method

2.) EBITDA Multiple Method

Booking Holdings Inc. has a 78.32 B and a stock price of $1914.57 for Aug.4 2022. As our DCF Model suggests, the EV will probably reach around 83 B and the statistics on the historical EV below, we can see that the estimation is reasonable if Booking Holding Inc. recovers from COVID-19 and the EV goes back to its average level.

When comparing with its competitors, Booking Holdings Inc. has the largest EV so far:

Regarding the equity value, we need to take Net Debt into account. Booking’s net debt / total capital decreased in each of the last five fiscal years from 2.5% in 2017 to -0.6% in 2021. However, it peaked in June 2022 at 11.2%. As there was a downward trend of net debt together with a peak in 2022, we need to further investigate the factors behind the peak in 2022. If the factors are not long-term ones, then the equity value will probably be higher than the current stock price as shown in the table above.

Cash Flow Statement

The operating activities are the sources of cash flows coming from the daily business operations of a company and thus we want to pay attention to the operating cash flow.

The table below shows the net operating cash flow and its growth rate:

As we can see here, the operating cash flow has been damaged by COVID-19, but quickly renounced in 2021.

Industry Average Multiples

The following table shows the industry average multiples and those for Booking Holding Inc. In summary, Booking Holdings Inc. has been the leader of the Online Travel Agencies (Expedia, Airbnb, TripAdvisor, Trip.com, etc.).

Stock Price Analysis

Stock Price Since IPO

Booking Holdings had its initial public offering on March 29, 1999 offering $550 per share. The latest closing stock price for Booking Holdings as of July 18, 2022 is $1738.79.

Source from yahoofinance

From 1999 to present, Booking Holdings’ stock price increased 68% since IPO. In the last 52 weeks, stock price has decreased by -17.27%. At IPO, Booking Holdings’s market cap was $7.86 billion. As of July 18th, 2022, BKNG has a market cap (net worth) of $70.64 billion and enterprise value of $70.20 billion. Since March 31, 1999, Booking Holdings’s market cap has increased from $7.86 billion to $70.64 billion, an increase of 799.06%. That is a compound annual growth rate of 9.88%.

Source from yahoofinance

In 2000, the stock price opened at $307.4385 and ended at $7.8584, decreasing -97.24%. Stock price opened at $8.4583, and ended at $34.9130, increasing 344.28% in 2001. In 2002, year stock opened at $35.0930, and ended at $9.5981, decreased -72.51%. Between 2006 and 2010, Bookings’ stock price increased significantly each year with an average growth rate of 100.4%. After 2010, Bookings’ stock price grew constantly with an average 15.5% yearly growth rate.

The beta measures the price volatility of a stock in comparison to the overall stock market. A value higher than 1 indicates greater volatility. Since the beta is 1.25, BKNG’s price volatility has been higher than the market average.

Index Performance

• Data Collection: Composition of Holders

Relative Performance compared with competitors and indices

The S&P 500 index is indicated by the yellow label and it clearly outperformed the online travel agencies (BNGK, ABNB, TRIP, TCOM, etc.) from 2017 to 2022. Among its competitors, Booking Holdings Inc. has a relatively stable and beyond-average performance throughout the years, as indicated by the blue line.

Source from koyfin.com

Comparative Analysis with S&P 500

In this analysis, we build the CAPM model to measure the risk exposure to the market factor, which is S&P 500. The risk free rate is represented by 10-year treasury yield. The risk exposure is the beta and is highlighted in the table below. We can see that it is 0.24, which is not very sensitive to the market returns.

Market Research

Target market research

• Bookings target customers are those who are familiar and comfortable using apps and websites to reserve hotels, flights, and plan for their trips online for a good price.
• They market their brand by putting ads on social media to show the idea that people can experience the world just by clicking buttons on their devices anywhere they are at.
• They acquire targeted companies by offering them the most downloaded online travel agent platform, tools, and insights to provide customers a variety of choices.

Brand Positioning

Source Bookings.com

• Booking Holdings nowadays is marketed as the largest online travel agency.
• Back in 2000, they were marketed as a tech company that pioneered a unique e-commerce pricing system known as a “demand collection system” that enables consumers to use the Internet to save money on a range of products and services while enabling sellers to generate incremental revenue.
• During the second half of 2000, they experienced a decrease in the momentum of their business, they then shifted focus to traveling business.

SWOT analysis

Strength

• Most known and largest travel agency in the world
• Booking’s app is the most downloaded online travel app globally in 2021, with 63 million downloads.
• Mobile app are easy to use  and with good visibility and in-app experience for flights, ground transport
• Consumers can also use their meta-search services to easily compare travel reservation information, such as flight, hotel, and rental car reservations, from hundreds of online travel platforms at once.

Weakness

• Highly rely on people’s willingness to travel and government’s policy. During COVID-19 from 2020 to 2022, gross travel bookings decreased 63% in 2020 and 21% in 2021. Stock price decreases 27.53% in 2022.
• Business model lacks variety. Over 60% of income comes from the agency business model which earns 10%-30% commission on each booking of its site.

