Booking Holdings Soars Past Expectations: AI-Powered Travel Boom Fuels $9B Quarter and Signals Consumers Still Can’t Stop Spending

Booking Holdings (BKNG) delivered another strong quarter that reinforces its standing as the dominant global player in online travel, with results that topped expectations and a cautiously upbeat view for the rest of the year. The company posted third-quarter revenue of $9.0 billion, up 13% year over year and above consensus estimates of $8.73 billion. Adjusted EPS came in at $99.50, a 19% increase and nearly $4 ahead of expectations, while gross bookings rose 14% to $49.7 billion, also beating forecasts. The stock gained nearly 5% after hours following the results, as management signaled steady travel demand, disciplined execution, and strong contributions from alternative accommodations, B2B operations, and its Genius loyalty program.

The key numbers tell a clear story: travel demand is holding up despite macro uncertainty. Room nights rose 8% versus the prior year, ahead of analysts’ estimates for 6%, and the company’s 14% growth in total bookings topped projections by more than 3%. Adjusted EBITDA increased 15% to $4.2 billion, yielding a margin expansion of roughly 180 basis points year over year. Merchant bookings were particularly strong, up 26%, now making up about 68% of total gross bookings over the past four quarters. Free cash flow was $1.4 billion, even after $1 billion returned to shareholders through buybacks and dividends. These numbers, alongside improved conversion and lower cancellation rates, show that Booking’s operational focus and technology investments are paying off.

Guidance for the December quarter was steady, if slightly conservative. Management expects Q4 revenue to grow 10–12%, with gross bookings up 11–13% and room nights increasing 4–6%. For full-year 2025, the company sees revenue up around 12%, gross bookings growing 11–12%, and adjusted EBITDA rising 17–18%. EPS is expected to climb slightly more than 20%, supported by margin expansion and Transformation Program savings now targeted at $500–550 million, up from prior expectations of $400–450 million. While the midpoint of Q4 revenue guidance is just shy of consensus, management’s tone was confident, and analysts noted that bookings growth guidance came in above prior forecasts — a positive signal for sustained travel momentum.

CEO Glenn Fogel framed the results as validation of Booking’s platform strategy and long-term vision. He pointed to broad-based regional strength, an acceleration in U.S. demand, and strong growth in both direct traffic and B2B business. The “Connected Trip” initiative — an integrated travel ecosystem where customers can book flights, accommodations, rentals, and experiences seamlessly — continues to gain traction. Alternative accommodations grew 10% year over year to over 8.6 million listings, accounting for 36% of total room nights, underscoring Booking’s ability to compete with Airbnb in the non-hotel space. Fogel also emphasized loyalty gains from the Genius program, where members book more often, cancel less, and display higher retention — effectively creating a walled garden of repeat travelers.

A major theme this quarter was AI. Fogel and CFO Ewout Steenbergen discussed the company’s work with OpenAI, Google, Amazon, and Salesforce, saying early AI integrations are improving personalization and conversion on both the traveler and partner sides. Booking was among the first wave of travel apps integrated into OpenAI’s ecosystem and believes generative tools will enhance the trip-planning process rather than threaten it. Fogel pushed back on the idea that chatbots will disintermediate traditional platforms, arguing that customers still need “execution and fulfillment” — areas where Booking’s infrastructure dominates. This was a subtle but clear response to growing investor worries that AI-driven search could erode the role of OTAs (online travel agencies) over time.

Advertising and marketing strategy remain central to Booking’s growth engine. Steenbergen noted ongoing experimentation in social media marketing, calling it “a couple of hundreds of millions” in spend aimed at capturing younger demographics and high-frequency users. Direct traffic also continues to rise, which improves profitability and reduces reliance on paid channels. Fogel said the company isn’t chasing 100% direct bookings — it’s optimizing for mix — but the trend toward higher direct engagement is a positive signal for long-term margins. Booking’s ability to balance advertising efficiency with loyalty-driven retention differentiates it from peers like Expedia, which has struggled to replicate the same level of direct engagement.

In terms of industry read-through, the results suggest travel remains resilient even as other consumer categories soften. U.S. lodging has leveled off, consistent with commentary from American Express, but international demand, B2B travel, and alternative stays are offsetting any slowdown. The mix of growth — less luxury-led and more diversified across regions and categories — indicates a normalization phase rather than a contraction. Steenbergen did acknowledge that average daily rates (ADRs) and trip lengths are slightly lower year over year, particularly in the U.S., but called these shifts modest and consistent with the overall normalization in travel patterns after two years of post-pandemic surge.

The broader takeaway for the travel industry is that consumers are still prioritizing experiences, though they are becoming more value-conscious. Bookings are shorter and more spontaneous, but the appetite for travel hasn’t faded. Booking’s outperformance against Expedia, its operational efficiency, and its tech-forward investments position it well to capture the next phase of travel growth — one that blends digital convenience, AI-driven personalization, and loyalty retention.

In short, Booking’s quarter reinforced that the travel cycle remains healthy, not euphoric. With room nights up 8%, gross bookings up 14%, and a 19% EPS gain, the company is managing both scale and margin effectively. Its focus on AI, direct engagement, and alternative accommodations ensures it remains at the forefront of a travel market that continues to evolve — and, so far, refuses to cool off.