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Booking Holdings (NASDAQ: BKNG)
Q4 2024 Earnings Call
Feb 20, 2025, 4:30 p.m. ET

Booking Holdings Closes 2024 with Strong Financial Performance

Key Highlights from the Earnings Call

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to the fourth quarter 2024 conference call for Booking Holdings. Please be aware that this call may contain forward-looking statements, which are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements

Generative AI: A Game Changer for Travel Services

As the travel industry adapts, a focus on AI innovation is shaping future experiences.

AI-Powered Innovations Enhance Travel Experiences

From being pioneers in large-scale A/B testing to embracing mobile apps and machine learning, our company has evolved significantly to meet the needs of travelers and partners. We anticipate that AI-driven features, such as a travel-specific agent, will be key to providing a more personalized journey. By integrating AI agents, we aim to seamlessly connect various travel elements on our platform, enhancing the overall user experience. Our commitment to advanced technology continues with generative AI initiatives, including Booking.com’s AI trip planner and Priceline’s AI travel assistant named Penny.

Collaboration Fuels Advanced AI Developments

We are encouraged by OpenTable’s successful use of Salesforce’s Agentforce platform, and we recognize the strides made by Agoda and Kayak in the generative AI space. As we incorporate this technology, we anticipate that it will improve our ability to attract and satisfy travelers and partners, who depend on our technology to grow their businesses. Importantly, we believe that generative AI will enhance operational efficiency, potentially slowing fixed expenses growth in 2025. We’re already noticing positive changes in customer service and partner interactions, and we intend to build on these early achievements.

Harnessing Generative Models for Enhanced Value

Our collaboration with leading generative AI organizations demonstrates our eagerness to stay at the forefront of this evolving technology. Historically, our approach has been to explore various sources of customer traffic, and this remains constant as we anticipate that these agentic models will transform how users interact with our platforms. Implementing these models allows us to provide unique value through competitive pricing, loyalty rewards, and top-notch customer service, which are critical for securing customer trust and repeat business.

Connected Trip Vision Gains Momentum

Our commitment to the connected trip vision has shown tangible results, with transaction growth accelerating over 45% year-over-year in the fourth quarter. Connected transactions accounted for a significant portion of Booking.com’s total activity. In 2024, travelers booked nearly 50 million airline tickets through our platforms, marking a 38% increase and yielding a gross bookings value of $13.1 billion. This growth not only attracts new customers but also enhances the experience for existing users.

Empowering Partners through Technology

We believe that combining generative AI with our machine learning capabilities can significantly support our supplier partners, particularly small and medium-sized businesses. The expanding merchant offerings at Booking.com are a key aspect of our connected trip vision, allowing for increased flexibility and the ability to market across different categories. Merchant gross bookings reached 59% of total bookings in 2024, exceeding our initial expectations.

Strengthening Loyalty and Direct Booking

Booking.com’s Genius loyalty program enhances our ability to connect travelers with various aspects of their journey. As we expand this program beyond accommodations, we have observed a rise in travelers advancing to higher Genius tiers, representing over 30% of our active users. These tiered travelers account for a substantial share of Booking.com’s room night bookings, reflecting a higher likelihood of direct bookings compared to other customers.

Alternative Accommodations Continue to Shine

In terms of alternative accommodations, we witnessed a year-over-year growth, with listings reaching 7.9 million by the end of Q4, a rise of roughly 8%. This increase on our platform has contributed to strong growth, with alternative accommodations seeing room night growth of 19% in the fourth quarter alone. We remain dedicated to being a reliable partner for accommodation providers, particularly independent businesses, by driving travel demand and supporting their success.

Looking Ahead

Lastly, our transformation program is underway, and we look forward to sharing further insights as we reinforce our organizational structure and goals.

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Booking Holdings Reports Strong Growth in Fourth Quarter 2024

Substantial Room Night Gains and Record Revenue Highlight a Productive Year

Amid significant changes, Booking Holdings is modernizing processes, planning workforce reductions, optimizing procurement, and exploring real estate savings. The company is currently discussing potential workforce adjustments with works councils and employee representatives. Although these decisions are challenging, the company believes that they are essential for boosting agility and enhancing operational efficiency.