Opportunities

• Expansion through mergers & acquisitions in the online travel industry
• Investment in advanced technologies for providing connected trips
• Tailwinds from growth in travel market and online penetration

Threats

• The adverse impact of the COVID-19 pandemic on their business, financial performance, and travel demand;
• Adverse changes in relationships with travel service providers and restaurants and other third parties on which they are dependent
• Our ability to respond to and keep up with the rapid pace of technological and market changes. Competitors like Google, Apple have a lot more consumers and provide devices which can promote the use of their service.

Conclusion

•  Online travel market has good potential growth in the future. Booking Holding is facing a competitive market. In order to maintain their leading position in the market, they can develop new technologies to secure current loyal consumers and attract new consumers, and also expand business models to more travel related industries.

Mergers and Acquisitions

1. To provide a price comparison (often referred to as “meta-search”) service allowing consumers to search and to compare prices for travel services offered by travel service providers and online travel agents (“OTAs”).
2. Offer restaurant reservation services to consumers and reservation management services to restaurants.
3. To enhance the global reach of the meta-search business.
4. European-based flights booking provider. To expand and to enhance flight product
5. To enhance our business-to-business distribution capabilities for hotel partners and more effectively support our accommodations affiliate partners).

Active Hotels:

In September 2004, Booking Holdings acquired Active Hotels Ltd. (“Active Hotels”), a United Kingdom based Internet hotel reservation distributor for approximately $165.4 million in cash, including transaction related costs. Active Hotels works with over 8,500 properties in the United Kingdom and throughout Europe, including international chains and independent properties. Its distribution network encompasses companyowned websites, such as activereservations.com , as well as over affiliated third-party 1,000 websites operating throughout Europe.

Bookings:

Furthermore, in July 2005, we acquired Amsterdam-based Bookings B.V. (“Bookings”), one of Europe’s leading Internet hotel reservation services, with offices primarily in Amsterdam, Barcelona, Berlin, Loule, Paris, Rome and Pisa. Priceline bought Booking.com for a mere $135 million in cash.

Agoda:

In November 2007, we acquired Agoda Company, Ltd. (“Agoda”) and AGIP LLC (“AGIP,” and together with Agoda, the “Agoda Companies”), an Internet hotel distributor with operations in Singapore and Thailand.

TravelJigsaw:

Through TravelJigsaw, which we acquired in May 2010, we offer retail price-disclosed rental car reservations in 80 countries around the world.

KAYAK:

In May 2013, we acquired KAYAK, which provides a price comparison (often referred to as “meta-search”) service allowing consumers to search and compare prices for travel services offered by travel service providers and online travel agents (“OTAs”). KAYAK currently operates primarily in the United States, though it intends to invest more heavily in expanding its international offerings. The transaction values KAYAK at $1.8 billion ($1.65 billion net of cash acquired) or $40 per share of KAYAK (subject to the collar described below), with the Group paying approximately $500 million of the consideration in cash and $1.3 billion in equity and assumed stock options.

OpenTable:

In July 2014 we acquired OpenTable, a leading brand for booking online restaurant reservations. Headquartered in San Francisco, California, OpenTable provides online restaurant reservation services to consumers and reservation management services to restaurants. OpenTable does business primarily in the United States, though it intends to continue to invest in expanding its international offerings. The Priceline Group announced they’d acquired online restaurant reservations leader OpenTable for $2.6 billion. That is an astronomical amount of money. Of course, that’s nothing in the tech world, where WhatsApp went to Facebook for $19 billion, but it is in the neighborhood of acquisitions like Google’s Nest deal ($3.2 billion) or Apple’s deal with Beats ($3 billion).

PriceMatch/ Rocketmiles/ AS Digital:

In 2015, the acquisition of the PriceMatch, with offices in Europe and the U.S., comes after the Priceline Group recently launched its BookingSuite division to create websites and provide the Booking.com booking engine for hotels. PriceMatch is a cloud-based solution geared to provide analytics to hotels to improve performance.

The Priceline Group will acquire Rocketmiles for around $20 million, according to the Wall Street Journal.

AS Digital is an Australia-based provider of table and reservation management tools for restaurants. The Priceline Group has made another move into the restaurant booking world with a deal to buy AS Digital. The company will be integrated into the OpenTable division within Priceline.

Brazilian Travel/ Momondo/ Cheapflights:

Kayak acquires Brazilian travel metasearch site Mundi

In July 2017, the Company completed the acquisition of the Momondo Group, which operates the travel meta-search websites Momondo and Cheapflights, for $556 million , and which is managed as part of the Company’s KAYAK business.

 FareHarbor/ HotelsCombined:

In April 2018, we paid $139 million , net of cash acquired, and issued shares of our common stock in an amount of $110 million in connection with the acquisition of FareHarbor, a leading provider of business-to-business activities distribution services. In November 2018, we paid $134 million , net of cash acquired, to complete the acquisition of HotelsCombined, a hotel meta-search company.

