The Case for Booking Holdings: A Decade of Outperformance and Future Growth Potential

The stock market is a game of patience, and Booking Holdings (BKNG) has proven itself a master of the long game. Over the past decade, BKNG has delivered an annualized return of 15.74%, outpacing the S&P 500's 13.6% and Expedia's 9.06%. While the past year saw a temporary dip-BKNG returned just +5.18% versus the S&P 500's +12%-this short-term volatility masks a company with a durable competitive edge and a track record of compounding value. Let's break down why BKNG remains a compelling long-term play.

A Decade of Compounding: Outperformance with Resilience

From 2015 to 2025, BKNG's 15.74% annualized return reflects its ability to navigate macroeconomic cycles and industry disruptions. Even during the pandemic-driven collapse in 2020, the company's strong balance sheet and digital-first model allowed it to recover swiftly. In Q2 2025, BKNG reported 309 million room nights, an 8% year-on-year increase, driven by growth in Europe and Asia. This resilience is no accident-it's the result of a business model designed to scale with technological innovation and shifting consumer preferences.

Strategic Advantages: The Engine of Growth

Booking Holdings' dominance in online travel is underpinned by three pillars: market share, loyalty, and technology.

1. Market Share and Network Effects: With a 68% share of the online accommodation booking segment, BKNG is the undisputed leader. Its platform hosts 6.8 million global listings, creating a moat that rivals like Airbnb and Expedia struggle to replicate. This scale allows BKNG to leverage data for personalization and pricing power.

2. Loyalty Program (Genius): The Genius loyalty program is a goldmine. Over 30% of active travelers are Level 2 or 3 members, who book more frequently and account for a disproportionate share of room nights. By locking in high-value customers, BKNG reduces reliance on third-party distribution channels and boosts margins.

1. AI and Connected Trips: The company is investing heavily in artificial intelligence to enhance its "connected trip" vision. AI-driven personalization, automated itinerary updates and improved customer service efficiency are expected to drive long-term value. Strategic partnerships with OpenAI, Microsoft, and Amazon further amplify these capabilities.

Financial Fortitude: ROIC, Reinvestment, and Shareholder Returns

BKNG's financials tell a story of disciplined capital allocation and operational excellence. As of September 2025, its ROIC stood at 78.28%, far exceeding its Weighted Average Cost of Capital (WACC) of 10.36%. This excess return is driven by a rising operating margin (31.62% in 2024) and improved asset turnover.

The company's capital allocation strategy is equally impressive. In 2024, BKNG repurchased $6.51 billion of stock and paid dividends totaling $8.75 per share. For 2025, management plans to reinvest in AI, fintech, and alternative accommodations while maintaining a target leverage of 2x gross debt. This balance between reinvestment and shareholder returns ensures BKNG can compound value without overleveraging.

Risks and Realities

No stock is without risks. BKNG's recent underperformance against the S&P 500 highlights the importance of staying ahead of secular trends. The rise of alternative accommodations and the threat of regulatory scrutiny in digital markets are challenges to monitor. However, BKNG's proactive investments in AI and its dominant market position suggest it's well-equipped to adapt.

Conclusion: A Buy-and-Hold Story

For investors with a 10-year horizon, BKNG offers a rare combination of proven compounding, strategic innovation, and financial discipline. Its ability to outperform peers over the long term, coupled with a robust capital allocation strategy, makes it a standout in the travel sector. As the company continues to evolve with AI and connected trips, the question isn't whether BKNG can grow-it's how much it can grow.

Data from Trefis and AlphaSpread indicates BKNG's 10-year annualized return of 15.74% versus the S&P 500's 13.6% and Expedia's 9.06%.
Q2 2025 earnings call data from Booking Holdings highlights 309 million room nights, up 8% year-on-year.
Porter's Five Forces analysis notes BKNG's 68% market share in online accommodation bookings.
Genius loyalty program data from Investing.com shows 30% of active travelers are high-value members.
Booking Holdings' 2025 Goldman Sachs TMT presentation emphasizes AI-driven personalization and connected trips.
Strategic partnerships with OpenAI and Microsoft are detailed in the company's SWOT analysis.
GuruFocus reports BKNG's ROIC at 78.28% as of September 2025.
Historical ROIC and operating margin data from Stock Analysis On Net.
Monexa.ai outlines BKNG's 2024 share repurchases and dividend payments.
Booking Holdings' 2025 capital allocation plans are detailed in Goldman Sachs conference transcripts.