- Booking’s outlook disappointed. Booking Holdings expects fourth-quarter gross bookings to grow 2% to 4% from a year earlier, well short of the 7% growth analysts expected. The 3% midpoint is less than half the consensus growth rate by our calculation.
- October was hit from several directions. The company cited “disruptions to travel to and from the Middle East, the conflict’s broader indirect effects such as elevated airfares, and localized unrest in certain European cities.” Paris bookings on Airbnb and other accommodation services slumped after riots and looting in the French capital.
- Third-quarter sales also missed. Revenue fell 1.2% to $8.89 billion, below the $9.54 billion analysts expected, a shortfall of about $650 million, or roughly 7%, by our calculation. Booking said global travel demand “moderated somewhat” toward the end of the quarter, though domestic demand held up.
- AI disruption is the longer-term worry. Investors fear AI agents, such as Meta’s Muse, could bypass online travel platforms by searching and booking flights and hotels directly, according to Bloomberg Intelligence analyst Nicole D’Souza. Booking has been building AI into its own brands and working with AI platforms.
What Happened?
Booking Holdings reported third-quarter results on Tuesday and gave a fourth-quarter outlook below Wall Street expectations. The online travel company said higher airfares linked to the Middle East conflict and unrest in some European cities weighed on demand in October. Revenue declined 1.2% to $8.89 billion, missing estimates of $9.54 billion. Before the report, Truist analyst Gregory J. Miller wrote that the company’s messaging “may still not be sufficient to counterbalance investor fears on AI disintermediation risk.”
Why It Matters?
Booking is a bellwether for global leisure travel, so a soft outlook is an early sign that geopolitics and high fuel costs are starting to hurt consumer travel spending. The revenue decline comes as investors already question the long-term value of online travel agencies in a world of AI agents. Weaker growth makes it harder for the company to argue that its AI investments will defend its position. Other travel names such as Airbnb and Expedia are exposed to the same airfare and Europe trends.
What’s Next?
Watch whether Middle East disruption, high airfares and unrest in European cities ease, since those were the main drags the company cited for October. Investors will also look for more detail on how Booking is working with AI platforms and whether those partnerships bring in bookings. Truist’s Miller said a few quarters of AI agent activity are needed to judge the effect on Booking and its peers, so the AI debate is likely to stay a drag on the stock’s valuation in the meantime.
Affected Tickers and Coins: BKNG, ABNB, EXPE
Source: Bloomberg