Venga:

May 2, 2019 /PRNewswire/ — Booking Holdings Inc. (NASDAQ: BKNG) today announced it has entered into an agreement to acquire Venga, a guest management platform for restaurants and other businesses. Founded in 2010 and headquartered in Washington, D.C., Venga’s SaaS technology enables its clients to enhance and personalize the customer experience. Following the acquisition, Venga will align closely with Booking Holdings’ brand OpenTable to further improve offerings for its 51,000+ restaurant partners.

Getaroom/ Etraveli:

In December 2021, we completed the acquisition of Getaroom, a business-to-business distributor of hotel rooms, which in conjunction with our Priceline business we expect to increase value for both hotel and affiliate partners, and in November 2021, we entered into an agreement to acquire European-based flights booking provider Etraveli Group.

In November 2021, we entered into an agreement to acquire global flight booking provider, Etraveli Group, for approximately 1.6 billion Euros ($1.9 billion). Completion of this acquisition is subject to certain closing conditions, including regulatory approvals. In December 2021, we paid $1.2 billion, net of cash acquired, to acquire Getaroom, a business-to-business distributor of hotel rooms

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Company Overview 

Booking.com, founded in Enschede, Netherlands, in 1996, is a Dutch online travel agency for lodging reservations & other travel products and a subsidiary of Booking Holdings (Parent company). It is headquartered in Amsterdam. The website has over 28 million listings and is available in 43 languages, which means it provides global services. Now, the CEO of Booking.com is Gleen Fogel.

Qualitative Analysis

Founders

Geert-Jan Bruinsma:

• Graduated from the University of Twente (Master of Science) in 1994. He was a member of AIESEC during college. (AIESEC is an international youth-run, non-governmental and not-for-profit organization that provides young people with leadership development, cross-cultural internships, and global volunteer exchange experiences.)
• After graduation, he became the founder of Bookings.nl (now called Booking.com) in 1996.
• After selling it to Priceline Group (now called Booking Holdings) in 2005, he worked in the business development apartment at Booking.com in 2011.
• Then, he left it and became the co-founder of Staying in 2016 and the founder of Potter & More in 2109.

Board of Directors

Source Bookings.com

Robert J. Mylod Jr. (Chair of Board):

• Robert J. Mylod Jr. has served on the Board since May 2017, as Chair of the Board since June 2020, and is a member of the Compensation Committee.
• Mr. Mylod is the Managing Partner of Annox Capital Management, a private investment firm he founded in 2013. Prior to joining, Mr. Mylod was a Principal at Stonington Partners, a private equity investment firm.
• Mr. Mylod currently serves as a member of the board of directors of Redfin and as a member of its audit committee and serves as a member of Dropbox’s board of directors and as a member of its audit and compensation committees. He is the Chairperson of the board of directors of Vroom, Inc. and serves as a member of Vroom’s audit and compensation committees. Between October 2015 and April 2017, Mr. Mylod served as a member of the board of directors of Autobytel, a company that facilitates the buying and selling of cars online.
• Mr. Mylod served as a member of the board of directors of EverBank, a U.S. savings bank providing online and mobile banking and financial services, and served on EverBank’s compensation committee and as the Chairman of the nominating and corporate governance committee from 2012 until 2017. Mr. Mylod served as a member of the board of directors of Novocure, a cancer treatment company, and on its audit committee, from 2012 to 2017, and on its nominating and corporate governance committee from 2015 to 2017.
• Received an A.B. in English from the University of Michigan and an M.B.A. from the University of Chicago Graduate School of Business

Gleen D. Fogel (Chief Executive Office and Director):

• Glenn Fogel has served as the Chief Executive Officer and President since January 2017 and the Chief Executive Officer of Booking.com since June 2019.
• Prior to that, he was a trader at a global asset management firm and prior to that was an investment banker specializing in the air transportation industry. Mr. Fogel is a member of the New York State Bar (retired).

Timothy (Tim) M. Armstrong (Director):

• Timothy (Tim) M. Armstrong has served on our Board since January 2013 and is a member of the Compensation Committee.
• Mr. Armstrong is Founder and CEO of the dtx company, a direct to consumer enablement company he established in 2019. From 2009 to 2018, Mr. Armstrong served as the Chairman and Chief Executive Officer of AOL as well as the CEO of Oath (Verizon’s media brand portfolio, including Yahoo! and AOL) after Verizon’s acquisition of AOL in 2015.
• From 2000 to 2009, Mr. Armstrong served as President, Americas Operations and Senior Vice President of Google Inc. Before joining Google, Mr. Armstrong served as Vice President of Sales and Strategic Partnerships for Snowball.com and as Director of Integrated Sales and Marketing at Starwave’s and Disney’s ABC/ESPN Internet Ventures. Mr. Armstrong serves on the board of Wheels Up, an aviation company. Mr. Armstrong is the Chairman of the Board of Trustees at Greenwich Academy and also serves as a trustee of the USA Olympic and Para-Olympic Foundation.

Mirian Graddick-Weir (Director):

• Has served on our Board since June 2018, and is Chair of our Compensation Committee and a member of our Audit Committee.
• Prior to joining Merck, she served as Executive Vice President of Human Resources and Employee Communications of AT&T from 2004 to 2006 and served as its Executive Vice President of Human Resources from 1999 to 2004. Dr. Graddick-Weir was responsible for the design, planning and administration of all Human Resources functions, including compensation, benefits, recruiting and training, for AT&T’s 47,000 employees.
• She joined AT&T in 1981. She currently serves as Chair of Yum! Brands’ nominating and corporate governance committee and as a member of its management planning and development and executive/finance committees.