Resource reallocation across strategic initiatives is vital for maintaining global competitiveness. This approach could lead to steadier top-line and earnings growth in the long term. Reflecting on 2024, highlights include the hard work of our teams who have advanced strategic initiatives and delivered strong financial results. The integration of generative AI technology further positions the company to improve its offerings for customers and partners.

Next, I’d like to introduce our Chief Financial Officer, Ewout Steenbergen.

Ewout Steenbergen — Chief Financial Officer

Thank you, Glenn, and good afternoon. I am excited to share our results for the fourth quarter and the entire year of 2024, along with our outlook for 2025. Note that all growth rates are year-over-year comparisons. For details on reconciling non-GAAP results to GAAP results, please refer to our earnings release.

A summary earnings presentation, along with our prepared remarks, will be available on the Booking Holdings investor relations website following this earnings call. Now, let’s examine our fourth quarter and annual performance. Room nights in Q4 increased by 13%, surpassing our guidance by 5 percentage points. This growth was fueled by strong performances across all regions, particularly in Europe.

Breaking down room nights growth in Q4 by region: Europe saw a low double-digit increase, Asia experienced a mid-teens rise, the rest of the world grew around 20%, and the U.S. increased approximately 10%. We are pleased with the progress in improving experiences for our travelers and partners, which aligns with our connected trip vision. Key initiatives include growth in alternative accommodations, a focus on direct and mobile app bookings, and expansion of our Genius loyalty program.

Regarding alternative accommodations at Booking.com, Q4 room night growth accelerated to 19%, outpacing the overall business growth. The global mix of alternative accommodation room nights accounted for 33%, a 1 percentage point improvement from Q4 2023. Strengthening direct relationships with travelers has resulted in increasing loyalty on our platforms. For the full year, the direct channel contributed to mid-50% of total room nights, showing year-over-year growth.

Excluding our B2B segment, our B2C direct channel mix was in the mid-60% range, improving from the low 60% range in 2023. Mobile app bookings comprised mid-50% of total Q4 room nights, an increase from the low-50% range last year. Our Genius loyalty program saw room nights booked by travelers in tiers 2 and 3 rise to the mid-50% range in 2024, up from the previous year.

In addition, the company booked approximately 14 million airline tickets across platforms in Q4, marking a 52% growth driven by our expanding flight offerings on Booking.com and Agoda, up from 39% growth in Q3. Gross bookings for Q4 increased by 17% year over year and rose about 18% on a constant currency basis—5 percentage points higher than room night growth, thanks to increased flight bookings and a 2% rise in constant currency accommodation average daily rates (ADR). The year-over-year ADR increase was partly a result of a higher mix of room nights coming from Asia. After adjusting for regional mix, constant currency ADR rose about 3% compared to Q4 2023.

This increase in gross bookings exceeded our high-end guidance by 8 percentage points due to unexpectedly higher room night growth and stronger constant currency accommodation ADRs and flight ticket growth, mitigated slightly by about a 1% effect from foreign exchange changes. Q4 revenue reached $5.5 billion, a 14% year-over-year growth that also exceeded our high-end guidance by 5 percentage points. Constant currency revenue growth stood at about 15%. Revenue as a percentage of gross bookings dropped to 14.7%, less than anticipated because of timing and a greater proportion of flight bookings.

The timing impact resulted from accelerated bookings in Q4 with a longer expected booking window. Additionally, revenue as a percentage of gross bookings declined year over year, influenced by timing and an increased mix of flight bookings, which was partly offset by heightened revenues from payment services. We expect some timing effects from Q4 will benefit revenues in 2025. Marketing expenses, a variable cost line, rose by 10% year over year.

As a percentage of gross bookings, marketing expenses were 4.2%, improving by approximately 30 basis points over Q4 2023 due to lower brand marketing expenses and a higher direct mix, although spending on social media channels increased with attractive returns on investment. In Q4, sales and other expenses accounted for 2% of gross bookings, unchanged from last year despite a higher merchant mix, as increased payment costs were counterbalanced by improved customer service efficiencies. Adjusted fixed operating expenses were up 9% year over year, better than expected, mainly due to the decrease in IT and G&A expenses.

