Booking Holdings will appeal $530M fine by Spanish competition authority

Booking Holdings CEO Glenn Fogel said the company “could not
disagree more” with a draft decision from Spanish regulators that alleges
Booking.com has violated Spanish competition laws and should be fined $530
million.

With a noticeable tone of frustration, Fogel defended the the company’s largest brand, saying Booking.com provides a marketplace that allows hotels and partners to attract travelers “from around the world at a lower cost than many other marketing channels.”

“We could not disagree more with this draft decision and the
arbitrarily large fine which they have proposed, which is completely disproportionate
to the alleged conduct,” Fogel said in a call with financial analysts to
discuss the company’s fourth quarter and full year 2023 financial results.

“If the draft decision were to become final, we plan to appeal.”

Booking Holdings is already working with the European
Commission regarding applicability of the Digital Markets Act, intended to
ensure a high level of competition in digital commerce across Europe, and Fogel
said, “We plan to file our notification for designation under the DMA suit, and
we believe the concerns raised by the Spanish authority overlap with the DMA. We will
continue to work closely with these regulatory bodies to maintain consistent
rules. And most importantly we’ll continue to ensure we are offering the best
possible platform to our partners and our customers.”

Meanwhile the fine – along with expenses related to a
pension fund matter for the company’s employees in the Netherlands – resulted in
a loss of $276 million in 2023 and brought net income in the fourth quarter to
$222 million, down 82% compared with the same period in 2022.

A separate regulatory issue – the decision
by the European Commission in September to block Booking Holdings’ acquisition of
Etraveli Group – did not come up on the call with analysts, although in November
Fogel said
the company would file an appeal. Etraveli provides the technology platform for Booking.com’s flight sales.

Despite that dispute, air ticket bookings were a growth factor
for the company in 2023 – up 57.6% to 36 million tickets booked compared with 23
million in 2022 and up 400% compared with 2019. 

“We see this vertical bring new customers to our platform
while delivering a more complete offering to our existing customers,” Fogel
said.

Room nights booked grew 17% year over year, hitting a record
of more than 1 billion in 2023 – 21% higher than the number booked in 2019,
before the impact of the pandemic. 

Room nights were just one metric that hit record levels for
the company. 

Gross travel bookings for the year were $150.6 billion, up
24% compared with 2022. Revenue was $21.4 billion, compared with $17.1 billion in 2022
and 40% higher than 2019 revenue, pre-pandemic, which was $15.1 billion. Operating
income in 2023 was $5.8 billion, up 14% year over year. 

Marketing expenses for the year were $6.8 billion, up from
$6 billion in 2022. Adjusted EBITDA in 2023 was $7.1 billion, up 24% year over
year.

Results from the fourth quarter of 2023 were also up across
the board. Gross travel bookings came in at $31.7 billion for the quarter, up
16% compared with Q4 2022. Room nights booked increased 9%, and air tickets sold
increased nearly 46% year over year.

Total revenue in Q4 was $4.8 billion and adjusted EBITDA was
$1.5 billion, both up 18% compared with the fourth quarter of 2022. 

Growth plans

In the call with analysts, Fogel said the company is a “meaningfully
larger and faster-growing business” than it was in 2019, and it is now focused
on growing gross bookings, revenue and earnings per share at a faster rate than
it did before the pandemic.

I do believe we have an advantage [in capitalizing on the use of generative AI] because of our size and scale and the capabilities of our people in terms of helping the traveler or in the back offices to be more efficient.

Glenn Fogel – Booking Holdings

One element of fueling that growth, said Fogel, will be testing
the expansion of the Genius loyalty program, which currently is integrated with
stays and car rentals, to all verticals such as flights, attractions, insurance
and rides to bring value to customers across all elements of their trip.

“We’re going to experiment. … This goes back to … AI and how
you use data … when you have these models and you can figure out the best
way to provide a benefit in our loyalty Genius program in a way that provides
value to the traveler. … That’s why they
come back to us, that’s why they come direct. … At the same time Genius is
primarily being funded by our partners because they see value … in providing a
discount or some other benefit that we put in the offering so the traveler will
book what that supplier wants to sell. And doing it in a scientific way … that’s
the thing I love, and that’s why we’re going to continue to experiment on that.”

Fogel also ticked off other elements of the growth plan, including scaling the merchant platform on Booking.com, which processed about half
of its gross bookings in 2023, continuing to expand its flight offerings,
improving performance marketing efficiency and growing Booking.com’s
alternative accommodation business, particularly in the United States.

And he spoke with optimism about the potential of generative
artificial intelligence and the company’s advantages with that technology.

“In some early signs we see that this is going to be just fantastic for
us … One of the things I love is us being in a position because of our financial
position, because of the number of people we have with capabilities to look into
this, because of the data we have … I do believe
we have an advantage because of our size and scale and the capabilities of our
people in terms of helping the traveler or in the back offices to be more efficient,”
he said.

“I certainly believe that we do have the pole position here in the
travel industry.”