Wei Hopeman (Director):

• Wei Hopeman has served on our Board since June 2019 and is a member of the Nominating and Corporate Governance Committee.
• Ms. Hopeman is a Managing Partner of Arbor Ventures, a venture capital firm focused on investing in fintech companies around the world, which she co-founded in 2014. From 2010 to 2014, Ms. Hopeman served as Managing Director and Head of Asia for Citi Ventures.
• Prior to Citi Ventures, Ms. Hopeman spent time in various other banking and private equity roles, including as the Chief China Representative for Jefferies & Co. and as a technology banker at The Goldman Sachs Group.

Charles H. Noski (Director):

• Charles H. Noski has served on our Board since March 2015, as Lead Independent Director since June 2020, as a member of our Audit Committee since June 2020, as Chair of our Nominating and Corporate Governance Committee since June 2020 and previously served as Chair of our Audit Committee from June 2016 – June 2020.
•  In 2012, Mr. Noski retired as a Vice Chairman of Bank of America Corporation, to which he was named after previously serving as that company’s Executive Vice President and Chief Financial Officer. Prior to this, Mr. Noski served as Chief Financial Officer, Corporate Vice President and as a member of the board of directors of Northrop Grumman Corporation.
• Prior to Northrop Grumman, he was Vice Chairman of the board of directors and Chief Financial Officer of AT&T Corporation. Before that, Mr. Noski led Hughes Electronics Corporation in various senior executive roles, including as Vice Chairman and as President and Chief Operating Officer. Mr. Noski began his career at Deloitte & Touche LLP where he was named Partner.
• In 2019, Mr. Noski was elected to the board of directors of Wells Fargo & Company, and currently serves as Chairman of the Wells Fargo board, chairs its audit committee and is a member of its governance and nominating committee.
• In 2020, Mr. Noski was elected to the Hewlett Packard Enterprise board and is a member of its finance and investment committee. From 2003 to 2019, Mr. Noski served as a member of the board of directors of Microsoft Corporation and was the Chairman of Microsoft’s audit committee and a member of its governance and nominating committee. Mr. Noski was also Chairman of the board of trustees of the Financial Accounting Foundation from 2016 to 2019 and a former member of the board of directors of the National Association of Corporate Directors. In addition, Mr. Noski served as a member of the board of directors of Avon Products, Inc. from 2012 to 2018.

Nicholas J. Read (Director):

• Nicholas J. Read has served on our Board since June 2018 and is a member of the Audit Committee. Mr. Read has served as Chief Executive Officer of Vodafone Group Plc since October 2018 and as a member of its board of directors since 2014.
• Prior to becoming its Chief Executive Officer, Mr. Read served as Group Chief Financial Officer of Vodafone Group Plc April 2014 to July 2018. Since joining Vodafone in 2001, Mr. Read has held a variety of senior roles, including Chief Financial Officer and Chief Executive Officer of Vodafone Limited, the U.K. operating company.
• Prior to becoming Group Chief Financial Officer, Mr. Read served as Regional Chief Executive Officer for Africa, Middle East and Asia Pacific for five years and was a board member of the Vodafone publicly-traded subsidiaries Vodacom, Safaricom and Vodafone Qatar and Vodafone’s joint ventures VHA in Australia and Indus Towers in India.
• Prior to joining Vodafone, he held senior global finance positions with United Business Media Plc and Federal Express Worldwide. Mr. Read is a Fellow Chartered Management Accountant and a Chartered Global Management Accountant, with a BA (Hons) in Accounting and Finance.

Thomas E Rothman (Director):

• Thomas E. Rothman has served on our Board since January 2013, as a member of our Audit Committee until June 2020 and is a member of our Nominating and Corporate Governance Committee since June 2020.
• Mr. Rothman has served as Chairman of Sony Pictures Entertainment Motion Picture Group since March 2015, where he oversees Columbia Pictures, TriStar Pictures, Imageworks and Sony Pictures Animation, along with other entities. From September 2013 to February 2015, Mr. Rothman was Chairman of TriStar Productions.
• Previously, Mr. Rothman served as Chairman of Fox Entertainment Group Inc., a media company and subsidiary of News Corp. from 2000 to 2005 and as its Chairman and Chief Executive Officer from 2005 to 2012. Mr. Rothman served as President of Twentieth Century Fox Film Group from January 2000 to August 2000, and served as President of Twentieth Century Fox Production from 1995 to 2000.
• In 1994, Mr. Rothman founded and served as President of Fox Searchlight Pictures. Prior to that, he served as President of Worldwide Production for the Samuel Goldwyn Company from 1989 to 1994. Mr. Rothman also served as an associate and then partner with Frankfurt, Kurnit, Klein & Selz, a law firm, from 1982 to 1987. Mr. Rothman serves as a member of the board of directors of the Sundance Institute and the American Film Institute, both emeritus.
• He is also a member of the boards of the California Institute of the Arts (CalArts), Brown University (emeritus), and was appointed by President Obama and confirmed by the U.S. Senate as a member of the National Council of the Arts, the governing body for the National Endowment for the Arts.

