Booking Holdings (BKNG) travels lower as growth slows in July, but record Q3 revenue still expected
1:58 pm Thursday, August 04th, 2022
Booking Holdings’ (BKNG) strong Q2 results provided further evidence that global travel demand has remained robust this summer, even as macroeconomic headwinds intensified. For the fourth consecutive quarter, the company easily surpassed EPS expectations, but the highlight of the report may be that gross bookings jumped by 57% to $34.5 bln, reaching a new quarterly record. Another notable highlight is that room nights climbed by 56% to 246 mln, surpassing 2019 levels for the first time. However, these accomplishments are failing to spark much enthusiasm from investors due to the company’s more cautious outlook for Q3.
During the earnings conference call, CEO Glenn Fogel commented that the pace of growth moderated in July to about 4% for room nights and just over 20% for bookings. The company is facing difficult yr/yr comparisons in Q3, though, with room nights and gross bookings were up by 44% and 77%, respectively, in the year-earlier period. Still, the deceleration does create some apprehension that consumers are starting to dial back a bit on travel spending.
There were plenty of other positive takeaways from the report, as well.
Cancellations rates in Q2 were below 2019 levels and BKNG has seen no evidence that travelers are shortening trip lengths, or, trading down to lower-quality accommodations.
BKNG’s international business, which accounts for roughly half of its revenue, is recovering at a rapid pace. In fact, international room nights were up mid-single-digits over 2Q19, representing the first quarter of growth for international versus 2019.
The improvement was mainly driven by strong travel within Europe, although BKNG also experienced a qtr/qtr improvement in Asia.
As an example, 38% of gross bookings in Q2 were processed through BKNG’s payment platform.
Overall, it was another solid quarter for BKNG as the recovery in travel demand continued to accelerate. A slowdown in bookings growth in July and BKNG’s acknowledgement that visibility is a little less clear due to a shortening booking window is weighing on the stock. However, the big picture view remains quite positive as the company is very confident in the long-term growth potential of travel.