Adjusted EBITDA reached $1.8 billion, growing 26% year over year and exceeding our highest guidance range by 12%—largely a result of higher revenue and favorable fixed operating expenses. The adjusted EBITDA margin in Q4 was 33.8%, up about 320 basis points from last year, driven mainly by improved management of fixed and marketing costs. Adjusted EPS hit $41.55 per share, a 30% increase supported by a 5% lower average share count compared to Q4 2023. On a GAAP basis, net income for Q4 was $1.1 billion, affected by a mark-to-market adjustment to the conversion option premium for our convertible notes maturing in May 2025, although mostly countered by remeasurement gains on euro bonds. Both items were excluded from our adjusted figures.

Examining the full year, we are pleased to report a 9% growth in room nights compared to the previous year. Regionally, we observed room nights growth as follows: Europe increased high single digits, Asia experienced mid-teens growth, the rest of the world saw high single digits, and the U.S. grew in the mid-single digits. European bookers represented about…

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Company Reports Strong Growth and Strategic Initiatives for 2024

In 2024, room nights booked reached impressive levels, with Asian bookers accounting for approximately a quarter and U.S. bookers making up a low double-digit percentage. This surge directly contributed to higher gross bookings, revenue, and adjusted earnings per share (EPS) that surpassed our long-term growth targets.

For the year, gross bookings rose by 10%, while revenue increased by 11%. Notably, on a constant currency basis, both values saw a growth boost of approximately 1 percentage point. Revenue as a percentage of gross bookings stood at 14.3% in 2024, a slight increase from 14.2% in 2023. This shift was largely influenced by higher revenues from payment processes, even as more flights were booked. Overall, the accommodation take rates remained stable year over year.

In terms of marketing expenses, they accounted for 4.4% of gross bookings in 2024, a slight decline from 4.5% in the previous year. This decrease was driven by a higher direct mix and lower brand marketing costs, alongside improved returns on performance marketing. However, greater investments in social media, which emerged as a major channel in 2024, moderated the overall impact. Adjusted fixed operating expenses rose by 8% year over year, a noteworthy achievement that exceeded initial forecasts of low to mid-teens growth at the year’s outset. This improvement stemmed from various management initiatives throughout the year.

Adjusted EBITDA surpassed $8 billion, marking a 17% increase over the previous year, and an 18% rise on a constant currency basis. The company was pleased to generate $1.2 billion more in adjusted EBITDA compared to 2023, contributing to profitable growth and margin expansion while continuing investments in key strategies.

The adjusted EBITDA margin improved to 35%, reflecting a 170 basis point growth from 2023 and surpassing our expectations at the start of the year. It is important to note that all profit metrics include the impact of stock-based compensation, a genuine expense of conducting business. Adjusted EPS exceeded $187 per share, which reflects a remarkable 23% increase over the prior year and nearly 24% growth on a constant currency basis. Additionally, our average share count was 7% lower than in 2023, largely due to our share repurchase program.

Turning to the financial position, our cash and investments totaled $16.7 billion at the end of the fourth quarter, marking an increase from $16.3 billion in the third quarter. This growth was driven by approximately $1.9 billion in debt raised in November and about $650 million in generated free cash flow, though partially offset by around $1.4 billion in capital returns, including stock repurchases and dividends. In the fourth quarter, free cash flow faced pressures totaling about $825 million due to changes in working capital, primarily resulting from seasonal shifts in deferred merchant bookings.

Over the full year, stock repurchases amounted to roughly $6 billion, alongside $1.2 billion in cash dividends. Since the start of our repurchase program in early 2022, we have bought back nearly $23 billion in stock, which represents 21% of our outstanding shares at that time. As of 2024, we still have approximately $7.7 billion remaining under our current repurchase authorization. Looking ahead, we remain dedicated to strategically investing in our business while also returning capital to shareholders, supported by a newly approved $20 billion share repurchase plan and a 10% increase to our quarterly cash dividend per share.