Sumit Singh (Director):

• Sumit Singh has served on our Board since June 2022. Mr. Singh has held Chewy’s CEO position since March 2018, and also serves on the company’s Board of Directors.
• In 2019, he led the company through its initial public offering. Mr. Singh was subsequently named to the 2020 “Bloomberg 50,” Bloomberg Businessweek’s annual list of innovators, entrepreneurs, and leaders who have changed the global business landscape over the past year, and to other notable lists such as NRF Foundation’s “The List of People Shaping Retail’s Future 2022.” Prior to joining Chewy, Mr. Singh held senior leadership positions at Amazon, and prior to Amazon, Mr. Singh served in senior management positions at Dell Technologies Inc. He has over 20 years global leadership experience that spans e-commerce, technology, retail, and logistics.
• He holds a Bachelor of Technology degree from Punjab Technical University and a Master’s in Engineering from the University of Texas at Austin, as well as an MBA from the University of Chicago Booth School of Business.

Lynn M. Vojvodich (Director):

• Lynn M. Vojvodich has served on our Board since January 2016 and is a member of the Nominating and Corporate Governance Committee and Compensation Committee.
• Ms. Vojvodich is an advisor to start-up and growth-stage technology companies. She served as Executive Vice President and Chief Marketing Officer of Salesforce from 2013 to February 2017.
•  Before joining Salesforce, Ms. Vojvodich was a partner at Andreessen Horowitz, a leading venture capital firm, where she helped companies build their go-to-market strategies. Previously, she was the Chief Marketing Officer at Terracotta Inc., a leader in in-memory and cloud-enabling technology.
• Ms. Vojvodich has also served in various roles at organizations including Bain & Company and Microsoft.
•  Ms. Vojvodich has served as a member of the board of directors of Dell Technologies since April 2019, Ford Motor Company since April 2017 and Figma, a cloud-based design software company, since December 2019. Ms. Vojvodich began her career as a mechanical engineer in a hard hat working on the design and construction of Gulfstream jets and offshore oil structures.

Venessa A. Wittmam (Director):

• Vanessa A. Wittman has served on our Board since June 2019 and is the Chair of our Audit Committee. Ms. Wittman has been the Chief Financial Officer of Glossier, an online beauty product company, since April 2019.
• She previously served as Chief Financial Officer of Oath, a subsidiary of Verizon, during 2018. Ms. Wittman served as Chief Financial Officer of Dropbox from 2015 to 2016 and as Chief Financial Officer of Motorola Mobility, a subsidiary of Google, from 2012 to 2014.
• From 2008 to 2012, Ms. Wittman served as Executive Vice President and Chief Financial Officer of Marsh & McLennan Companies, a global professional services firm.
• Prior to Marsh & McLennan, Ms. Wittman held a number of other senior finance roles during her career. Ms. Wittman currently serves on the board of directors of Impossible Foods Inc., a sustainable foods company, and is the audit committee chair, as well as a member of the board of directors of Oscar Health.
• From 2014 to 2019, Ms. Wittman was a member of the board of directors of Ulta Beauty, a cosmetics and beauty supply retailer, and served on its audit committee. She also served as a member of the board of directors of Sirius XM Holdings from 2011 to 2018.

Source Bookings.com

From 2022 Proxy Statement, the Vanguard Group and BlackRock, Inc. play an important role in Booking Holdings. They respectively hold 7.7% and 6.4% percent of shares.

Executive Team

Source Bookings.com

Peter J. Milliones, Jr. (Executive Vice President and General Counsel):

• Peter J. Millones Jr. has been the General Counsel since January 2001 and the Executive Vice President since April 2003. He previously served as Vice President and Associate General Counsel from March 2000 to January 2001 and as our Corporate Secretary from January 2001 to April 2018.
• Prior to that, Mr. Millones was with the law firm of Latham & Watkins LLP. As part of his responsibilities, Mr. Millones oversees our executive compensation programs.

David I. Goulden (Executive Vice President and Chief Financial Officer):

• David I. Goulden joined us on March 1, 2018 after leaving Dell Technologies in February 2018 and is our Executive Vice President and Chief Financial Officer.
•  Prior to joining Booking Holdings, Mr. Goulden served in numerous senior executive positions at EMC Corporation and then Dell Technologies (following EMC’s acquisition by Dell), including as Dell’s President, Infrastructure Solutions Group (beginning in 2016), EMC’s Chief Executive Officer of Information Infrastructure (2014-2016), EMC’s President and Chief Operating Officer (2012-2014) and EMC’s Chief Financial Officer (2006-2014).

