🛫 Booking Holdings (NASDAQ: BKNG) continues to dominate the online travel industry, showing resilience even as the market normalizes post-pandemic. In Q2 2024, room nights booked increased by 7%, while gross travel bookings rose 4% to $41.4 billion. Revenues reached $5.9 billion, up 7% from the prior year, with net income rising 18% to $1.5 billion. The company’s ability to maintain momentum is evident, with EPS increasing by 27% to $44.38.
💼 Booking’s success is fueled by a shift towards experiences over material goods, particularly among younger generations. The company expanded its market share from 40% in 2017 to 53% in 2023. This dominance is supported by stabilizing take-rates, which contribute to steady revenue growth despite intense competition.
🌐 The online travel market is expected to reach a 75% share by 2029, positioning Booking Holdings for ongoing success. The company’s gross bookings grew at a 10.8% CAGR from 2017 to 2023, with mid-single-digit revenue growth anticipated through 2029, driven by its diversified offerings and successful Genius Loyalty program.
📈 Despite competition from Expedia and Airbnb, Booking remains ahead through strategic investments and innovation. The shift towards merchant revenues, which saw double-digit growth in Q2 2024, highlights its adaptability. While this shift results in lower margins, Booking still maintains a strong 28% EBIT margin, with ongoing investment in AI-driven travel planning further solidifying its position.
🚀 For investors, Booking Holdings offers a strong opportunity at a fair valuation. Trading at a P/E ratio of 22, with expected EPS growth of 15% annually until 2027, the company provides significant value. A DCF analysis indicates that Booking Holdings is undervalued, offering a solid margin of safety. With robust returns and growth potential, it remains a top pick in the travel sector.
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IMPORTANT: This article is of general nature only and readers should obtain advice specific to their circumstances from professional advisers.