These initiatives reinforce our confidence in our earning potential, strong free cash flow, and ability to consistently return capital to shareholders through buybacks and dividends. Anticipating the first quarter, we expect the extra day in February 2024 to pose about a 1 percentage point headwind to our growth rates. Additionally, the Easter calendar shift from March 2024 to April 2025 is expected to have mixed impacts on room night growth and revenue. We predict room night growth between 5% and 7%, benefiting slightly from the Easter timing change.

We also forecast first quarter gross bookings to rise within a 5% to 7% range, facing about 4 percentage points in foreign exchange (FX) impacts, but offset by positive flight ticket growth and a 1% increase in constant currency accommodation average daily rates (ADR). Revenue growth for the first quarter is projected between 2% and 4%, accounting for a 3 percentage point headwind from FX changes and the Easter calendar shift. Adjusted EBITDA for this quarter is expected to fall between $800 million and $850 million, representing a decline of 5% at the high end, influenced by the seasonal factors mentioned.

When normalizing for the impacts of unique calendar events and FX changes, we expect low double-digit growth in gross bookings, revenue, and adjusted EBITDA for the first quarter. For the full year 2025, our goal is to achieve constant currency growth rates of at least 8% for both gross bookings and revenue, along with a 15% increase in adjusted earnings per share. We are optimistic about meeting these targets, thanks to the foundational investments made to strengthen our business and enhance offerings for travelers and partners. At current FX rates, we estimate FX changes will affect reported growth rates by about 3 percentage points for gross bookings and revenue, and around 3.5 percentage points for adjusted EBITDA and EPS.

Thus, we anticipate full-year reported gross bookings and revenue will rise in the mid-single digits, while constant currency figures will see high-single-digit increases. We plan to drive efficiency in marketing expenditures and expect revenue to outpace adjusted fixed operating expenses, aligning with our commitments for 2025 discussed last year. Consequently, we foresee adjusted EBITDA growth outpacing revenue growth by a couple of percentage points, and increasing low double digits on a constant currency basis.

In 2025, we expect to extend our adjusted EBITDA margins, targeting a growth rate close to 100 basis points. Our adjusted EPS is anticipated to rise in the low double digits overall, with mid-teens growth on a constant currency basis. Lastly, we aim to maintain discipline in managing capital expenditures, projecting them to remain around 2% of revenue, consistent with 2024 levels. Our new transformation program, announced in November, aims to simplify our organization and improve agility, with expected annual savings of about $400 million to $450 million compared to 2024 expenses. We have already realized over $35 million in savings to date.

Estimates of the total transformation costs over the next few years will parallel the anticipated annual savings, and these costs will be transparently reported separately. Overall, we believe the strategies set for 2025 and beyond will strengthen our position in the market and enhance shareholder value.

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Investment and Innovation Fuel Long-Term Growth: A Look Ahead

Transformational Savings and Strategic Reinvestment

Company guidance anticipates approximately $150 million in cost savings from a transformation program, primarily targeting variable costs. In addition to these savings, further efficiencies are expected to be realized across our ongoing operations. With the financial capacity generated by these initiatives, the company plans to reinvest around $170 million in 2025, augmenting our baseline investments. This reinvestment supports strategic priorities aimed at long-term value creation while allowing for an expansion of adjusted EBITDA margins. Key areas of focus for these investments include developing generative AI capabilities, enhancing our connected trip vision, and broadening our fintech services.

These initiatives are expected to yield additional revenue growth in subsequent years and present favorable returns. To conclude, we are satisfied with our fourth-quarter performance and optimistic about the outlook for the first quarter and the entirety of 2025. Our long-term vision involves leveraging technological advancements, such as generative AI, to enhance our offerings and create a more connected travel experience. I would like to thank all my colleagues for their dedication and hard work in driving technological innovation and delivering value to our shareholders, travelers, and partners.

We are now ready to take your questions. Operator, please open the lines.