Paulo Pisano (Chief Human Resources Officer):

• Paulo Pisano serves as the Chief Human Resources Officer of Booking Holdings Inc. and as Senior Vice President and Chief People Officer of Booking.com.
• Prior to joining Booking.com in early 2020, Paulo was the Chief People Officer at Galp, a globally integrated energy company.
• Previously, he served as the SVP and Chief Talent Officer at Pearson, following his post as Head of Organizational Effectiveness at Barclays.
•  Paulo holds an MBA from INSEAD and an NED diploma through the Financial Times.

Product Positioning

Booking Holding Inc. is an online travel agency (OTA). There are several brands owned. It offers these services through six primary consumer-facing brands: Booking.com, Priceline, agoda, Rentalcars.com, KAYAK, and OpenTable. Also they continue to increase the collaboration, cooperation, and interdependency among brands to provide consumers with the most comprehensive services and maximize the benefits of their scale.

• Booking.com. is a one site service and reservation brand. Offering accommodation reservation services for hotels, motels, resorts, homes, apartments, and other unique places to stay and pre-booked taxi and black car services.
• Rentalcars.com. Rentalcars.com operates as part of Booking.com and offers online rental car reservation services. They also offers pre-booked taxi and black car services.
• Priceline. Priceline is a leader in the discount travel reservation business, offering online travel reservation services and mainly focusing on North America.
• Agoda. Agoda is a leading online accommodation reservation service catering primarily to consumers in the Asia-Pacific region.
• KAYAK. KAYAK provides an online price comparison service to easily search and compare travel itineraries and prices.
• OpenTable. OpenTable is a leading brand for booking online restaurant reservations.

The advantages are the simplification of the travel booking process and the invention of travel packages to further optimize the search process of travel bookings.

Competitive Analysis Globally

As disclosed by the annual report in the last 3 years, Google, Apple, Alibaba, Tencent, Amazon, and Facebook are current and mainly competitors which have significantly more customers or users, consumer’s data, and financial and other resources than Booking does.

Google has integrated information and reservation products into Google Maps, also Google is the leading internet search service and has leveraged its search popularity to promote its travel services and reduce “customer acquisition cost”.

In terms of personnel, booking’s success in markets across Europe, the United States, and Asia has led to increased efforts by competitors and others to hire booking’s employees which lead to competition for talent in booking has intensified so that they have to increase the personnel expense of talent to attract and retain key talent. Also the competition for talent is exacerbated by an increased willingness of certain companies to offer flexible and remote working policies, which expands the pool of candidates from which our competitors may attract talent.

In terms of market share, there are major differences between the European and Asia-Pacific markets and the U.S. market. In the U.S. booking has a larger market for tourism and therefore is more standardized and centralized.

Yahoo Finance

The above table shows the total revenue of Booking’s major competitors in 2021. One of the more noteworthy ones is that Expedia’s total revenue of $8598millions opens a significant gap with the other competitors and is the most similar to Booking’s total revenue. Also  Expedia is booking’s strongest competitor in Europe Region where Expedia has similar travel packages and travel booking services as booking

Break-even Analysis

In this section, break-even analysis is used as a financial calculation that weighs the costs of a new business, service or product against the sales revenue to determine the break even point. In other words, it reveals the point at which Booking Holdings Inc. will have sold enough units to cover all of the costs.

Below is the result of our break-even analysis:

As we can see, the balance between revenue and cost was relatively risky during the year of 2020 when the COVID-19 started. After 2020, there was a quick recovery as the revenue climbed back to match the normal level before the pandemic. Also, the level of fixed costs (labor, payroll, advertising, etc.) and variable costs are relatively stable throughout the years.

Discounted Cash Flow Model Projections

In this section, we projected unlevered free cash flow into the future 5 years (2022-2026).

Source YahooFinance

Before revealing the result and analysis, there are some assumptions to be disclosed:

• Assume 20% growth rate of EBITDA through 2022-2024 and 4% for 2025
• Long-term growth rate of 4%
• WACC as discount rate at 8%
• Formula: NWC  = Inventory + A/R – A/P
• EBITDA multiple of 17.1x according to the 2022 Forecast by Statista

In the last row, the sum of PV of 5 years’ cash flow is $12,503 MM. Then we calculated the enterprise value by first determining the terminal value in 2026 using two separate methods: 1.) Growth in Perpetuity Method and 2.) EBITDA Multiple Method

1.) Growth in Perpetuity Method

2.) EBITDA Multiple Method

Booking Holdings Inc. has a 78.32 B and a stock price of $1914.57 for Aug.4 2022. As our DCF Model suggests, the EV will probably reach around 83 B and the statistics on the historical EV below, we can see that the estimation is reasonable if Booking Holding Inc. recovers from COVID-19 and the EV goes back to its average level.

When comparing with its competitors, Booking Holdings Inc. has the largest EV so far:

Regarding the equity value, we need to take Net Debt into account. Booking’s net debt / total capital decreased in each of the last five fiscal years from 2.5% in 2017 to -0.6% in 2021. However, it peaked in June 2022 at 11.2%. As there was a downward trend of net debt together with a peak in 2022, we need to further investigate the factors behind the peak in 2022. If the factors are not long-term ones, then the equity value will probably be higher than the current stock price as shown in the table above.

Cash Flow Statement

The operating activities are the sources of cash flows coming from the daily business operations of a company and thus we want to pay attention to the operating cash flow.

