Booking’s Fogel sees signs of “record summer travel season”

When Booking Holdings CEO Glenn Fogel is worried about the future, he looks at what he calls his “smoke signals.”

Are travelers booking hotels with fewer stars in their ratings? Are they staying fewer nights, or shifting to less expensive destinations? Trends in any of those directions might portend darker days ahead for the travel industry.

“I do not see that yet,” Fogel said Thursday evening in a call with financial analysts to discuss the company’s second quarter earnings. “I do not see that in any of those areas.”

Instead of a dark haze blotting his horizon, Fogel is seeing rainbows.

Gross travel bookings came in at a record $39.7 billion for the quarter, an increase of 15% from the same period last year and, more notably, topping the $39.4 billion reported in the first quarter this year, which had been the company’s previous high.

Those figures helped drive total revenues to $5.5 billion, a year-over-year increase of 27%, and net income to $1.3 billion, which rose 51% year over year. Adjusted EBITDA was $1.8 billion, 64% higher than last year and significantly higher than the company’s expectations, Fogel said.

“In the second quarter we continued to see robust leisure travel demand, which helped drive the strong results we are announcing today,” he said.

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Some of the other numbers: Marketing expenses for the quarter were $1.8 billion, up 4% from last year. And the number of booked room nights went up 9% year over year.

But the signals were even better. Looking at what happened in the first month of the new quarter, Fogel saw growth rates that more than doubled Q2’s 9% rise.

“We estimate July room nights will increase about 20% year over year,” he said, later calling it a sign of what the company expects could be “a record summer travel season.”

“Overall, we have been very pleased to see our strong performance in the first half of the year, which has benefited from the continued strength and resiliency of overall travel demand,” Fogel said. “Our solid start to the year combined with what we currently believe will be a new, all-time high for Q3 summer travel period results in an improved outlook for the full year.”

Beyond celebrating the numbers, Fogel also spoke to the company’s investments in things like artificial intelligence and connected trips.

“We’re seeing progress and momentum across several important initiatives, which will help strengthen our business over the long term,” he said. “These initiatives include advancing our connected trip vision, further integrating AI technology into our offerings, continuing to grow alternative accommodations and building more direct relationships with our travel bookers.”

The vision of travelers using a Booking Holdings brand to plan, book and enjoy their travels – as if carrying a travel agent in their pockets, Fogel suggested – is a long-held ambition. He sees it simplifying things for travelers, while giving suppliers more opportunities to personalize and merchandize their offerings – binding both more closely to the Booking Holdings platforms.

“Over time, you will see incremental improvement and enhancements to our platform that move us another step forward to this long-term vision,” he said. “Importantly, this approach allows us to enjoy the benefits while we’re building toward that future state.”

A key piece to solving that puzzle is AI. Fogel referenced a couple of initiatives that further the company’s goals.

In June, Priceline unveiled a suite of more than 40 new tools and updates for travel planning and booking, including an artificial intelligence-powered chatbot built on technology from both OpenAI and Google. “Penny” is the name for the new chatbot that is part of Priceline’s “Trip Intelligence” suite.

Also in June, Booking.com added conversational chat capabilities to its mobile app. The new AI Trip Planner combines the online travel agency's existing machine learning systems with OpenAI’s ChatGPT application programming interface so users can receive travel recommendations based on preferences they describe in natural language.

“We believe the current travel experience is much more complicated, fragmented and frustrating to travelers than it should be,” Fogel said. “Eventually, our connected trip vision will greatly improve it via technology.”