Questions & Answers:

Operator

[Operator instructions] Your first question is from Lee Horowitz with Deutsche Bank.

Lee Horowitz — Analyst

Hi, thank you for the question. I’d like to start with Glenn and discuss generative AI. I appreciate the detailed insights on your product rollouts. However, I’m curious about the risks related to increased competition from agentic platforms that have substantial investment aimed at creating functional AI agents capable of bypassing traditional booking setups and going directly to hotels. Any thoughts on how this might impact your business would be helpful, along with a follow-up I’m interested in as well.

Glenn D. Fogel — President and Chief Executive Officer

Hi Lee, thank you for the question. It’s not an unexpected one. I’ve been with the company for nearly 25 years and have regularly heard concerns about being disintermediated, whether it was by hotels establishing their own websites or by Google. New technology inevitably raises questions about business impact. However, one of our company’s strengths is our capacity to adapt by leveraging our resources, technological expertise, and the talent of our team. Regarding agentic AI, data plays a crucial role, and we are constantly exploring how to ensure that we remain leaders in this evolving landscape.

One initiative involves developing a travel-specific AI agent, which is part of our ongoing efforts. While I won’t share all our strategies, I can assure you that we’re collaborating with major industry players to create beneficial solutions together. Historically, we’ve demonstrated the ability to adapt, and I’m optimistic about the potential of generative AI and related technologies to present new opportunities.

Lee Horowitz — Analyst

Thanks, Glenn. That’s helpful.

Ewout Steenbergen — Chief Financial Officer

I’d like to add to Glenn’s perspective. As we know, developers of large language models are making significant capital investments. Their choices could either involve navigating the complexities of the travel sector on their own or, more likely, partnering with us, as they currently do. Our unique ability to offer monetization opportunities is vital for demonstrating the returns on such substantial capital expenditures.

Lee Horowitz — Analyst

That makes sense; thank you. I have a follow-up question regarding alternative accommodations. It seems clear that you’ve been gaining market share. Can you elaborate on which regions have contributed most to your robust growth rate in this segment for 2024? Furthermore, where do you plan to invest more in 2025, and what aspects of your offerings are resonating so well with consumers, helping you outperform competitors?

Ewout Steenbergen — Chief Financial Officer

Great question, Lee. Our alternative accommodations growth has been strong across all global regions, outpacing traditional accommodations. This growth can be attributed to the comprehensive offerings we provide, combining both traditional and alternative accommodations on our platform. This allows travelers to compare and choose the best option for their needs, which has been well-received. Our ability to provide this comprehensive experience is a key reason for our continued growth.

Glenn D. Fogel — President and Chief Executive Officer

It’s worth recognizing our team for their exceptional efforts. For 14 out of the last 15 quarters, we have led in this space, not as a small player but with substantial room night numbers—more than two-thirds compared to the market leader. It’s a testament to what we’ve achieved in a sector where many doubted our potential.

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Airline Growth Soars as Travel Service Innovator Charts New Paths

Lee Horowitz — Analyst

Helpful. Thank you both.

Operator

Your next question is from the line of Mark Mahaney with Evercore ISI.

Mark Mahaney — Analyst

OK, let’s see, I’d like to ask about airlines and then Operator. On the airlines, that growth you had, you talked about it a little bit on the call, but that’s the — I think the fastest growth you’ve had in, I don’t know, year and a half or something like that. So, maybe just talk about the growth going forward, like, how much higher do you think the attach rate could be or how many more markets is the — do you still have the airline offering to roll out in? Like, just give us a sense of what inning we are in terms of the growth of airline as a product in the booking portfolio. And then, could you talk a little bit about the Operator experience you have? Anything you’d disclose on the economics? How did that partnership come together? And what do you expect to get out of that going forward? Thank you very much.

Glenn D. Fogel — President and Chief Executive Officer

Sure. Hi, Mark. It’s Glenn. Yes, we are very excited about the recent flight numbers.

The growth rate reached 52%, which marks an increase from 39% in the previous quarter. This upward trend is encouraging. However, it’s crucial to remember that growth may not persist in a straight line indefinitely. We expect to see a continued strong performance in our flight business, not solely by expanding into new markets but primarily by enhancing service quality.