The table below shows the net operating cash flow and its growth rate:

As we can see here, the operating cash flow has been damaged by COVID-19, but quickly renounced in 2021.

Industry Average Multiples

The following table shows the industry average multiples and those for Booking Holding Inc. In summary, Booking Holdings Inc. has been the leader of the Online Travel Agencies (Expedia, Airbnb, TripAdvisor, Trip.com, etc.).

Stock Price Analysis

Stock Price Since IPO

Booking Holdings had its initial public offering on March 29, 1999 offering $550 per share. The latest closing stock price for Booking Holdings as of July 18, 2022 is $1738.79.

Source from yahoofinance

From 1999 to present, Booking Holdings’ stock price increased 68% since IPO. In the last 52 weeks, stock price has decreased by -17.27%. At IPO, Booking Holdings’s market cap was $7.86 billion. As of July 18th, 2022, BKNG has a market cap (net worth) of $70.64 billion and enterprise value of $70.20 billion. Since March 31, 1999, Booking Holdings’s market cap has increased from $7.86 billion to $70.64 billion, an increase of 799.06%. That is a compound annual growth rate of 9.88%.

Source from yahoofinance

In 2000, the stock price opened at $307.4385 and ended at $7.8584, decreasing -97.24%. Stock price opened at $8.4583, and ended at $34.9130, increasing 344.28% in 2001. In 2002, year stock opened at $35.0930, and ended at $9.5981, decreased -72.51%. Between 2006 and 2010, Bookings’ stock price increased significantly each year with an average growth rate of 100.4%. After 2010, Bookings’ stock price grew constantly with an average 15.5% yearly growth rate.

The beta measures the price volatility of a stock in comparison to the overall stock market. A value higher than 1 indicates greater volatility. Since the beta is 1.25, BKNG’s price volatility has been higher than the market average.

Index Performance

• Data Collection: Composition of Holders

Relative Performance compared with competitors and indices

The S&P 500 index is indicated by the yellow label and it clearly outperformed the online travel agencies (BNGK, ABNB, TRIP, TCOM, etc.) from 2017 to 2022. Among its competitors, Booking Holdings Inc. has a relatively stable and beyond-average performance throughout the years, as indicated by the blue line.

Source from koyfin.com

Comparative Analysis with S&P 500

In this analysis, we build the CAPM model to measure the risk exposure to the market factor, which is S&P 500. The risk free rate is represented by 10-year treasury yield. The risk exposure is the beta and is highlighted in the table below. We can see that it is 0.24, which is not very sensitive to the market returns.

Market Research

Target market research

• Bookings target customers are those who are familiar and comfortable using apps and websites to reserve hotels, flights, and plan for their trips online for a good price.
• They market their brand by putting ads on social media to show the idea that people can experience the world just by clicking buttons on their devices anywhere they are at.
• They acquire targeted companies by offering them the most downloaded online travel agent platform, tools, and insights to provide customers a variety of choices.

Brand Positioning

Source Bookings.com

• Booking Holdings nowadays is marketed as the largest online travel agency.
• Back in 2000, they were marketed as a tech company that pioneered a unique e-commerce pricing system known as a “demand collection system” that enables consumers to use the Internet to save money on a range of products and services while enabling sellers to generate incremental revenue.
• During the second half of 2000, they experienced a decrease in the momentum of their business, they then shifted focus to traveling business.

SWOT analysis

Strength

• Most known and largest travel agency in the world
• Booking’s app is the most downloaded online travel app globally in 2021, with 63 million downloads.
• Mobile app are easy to use  and with good visibility and in-app experience for flights, ground transport
• Consumers can also use their meta-search services to easily compare travel reservation information, such as flight, hotel, and rental car reservations, from hundreds of online travel platforms at once.

Weakness

• Highly rely on people’s willingness to travel and government’s policy. During COVID-19 from 2020 to 2022, gross travel bookings decreased 63% in 2020 and 21% in 2021. Stock price decreases 27.53% in 2022.
• Business model lacks variety. Over 60% of income comes from the agency business model which earns 10%-30% commission on each booking of its site.

Opportunities

• Expansion through mergers & acquisitions in the online travel industry
• Investment in advanced technologies for providing connected trips
• Tailwinds from growth in travel market and online penetration

Threats

• The adverse impact of the COVID-19 pandemic on their business, financial performance, and travel demand;
• Adverse changes in relationships with travel service providers and restaurants and other third parties on which they are dependent
• Our ability to respond to and keep up with the rapid pace of technological and market changes. Competitors like Google, Apple have a lot more consumers and provide devices which can promote the use of their service.

Conclusion

• Online travel market has good potential growth in the future. Booking Holding is facing a competitive market. In order to maintain their leading position in the market, they can develop new technologies to secure current loyal consumers and attract new consumers, and also expand business models to more travel related industries.

