Booking.com's Q3 2025 Earnings Call: Contradictions in AI Strategy, Conversion Rates, and Direct Booking Approach Highlight Shifting Priorities

Date of Call: October 28, 2025

Financials Results

• Revenue: $9.0B, up 13% YOY
• EPS: $99.50 per share, up 19% YOY

Guidance:

• Q4: room nights expected +4% to +6%.
• Q4: gross bookings expected +11% to +13% (including ~2ppt benefit from flights).
• Q4: revenue expected ~+10% to +12% (noting revenue growth is lower than gross bookings due to higher flight mix).
• Q4: adjusted EBITDA expected $2.0B–$2.1B; margins slightly higher year-over-year.
• Full year 2025: room nights ~+7%; gross bookings ~+11%–12%; revenue ~+12%; adjusted EBITDA ~+17%–18%; adjusted EPS >+20%.
• FX: expected to add ~3ppt to FY gross bookings/revenue and ~4ppt to FY adjusted EBITDA/EPS.

Business Commentary:

* Strong Financial Performance: - Booking Holdings reported double-digit gross bookings and revenue growth, with room nights reaching 323 million, up 8% year-over-year. - The growth was driven by healthy demand across the U.S., which saw high single-digit growth, and a strong performance in Asia.

• Advancements in Connected Trip Vision:
• Connected Trip transactions, involving multiple travel verticals, grew mid-20% year-over-year in the third quarter.

• This development is attributed to enhancements such as a dynamic home screen and new partnerships with airlines like Ryanair and Southwest.

• Expansion of Alternative Accommodations:

• Alternative accommodation listings increased to over 8.6 million, up approximately 10% year-over-year.

• Healthy customer demand and the ability to combine breadth of supply with marketing reach and payment capabilities contributed to this growth.

• AI Integration and Loyalty Programs:

• AI technologies, such as a chatbot at Agoda and KAYAK's AI Mode, are enhancing customer experiences and driving more personalized

Sentiment Analysis:

Overall Tone: Positive

• Management: "I'm pleased to report another strong quarter" with "double-digit gross bookings and revenue growth." Room nights +8% YOY; gross bookings $50B +14% YOY; adjusted EBITDA $4.2B +15% and adjusted EPS +19% YOY. Management raised full-year guidance and highlighted progress on Connected Trip, Genius loyalty and AI initiatives as drivers of long-term value.

Q&A:

• Question from Kevin Kopelman (TD Cowen): I was hoping to dig in on your U.S. acceleration in Q3. Could you talk about your B2B initiatives in the U.S. that you mentioned and maybe globally? And then it sounds like B2C also accelerated in the U.S., so any additional color on what you saw as the key drivers there would be great.
  Response: U.S. acceleration reflects both B2B contract wins and stronger B2C (brand, product, marketing) performance, with a notable lift from increased direct bookings.

• Question from Douglas Anmuth (JPMorgan Chase & Co): I know you were early in the test program with OpenAI as well, but can you talk about your thought process heading into the app integration and what you're seeing in the early days? And just how should we think about economic impact if bookings were to shift from direct traffic or from Google?
  Response: Early OpenAI integration is promising but nascent; leads from LLMs are small but growing — Booking expects to leverage its execution, payments, regulatory expertise and proprietary data to retain economic value and improve conversion.

• Question from Lee Horowitz (Deutsche Bank AG): Maybe sticking with the AI topic. There's obviously a lot of noise in the market around some of your hotel partners looking to partner directly with some of the generative search players in order to perhaps increasing the bypass platforms like yourselves. I guess how do you contextualize this particular risk? And what tools do you think you have at your disposal to maybe mitigate this kind of disruption?
  Response: Management views direct hotel-to-LLM risk as limited today; Booking's product value, trust, scale and Genius loyalty (high direct mix) make large-scale bypass unlikely.

• Question from Mark Stephen Mahaney (Evercore ISI): I wanted to ask 2 topics, please. First is social media, I think you mentioned kind of leaning into social media marketing. I think you've been talking about this for a year and maybe to -- could you spend a little bit more time on that? Has that now become a material, let's say, a double-digit percent of your performance marketing coming from there? And do you find that the returns have been continually improving. And then Asia, you [ ripped ] on Asia in the opening comments. So could you peel that back a little bit? Are there particular parts within Asia that have really started to perform better for you. You've been -- I know that the region as a whole has got the world's highest travel growth rates. But do you feel like with the Agoda and Booking that you've been particularly able to penetrate certain markets better than others?
  Response: Social: experimenting and scaling ROI-focused social performance spend ("couple hundred million"), diversifying channels; Asia: strong growth driven by two-brand strategy — Agoda localizes while Booking.com provides global reach, holding leadership outside Mainland China.

• Question from Ronald Josey (Citigroup Inc.): I have 2, please. Glenn, as entry points to the web and booking involved here given just newer tools and OpenAI being one of them, can you talk to us how maybe this evolves or changes your strategy to attract to call it 30%, 35% or so traffic that's not direct. So a question about how the front end is changing and sort of thoughts there. And then on the product side, look, seeing tons of innovation with AI Trip Planner, Penny, hotel search, AI Mode, concierge. I think you talked about the homepage is unique now per user. Talk to us about the impacts this might be having on either cancellation rates, conversion rates, things along those lines.
  Response: To increase direct share management emphasizes brand awareness and continuous product/service improvements; AI/product enhancements are improving conversion, lowering cancellation rates and reducing customer-service costs.