The objective is to provide a more compelling reason for travelers to choose our services over other flight booking options. This involves integrating our flight offerings into what we call a “connected trip,” alongside additional value offerings like hotels, discounted ground transportation, travel insurance, and more. The ultimate goal is to establish a seamless travel planning experience, effectively creating what we refer to as the “travel agent in your pocket,” accessible through smartphones. Many travelers begin their planning with flights, and we aim to leverage this to offer comprehensive value once they engage with our platform. Positive word-of-mouth will also help sustain our growth across all service categories, not only flights.

Regarding Operator, we’re still in the early stages. I must admit, we cannot disclose specific financial details at this moment. This area, in partnership with a respected AI expert, is still under development, and we’re focused on exploring how we can mutually benefit from this collaboration. The concept reminds me of our early days, where initial iterations left much to be desired. Our website from 1999 was far from user-friendly, and today’s experience is still evolving. We’re committed to improving it, and this partnership is part of that journey.

Mark Mahaney — Analyst

All right. Thanks, Glenn.

Operator

Your next question is from the line of Brian Nowak with Morgan Stanley.

Brian Nowak — Analyst

Great. Thanks for taking my questions. Glenn, I have one for agentic for you. Just want to ask a question.

When considering partnerships with companies like Operator or Gemini, what strategies do you have in place to manage the risks that could arise if more travelers start using these services instead of coming directly to you in the next several years? How might this affect your balance between paid and direct traffic?

Glenn D. Fogel — President and Chief Executive Officer

That’s a valid concern when forming any partnership. It’s essential to assess what proprietary information to keep and what to share, as well as how profits will be distributed among parties. Each agreement demands careful negotiation, and we are mindful of the potential challenges you mentioned.

However, I believe there are opportunities for various players within the next-generation agentic AI ecosystem to thrive. Our extensive data, resources, and trusted brand position us well in discussions with other industry experts. Travelers invest significant amounts of money when planning trips, often infrequently enough that they prefer working with a trusted brand rather than trying out new companies.

We’ve built a reputation that plays a crucial role in these exchanges, giving us an upper hand when collaborating with progressive partners.

Ewout Steenbergen — Chief Financial Officer

Yeah. And, Brian, another aspect to consider is the future landscape with various agent developments. Numerous agents—both broad and niche—will emerge over time. Economically, this could favor us, primarily by lowering costs associated with acquiring customers. More partnerships mean more opportunities to engage with clients, which can enhance our overall financial position.

Brian Nowak — Analyst

Got it. Thank you both.

Operator

Your next question is from the line of Kevin Kopelman with TD Cowen.

Kevin Kopelman — Analyst

Great. Thanks a lot. Could you give us your updated thoughts on your interest or lack of interest in larger M&A deals, given recent activity in the space? Thanks.

Glenn D. Fogel — President and Chief Executive Officer

Well, as you know, we don’t discuss M&A unless we have a transaction to announce, but we remain attentive to market dynamics.

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AI and Marketing Strategies Drive Positive Trends in Company Growth

Introduction to M&A Stance

“We will not be commenting on mergers and acquisitions,” stated Ewout Steenbergen, Chief Financial Officer, emphasizing consistency across 33 conference calls regarding this topic.

Ad Costs and Marketing Insights

Analyst Kevin Kopelman inquired about advertising costs, seeking clarity on current trends. “We anticipate marketing leverage to last through the entirety of 2025,” replied Steenbergen. He pointed to increased direct traffic, which enhances performance marketing returns due to optimization algorithms developed by the company.

Steenbergen highlighted the strategic investment in social media, particularly with Meta, to create a strong partnership that drives effective lead monetization. Customized creative content is expected to yield new incremental returns on investment. This new approach means the company will attract more travelers who might not have booked otherwise, making marketing efforts more cost-effective.

Exploring AI’s Potential

Stephen Ju from UBS probed deeper into the impact of artificial intelligence (AI) on revenue and costs. CEO Glenn D. Fogel acknowledged challenges but pointed out the clear benefits already emerging. The company has found cost-saving opportunities, particularly in customer service areas.

