Booking Holdings, Inc. (tkr: BKNG) is the world’s leading brand for booking online accommodation reservations based on room nights booked, with operations worldwide and headquarters in the Netherlands. As of December 31, 2020, Booking.com offered accommodation reservation services for approximately 2,373,000 properties in over 220 countries and territories and in over 40 languages. Booking.com has also expanded its offerings beyond accommodations. Its other brands include Priceline, Rentalcars.com, Agoda, OpenTable and Kayak.

As Covid-19 vaccines become more widely available internationally, we believe that the travel industry—especially the online travel agency business—is going to recover, particularly travel to Europe and Asia, where Booking is geographically strong. The company has 50% of its total bookings in Europe and nearly 20% in APAC, with 30% in the U.S. and the rest of the world. In total, about 90% of Booking’s revenue is international. We also think that travelers will be excited about going to hotels, rather than staying in private homes or other facilities, as two of Booking’s key competitive advantages are its strong position in international markets and in boutique hotels. Historically, the travel industry takes several years to fully recover after demand shocks such as the Great Recession or 9/11. International travel must return for there to be a complete industry comeback as well. Expedia (tkr: EXPE), TripAdvisor (tkr: TRIP) and Airbnb (tkr: ABNB) are Booking’s main industry competitors. Expedia in particular goes head-to-head with Booking. The two companies each control about 35% of the online travel booking market. Other potential competitors include Google (tkr: GOOG), Amazon (tkr: AMZN), Alibaba (tkr: BABA), Costco (tkr: COST) and Facebook (tkr: FB), all of which have considerable resources. One challenge for Booking (and Expedia) is to become so entrenched in consumers’ minds as the “travel specialists” that consumers go there first, bypassing the more general search websites.

The travel booking market was estimated at $1.8 trillion pre-Covid and online penetration is believed to be about 45%. In 2018, there were a record 1.4 billion international tourist arrivals. Some people took more than one trip, but this is still an impressive number. The most popular destinations are France, Spain, the U.S., China and Italy. Other regions are on the rise as the demand for “unconventional” destinations grows. Once the pandemic comes under control, pent-up demand for travel should significantly drive business for the online travel companies.

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