Mergers and Acquisitions

1. To provide a price comparison (often referred to as “meta-search”) service allowing consumers to search and to compare prices for travel services offered by travel service providers and online travel agents (“OTAs”).
2. Offer restaurant reservation services to consumers and reservation management services to restaurants.
3. To enhance the global reach of the meta-search business.
4. European-based flights booking provider. To expand and to enhance flight product
5. To enhance our business-to-business distribution capabilities for hotel partners and more effectively support our accommodations affiliate partners).

Active Hotels:

In September 2004, Booking Holdings acquired Active Hotels Ltd. (“Active Hotels”), a United Kingdom based Internet hotel reservation distributor for approximately $165.4 million in cash, including transaction related costs. Active Hotels works with over 8,500 properties in the United Kingdom and throughout Europe, including international chains and independent properties. Its distribution network encompasses companyowned websites, such as activereservations.com , as well as over affiliated third-party 1,000 websites operating throughout Europe.

Bookings:

Furthermore, in July 2005, we acquired Amsterdam-based Bookings B.V. (“Bookings”), one of Europe’s leading Internet hotel reservation services, with offices primarily in Amsterdam, Barcelona, Berlin, Loule, Paris, Rome and Pisa. Priceline bought Booking.com for a mere $135 million in cash.

Agoda:

In November 2007, we acquired Agoda Company, Ltd. (“Agoda”) and AGIP LLC (“AGIP,” and together with Agoda, the “Agoda Companies”), an Internet hotel distributor with operations in Singapore and Thailand.

TravelJigsaw:

Through TravelJigsaw, which we acquired in May 2010, we offer retail price-disclosed rental car reservations in 80 countries around the world.

KAYAK:

In May 2013, we acquired KAYAK, which provides a price comparison (often referred to as “meta-search”) service allowing consumers to search and compare prices for travel services offered by travel service providers and online travel agents (“OTAs”). KAYAK currently operates primarily in the United States, though it intends to invest more heavily in expanding its international offerings. The transaction values KAYAK at $1.8 billion ($1.65 billion net of cash acquired) or $40 per share of KAYAK (subject to the collar described below), with the Group paying approximately $500 million of the consideration in cash and $1.3 billion in equity and assumed stock options.

OpenTable:

In July 2014 we acquired OpenTable, a leading brand for booking online restaurant reservations. Headquartered in San Francisco, California, OpenTable provides online restaurant reservation services to consumers and reservation management services to restaurants. OpenTable does business primarily in the United States, though it intends to continue to invest in expanding its international offerings. The Priceline Group announced they’d acquired online restaurant reservations leader OpenTable for $2.6 billion. That is an astronomical amount of money. Of course, that’s nothing in the tech world, where WhatsApp went to Facebook for $19 billion, but it is in the neighborhood of acquisitions like Google’s Nest deal ($3.2 billion) or Apple’s deal with Beats ($3 billion).

PriceMatch/ Rocketmiles/ AS Digital:

In 2015, the acquisition of the PriceMatch, with offices in Europe and the U.S., comes after the Priceline Group recently launched its BookingSuite division to create websites and provide the Booking.com booking engine for hotels. PriceMatch is a cloud-based solution geared to provide analytics to hotels to improve performance.

The Priceline Group will acquire Rocketmiles for around $20 million, according to the Wall Street Journal.

AS Digital is an Australia-based provider of table and reservation management tools for restaurants. The Priceline Group has made another move into the restaurant booking world with a deal to buy AS Digital. The company will be integrated into the OpenTable division within Priceline.

Brazilian Travel/ Momondo/ Cheapflights:

Kayak acquires Brazilian travel metasearch site Mundi

In July 2017, the Company completed the acquisition of the Momondo Group, which operates the travel meta-search websites Momondo and Cheapflights, for $556 million , and which is managed as part of the Company’s KAYAK business.

 FareHarbor/ HotelsCombined:

In April 2018, we paid $139 million , net of cash acquired, and issued shares of our common stock in an amount of $110 million in connection with the acquisition of FareHarbor, a leading provider of business-to-business activities distribution services. In November 2018, we paid $134 million , net of cash acquired, to complete the acquisition of HotelsCombined, a hotel meta-search company.

Venga:

May 2, 2019 /PRNewswire/ — Booking Holdings Inc. (NASDAQ: BKNG) today announced it has entered into an agreement to acquire Venga, a guest management platform for restaurants and other businesses. Founded in 2010 and headquartered in Washington, D.C., Venga’s SaaS technology enables its clients to enhance and personalize the customer experience. Following the acquisition, Venga will align closely with Booking Holdings’ brand OpenTable to further improve offerings for its 51,000+ restaurant partners.

Getaroom/ Etraveli:

In December 2021, we completed the acquisition of Getaroom, a business-to-business distributor of hotel rooms, which in conjunction with our Priceline business we expect to increase value for both hotel and affiliate partners, and in November 2021, we entered into an agreement to acquire European-based flights booking provider Etraveli Group.

In November 2021, we entered into an agreement to acquire global flight booking provider, Etraveli Group, for approximately 1.6 billion Euros ($1.9 billion). Completion of this acquisition is subject to certain closing conditions, including regulatory approvals. In December 2021, we paid $1.2 billion, net of cash acquired, to acquire Getaroom, a business-to-business distributor of hotel rooms

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