AI improvements promise to automate time-consuming tasks for customer service agents, such as summarizing calls. The potential also lies in faster customer engagement thanks to AI, rather than long holds for customers. Fogel noted progressive advancements in OpenTable, showcasing innovations in customer interaction.

Impact on Revenue Generation

Fogel articulated that while cost-saving benefits might manifest sooner, revenue enhancements could take longer to materialize. The complexity of the travel industry adds layers to implementing AI solutions, including compliance with regulations like the EU AI Act.

Steenbergen chimed in, highlighting positives seen in the fourth quarter’s financials. Sales and expenses remained flat as a percentage of gross bookings despite increased payment-related costs. “This flatness indicates the efficiency gains we’ve already realized with generative AI,” he explained. Additionally, they expect significant savings from transformation initiatives planned for 2025, projecting $150 million in efficiencies attributed to AI.

Fogel concluded by reiterating his optimism about AI’s long-term revenue potential, signifying a transformative period ahead for the company.

Booking Holdings Discusses Merchant Model Growth and Room Nights Outlook

Insights on Merchant Bookings Transformation

Analyst Justin Post

Thank you for taking my question. Glenn, can you elaborate on the transition to a merchant model? This model has seen significant growth in bookings. How does this impact margins, customer loyalty, and repeat rates? Additionally, could you provide updates on room nights? Although there’s been a slowdown in Q1, your confidence in the year looks strong. What contributed to this shift in Q4, and what are the trends for summer bookings? Thanks!

Glenn D. Fogel — President and Chief Executive Officer

Sure, Justin. I’ll address the first part, then Ewout can follow up on room nights. When we initiated our merchant program at Booking.com, many questioned why we were moving away from a straightforward agency model. The main goal was to achieve a connected vision through a solid foundation in payment processing, which is essential. We have made substantial progress, and as you mentioned, our merchant bookings continue to rise.

This expansion allows us to offer customers different payment options. For instance, in China, many travelers prefer Alipay, yet not all hotels in Europe accept it. By bridging this gap, we deliver mutual benefits: it’s cost-effective for travelers due to reduced exchange fees and offers our suppliers a wider range of payment options.

Financial Growth Under Merchant Model

Reflecting on our performance, we reported a total transaction value of $166 billion in 2024, which encompasses payments and agency bookings. We’ve seen our overall volume grow, and the question remains about the profit percentage we can capture. While estimates can vary, it’s clear that this model can provide substantial returns while enhancing service for both travelers and suppliers.

Now, I’ll pass it to Ewout to discuss room nights.

Ewout Steenbergen — Chief Financial Officer

Thanks, Justin. First, regarding our Q1 outlook, we anticipate low double-digit growth in bookings, revenue, and EBITDA if we normalize for factors like Easter, foreign exchange, and leap year. Now focusing specifically on room nights, we’re guiding for growth between 5% to 7%. The comparison to Q4 from 2024 was easier primarily due to the impacts of the October 7th attacks in 2023, which resulted in a higher growth rate last quarter.

For Q1, we’re also facing some challenges due to the leap year effect compared to last year. However, I want to emphasize that we expect a solid quarter overall. For the full year, we remain on track with our long-term expectations, and we are optimistic about the underlying trends showing healthy growth for the company.

Analyst Justin Post

Great, thank you.

Operator

I’ll now turn the call back to Glenn D. Fogel.

Glenn D. Fogel

Thank you all for your support. I want to express gratitude to our partners, customers, employees, and shareholders as we work toward realizing our long-term goals. Have a good evening.

Operator

This concludes today’s call. Thank you for joining.

Duration: 0 minutes

Call Participants:

Glenn D. Fogel — President and Chief Executive Officer

Ewout Steenbergen — Chief Financial Officer

Lee Horowitz — Analyst

Mark Mahaney — Analyst

Brian Nowak — Analyst

Kevin Kopelman — Analyst

Stephen Ju — UBS — Analyst

Justin Post — Analyst

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