• Question from Justin Post (BofA Securities): Great. A couple. First, I'd like to dive into the U.S. It really seems like the OTA industry is maybe taking some share here. Just wondering if it's the loyalty program, leisure growing faster than business, what's helping the industry take share and you specifically take some share? And then on the algorithm, just wondering, there's a lot of stuff going on with Connected Trip. Obviously, payments and more air. Just could you help us think about how both bookings could grow relative to nights and also how you're thinking about revenue take rates over the next couple of years?
  Response: U.S. share gains tied to improved brand/product and loyalty; Connected Trip is scaling (flights +32%, attractions ~+90%, payments mid-20%), and management expects gross bookings to outpace room-night growth over time as ADRs and verticals expand.

• Question from Justin Post (BofA Securities): Maybe one quick follow-up. Do you think the gap between bookings growth and room night growth can grow?
  Response: Yes — bookings can grow faster than room nights as ADRs and other verticals (flights, payments, attractions) increase their contribution.

• Question from Trevor Young (Barclays Bank PLC): Glenn, maybe a bigger picture one for you. From a competitive standpoint, do you foresee competitive intensity picking up over the next 2 to 3 years? It seems as though a major Asia player has aspirations in Europe while an accommodation competitor is making a big push into traditional hotels and adjacencies. Meanwhile, consumers will have a new channel via AI tools to make travel all that much more accessible. And if you do see competitive intensity picking up, how are you evolving your strategy to better position Booking for that environment?
  Response: Competition will remain intense, but Booking's scale, proprietary data, AI capabilities and multi-vertical offerings are durable advantages that management believes will position the company to accelerate growth if executed well.

Contradiction Point 1

AI Tool Impact on Conversion and Cancellation Rates

It involves the impact of AI tools on conversion and cancellation rates, which are crucial for understanding the effectiveness of Booking Holdings Inc.'s strategy in managing customer experiences and operational efficiency.

How is the evolution of web tools like OpenAI influencing your strategy? How are AI tools affecting cancellation and conversion rates? - Ronald Josey(Citi)

2025Q3: AI tools are helping reduce cancellations and improve conversion rates by providing more targeted and efficient customer experiences. - Glenn Fogel(CEO)

What changes have been made to the attractions strategy to enhance appeal? Can you outline the roadmap and deployment plans for AI-powered tools? - Mark Mahaney(Evercore ISI)

2025Q1: Overall, AI tools are improving conversion rates and reducing cancellations for the customers. - Glenn Fogel(CEO)

Contradiction Point 2

AI Integration and Strategic Focus

It highlights a shift in the company's strategic focus and approach to integrating AI technologies, which could impact future product development and competitiveness.

Can you explain your approach for the OpenAI app integration and how it may affect bookings from direct traffic and Google? - Douglas Anmuth (JPMorgan)

2025Q3: We are one of the first apps on OpenAI's ChatGPT App Store, which indicates our value to partners. The future of travel discovery may shift, but our focus is to provide value beyond discovery, such as transaction fulfillment, payments, and regulations. We are confident in our ability to lead in the travel industry given our scale and expertise. - Glenn Fogel(CEO)

What are the key technological hurdles for scaling GenAI assistance? - Brian Nowak (Morgan Stanley)

2025Q2: We believe that AI will be something that differentiates us going forward particularly with the GenAI capabilities that we're adding to our platform. We've already started early in areas of alternate accommodations and Connected Trips and other parts of that. And we're excited about the fact that we're a pioneer and we're leading in this area. - Glenn D. Fogel(CEO)

Contradiction Point 3

Direct Bookings and Market Strategy

It concerns the company's approach to direct bookings and market strategy, which are key elements of their business model and growth plans.

How do you assess the risk of hotel partners partnering directly with generative search players, and what strategies do you have to address the disruption? - Lee Horowitz(Deutsche Bank)

2025Q3: We expect a similar shift to what we saw with Google, where some customers may bypass platforms. However, our focus remains on providing value beyond initial discovery, such as transaction execution and partner communication. Our 60% direct booking rate and Genius program's value are significant factors keeping customers engaged. - Glenn Fogel(CEO)

Have you observed concerning trends in the U.S. market that could impact your strategy? What are your views on the high watermark for direct mix and AI tools’ impact? - Lee Horowitz(Deutsche Bank)

2025Q1: Direct mix growth is positive, but no specific target is set, as all customers are valued. - Glenn Fogel(CEO)

Contradiction Point 4

Focus on B2B and B2C Growth in the U.S.

It highlights a shift in focus and strategy for growth in the U.S. market, which could impact future business development and market positioning.

What drove the U.S. acceleration in Q3? What are the key drivers of growth in B2B and B2C segments? - Kevin Kopelman (TD Cowen)

2025Q3: B2B growth is strong, with good contracts being won. - Glenn Fogel(CEO)

How do you assess the risks from agentic platform competition? Are there concerns that agentic AI platforms might bypass your listings to book directly with hotels? - Lee Horowitz (Deutsche Bank)

2024Q4: We've seen a very strong growth in B2B bookings across all regions. - Glenn Fogel(CEO)

Contradiction Point 5

AI Integration and Impact on Travel Search

It reflects differing perspectives on the impact of AI integration and how it might affect the company's position in the travel search market.

How do you expect the OpenAI app integration to impact bookings from direct traffic or Google? - Douglas Anmuth (JPMorgan)

2025Q3: We are one of the first apps on OpenAI's ChatGPT App Store, which indicates our value to partners. - Glenn Fogel(CEO)

How do you see AI impacting the top or bottom line, specifically revenue growth and cost savings? - Stephen Ju (UBS)

2024Q4: AI tools are helping reduce cancellations and improve conversion rates by providing more targeted and efficient customer experiences. - Glenn Fogel(CEO)