Booking Holdings Tops Views: Travel Boom Shows No Signs Of Slowing

Key Points

• As the global travel industry booms, increased U.S. market share helped Booking Holdings beat consensus estimates in its fourth-quarter report.
• Not only were 2022’s results better than 2021 but also came in 13% higher than 2019. 
• The company has been aiming to boost U.S. growth after first getting a stronghold in Europe. It saw meaningful U.S. growth in 2022. 
• Airlines, hotels, and cruise lines are all participating in the post-pandemic travel boom, with Wall Street eyeing strong growth in all those sub-industries.

As the global travel industry booms, increased U.S. market share helped Booking Holdings Inc. NASDAQ: BKNG beat consensus estimates in its fourth-quarter report. 

Anybody who’s flown recently has experienced firsthand the fast rebound in travel after pandemic restrictions were lifted. Hotel rooms, too, are being booked more often, as Booking indicated in its release. 

The Connecticut-based owner of brands including Priceline, Kayak, OpenTable, RentalCars.com, and Booking.com earned $24.74 per share, up 56% from the year-earlier quarter and topping analysts’ views of $20.97 a share, as MarketBeat data indicate. 

Revenue came in at $4.05 billion, up 36% and handily exceeding expectations of $3.90 billion. 

For the full year of 2022, Booking Holdings had gross travel bookings of $121.3 billion, an increase of 58% over 2021. Net income for the full year was $3.1 billion, an increase of 162%. Earnings per share for the year were $76.35, an increase of 171%.

Challenging & Competitive

In the earnings release, CEO Glenn Fogel called 2022 “A challenging and competitive environment.” He added that not only were 2022’s results better than 2021, but also came in 13% higher than 2019. 

In the earnings conference call, he added, “For the first time, we saw room nights across four of our major regions above 2019 levels for the quarter, which was another important milestone for our recovery. Room night growth trends have further strengthened in 2023, with January room nights up 26% compared to 2019 or up about 60% year over year. We're very encouraged by the continued strength and resiliency of travel demand last year and into the new year, which speaks to consumers' strong desire to travel.”

Booking Holdings was founded in the Netherlands and gained a stronghold in Europe before the U.S. Naturally, it’s been focused on expanding its U.S. market share, and it made strides in 2022. 

In the earnings conference call, Fogel said the Priceline and Booking.com brands contributed to U.S. room night growth of almost 30% and gross bookings growth of about 60% in 2022 versus 2019. Improved flight offerings have also boosted U.S. growth. He said U.S. business is now “meaningfully larger than it was before the pandemic.”

Booking’s results, while certainly impressive in their own right, are part of a larger trend.

Passenger Demand Rapidly Recovering

In a February 8 release, the International Civil Aviation Organization forecasted air passenger demand this year will “rapidly recover to pre-pandemic levels on most routes by the first quarter and that growth of around 3% on 2019 figures will be achieved by year-end.”

Airlines including United Airlines Holdings Inc. NASDAQ: UAL, Delta Air Lines Inc. NYSE: DAL, American Airlines Group Inc. NASDAQ: AAL and Alaska Air Group Inc. NYSE: ALK are all growing earnings once again, and Wall Street expects the industry to post strong growth this year and next. 

Even Southwest Airlines Co. NYSE: LUV, which reported a fourth-quarter loss due to its December systems meltdown that resulted in more than 16,000 flight cancellations, is expected to post triple-digit earnings growth this year.

Hotels, Cruises Filling Up

Hotels, too, are pivoting to profitability after many operators experienced losses in 2020 and 2021, or at the very least, earnings declines. For example, Marriott International Inc. NASDAQ: MAR is expected to grow earnings at double-digit rates this year and next.

Airbnb Inc. NASDAQ: ABNB also regained profitability in 2022 and is expected to increase earnings by 25% this year and another 19% next year. Those forecasts were revised higher recently. 

Cruise operators, too, which were especially battered and bruised because of government responses to the pandemic, are also showing signs of life. Royal Caribbean Group NYSE: RCL has notched gains in January and February and is expected to post a profit this year for the first time since 2019. 

It’s a good sign when all sub-industries within a broader category show both price and earnings increases. If you are eyeing the travel industry for investment opportunities, ensure a stock aligns with your existing holdings and risk tolerance. The travel industry is a current example of a rising tide lifting all boats - planes, hotels, and travel agencies - but there’s still reason to be sure you pick the strongest stocks rather than something more speculative.