Booking Holdings Leans Into AI as US Consumers Slow Travel Spending

Booking Holdings said Tuesday (July 29) that U.S. consumers reined in their travel spending in the second quarter, while their Asian and European counterparts picked up the slack.

The parent of Booking.com, Priceline, Agoda, Kayak, and OpenTable said the U.S. was its slowest-growing region, up by low single digits in the quarter. Americans were booking shorter and cheaper hotel stays.

But U.S. performance was offset by growth in the high single digits for Europe, low double digits for Asia, and high single digits for the rest of the world.

The result was an 8% increase in the number of room nights booked to 309 million in the quarter from a year ago. Gross bookings — the total value of hotels, rental cars and airfares — were $46.7 billion, up 13%.

“Asia remains central to our long-term strategy. Its size and economic momentum make it an attractive travel market, and our strong position there allows us to benefit from that growth,” Booking CEO Glenn Fogel said during an earnings call with analysts.

“We expect industry growth in the region to be in the high single digits over the medium term, the fastest among our major markets.”

Fogel said the company deployed a “two-brand” strategy in Asia — referring to Agoda.com and Booking.com — along with localizing the user experience, expanding flights and attractions, tailoring payment methods and ensuring travelers engage with the platform in their own language.

Booking also said that connected trips, in which consumers book more than one type of travel, were up 30% year over year. Other strategies include increasing its alternative accommodations offerings, raising the direct and mobile app mix of bookings, expanding its Genius loyalty program and growing its rental car and flight bookings business.

Fogel also said the company is going full bore into deploying generative and agentic artificial intelligence (AI) across its many brands. He cited the following AI initiatives already underway:

Priceline’s AI assistant Penny now has expanded voice capabilities that led to higher engagement rates.

Kayak.ai, the test lab for AI at Kayak, is working on improving products to be more personalized and conversational.

OpenTable rolled out “Concierge,” an AI assistant to help diners research and soon book reservations.

Agoda’s agentic tools enable auto-summarization of cases.

Voice-enabled AI agents in customer service have improved resolution times and raised customer satisfaction scores.

Gen AI also has reduced the number of calls human agents have had to handle in customer service across its brands.

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AI Impact on Travel Searches

Fogel wants to develop an AI version of a human travel agent, one that knows the traveler deeply based on data Booking has about the person. He envisions travelers talking to an AI, which will present what they likely will want in lodging, airfare and rental car all in one spot.

As for making sure its brands surface in searches using AI chatbots, which is a rising trend, Fogel said the company is working with OpenAI, Microsoft, Amazon and others on agentic developments.

“This enables us to stay at the forefront of this rapidly developing field, and we believe will expand our potential sources of new customers in the future,” Fogel said. “Search patterns and travel discovery methods evolve, particularly at the inspiration stage of the travel funnel.”

There has been concern that company brands will have a tougher time getting in front of consumers as Google Search website links give way to summarized answers from AI chatbots like ChatGPT. In addition, Google Search itself offers an AI chatbot in AI Overviews and AI Mode.

Asked if Booking has seen an impact from the use of AI chatbots for travel searches, CFO Ewout Steenbergen said thus far it has not.

“Google clicks continue to hold up quite well. Actually, they’re still growing for accommodations — slightly — still, period over period. We don’t see yet a decline in that,” Steenbergen said.

In the meantime, Booking will try to get more consumers to go directly to its travel websites. At present, the percentage of travelers going direct is in the mid-60s, which was up from the low-60% a year ago, Fogel said.

Booking also spent 25% more on social media channels in the quarter compared to a year ago. “The more channels we can use, the better it is for the company in the future,” Steenbergen said.

In the second quarter, Booking reported net income of $895 million ($27.43 per share), which is 41% lower than $1.52 billion ($44.38 per share) in the same quarter a year earlier.

Adjusted for one-time items, earnings per share was $55.40. Revenue rose 16% to $6.8 billion, up from $5.9 billion year over year.

Analysts were expecting earnings of 50.4 cents per share on revenue of $6.55 billion, according to S&P Global Market Intelligence.

Looking ahead, Booking is expecting revenue growth of 7% to 9% for the third quarter and in the low double-digits for the full year. Adjusted for currency fluctuations Q3 revenue growth is expected at 3% to 5% and in the high single digits for the full year.

Booking expects a 3.5% to 5.5% increase in room nights growth for the third quarter and gross bookings growth of 8% to 10%. For the year, the company expects gross bookings to increase in the low double digits. It did not give an estimate for room nights growth for 2025.

Shares of Booking fell by 1.6% to $87.98 in after-hours trading.

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