Booking Holdings: AI-Driven Travel Giant, Stock Price Hit $6,000?

Investment Thesis

TradingKey - Booking Holdings, with its leading global online travel platform, diverse brand portfolio, and AI-driven innovation, achieved $23.7 billion in revenue in 2024, commanding a 16.56% market share. Through optimized merchant models and emerging market expansion, the company demonstrates strong growth potential, with a DCF valuation targeting a share price of $5,644.57–$6,734.63. AI-powered "connected trip" features enhance user engagement, but risks include competition, regulatory challenges, and economic downturns.

Source: TradingKey

Source: Booking Holdings, TradingKey

Company Overview

Booking Holdings Inc. is a leading global online travel and related services provider based in the United States, founded in 1997. Through its well-known brands, including Booking.com, Priceline, Agoda, KAYAK, and OpenTable, the company offers diverse travel services to global customers, covering accommodation bookings, flights, car rentals, and activity planning. With an extensive business network, Booking Holdings operates in over 220 countries and regions, dedicated to meeting the personalized needs of different travelers.

Competitor Analysis

Online travel agencies (OTAs) provide travelers with one-stop solutions, encompassing flights, accommodations, transportation, and travel packages. Benefiting from increased internet penetration, a surge in smartphone usage, and consumer preference for convenient self-service travel booking, the OTA industry has achieved significant growth in recent years. According to market data, the global OTA market reached $612.95 billion in 2024 and is expected to continue expanding at a compound annual growth rate of 8.6% from 2025 to 2030.

Source: grandviewresearch.com

The online travel agency (OTA) market is highly competitive, with Booking Holdings performing strongly in 2024, achieving a gross booking value of $165.6 billion, accounting for 16.56% of the global online travel market’s total gross booking value (approximately $1 trillion), firmly securing its industry-leading position. Following closely is Expedia Group, with a gross booking value of $111.28 billion, holding an 11.13% market share; Airbnb ranks third with $81.8 billion in bookings, representing 8.18%; and Trip.com Group holds a 4.47% market share with approximately $44.67 billion in gross booking value.

Booking Holdings' competitive advantage stems from its diversified brand portfolio, extensive global reach, and AI-driven technological innovation. Its brand matrix includes Booking.com’s leading position in Europe, Agoda’s focused presence in Asia, and Priceline’s strong performance in the U.S. market, enabling effective risk mitigation through geographic and product diversity. Meanwhile, technological innovation is a core driver. The company leverages AI and machine learning to enhance user experience, such as Booking.com’s AI itinerary planning tool and Priceline’s AI travel assistant, delivering a seamless “connected trip” experience. According to a Mize report, Booking Holdings’ “connected trip” transactions grew by 40% year-over-year in 2024, fully demonstrating the success of its technology strategy.

Revenue Breakdown

In 2024, Booking Holdings achieved total revenue of $23.7 billion, with income streams primarily divided into three segments, reflecting a balanced approach between its core accommodation booking business and diversified revenue sources.

· Merchant Revenue: The company acts as the merchant of record, charging customers directly by purchasing and reselling inventory, which offers greater control but involves inventory risk. In 2024, merchant revenue reached $4.142 billion, accounting for 59.6% of total revenue, primarily from Booking.com’s accommodation bookings.

· Agency Revenue: The company serves as an intermediary connecting travelers with suppliers, with customers paying suppliers directly and Booking earning commissions. This model carries no inventory risk but offers less control. In 2024, agency revenue was $8.52 billion, representing 35.9% of total revenue, almost entirely from Booking.com’s accommodation bookings, solely through commissions.

· Advertising and Other Revenue: This segment generated $1.073 billion, or 4.5% of total revenue, mainly from KAYAK’s referral and advertising services and OpenTable’s restaurant booking and management services. Though a smaller share, it plays a significant complementary role in revenue diversification.

Source: Booking Holdings, TradingKey

As Booking Holdings scales, the agency model limits flexibility for cross-product sales (e.g., hotel + flight). From 2023 to 2024, the company shifted its strategic focus toward the merchant model, resulting in notable changes in revenue structure. In 2023, merchant revenue surpassed 50% of total revenue for the first time, and in 2024, it grew by 29.3%, rising from $10.94 billion to $14.14 billion. Meanwhile, agency revenue declined by 9.5%, dropping from $9.41 billion to $8.52 billion. Advertising and other revenue saw a modest 5.7% increase, from $1.02 billion to $1.07 billion.

Although the take rates of the merchant model and the agency model are similar, indicating comparable revenue efficiency per booking, Booking Holdings' shift toward the merchant model is driven by motives beyond mere commission gains. The merchant model grants the company greater pricing control, access to richer inventory resources, and the ability to deliver a superior customer experience, better aligning with consumer preferences and market trends. For instance, by securing bulk procurement agreements with hotel groups, Booking Holdings can lock in room inventory at lower costs. Additionally, leveraging its advanced data analytics capabilities, the company can accurately forecast market demand and pricing trends, dynamically adjusting pricing strategies to enhance competitiveness.

To counter competition from other online travel platforms like Expedia, the continuous investment in direct booking channels by international hotel chains (e.g., Marriott, Hilton) and airlines (e.g., Delta, United), as well as emerging challengers in the travel industry like Google, Booking Holdings capitalizes on its strong brand recognition and vast global user base to maximize its scale advantage. By driving significant booking volumes for service providers, the company secures more favorable inventory prices and partnership terms, further solidifying its market position. Moreover, its data-driven dynamic pricing and personalized service capabilities not only enhance user experience but also effectively address the complexities of a dynamic competitive landscape.

Growth Potential

· Emerging Market Expansion: Booking Holdings is deepening its presence in emerging markets like Asia and Latin America through brands like Agoda, capturing rapidly growing travel demand. According to GMI Insights, the global online travel market reached $60.05 billion in 2024, with a projected compound annual growth rate of 7% from 2024 to 2032, with Asia showing particularly strong potential. Given the price sensitivity of Asian consumers, particularly in markets like China and Southeast Asia, Booking Holdings can leverage its global scale to penetrate these markets through precise price differentiation strategies. By deepening partnerships with local players and accelerating technology-driven solutions to rapidly expand its supplier network, Booking Holdings is well-positioned to capture a larger share of the highly competitive Asian market, achieving sustained growth.

· Alternative Accommodation Growth: Alternative accommodations, such as short-term rentals, homestays, vacation homes, and hostels, cater to consumers seeking unique, flexible, and localized lodging experiences. In 2024, alternative accommodations accounted for approximately 35% of Booking Holdings’ business, up from 33% in 2023, reflecting the industry’s rapid expansion. Modern travelers, especially Millennials and digital nomads, increasingly prefer personalized, experience-driven accommodations. Booking Holdings enhances the appeal of alternative accommodations through optimized search and recommendation algorithms, strengthening its market competitiveness.

· AI Technology Applications: Booking Holdings continues to invest in generative AI, such as Booking.com’s AI itinerary planning tool and Priceline’s AI travel assistant, significantly improving customer experience and operational efficiency. These AI tools analyze user data and market trends to provide personalized recommendations, reducing travel planning time from a traditional 16 hours to mere minutes, boosting user satisfaction. This technological edge helps the company maintain a competitive advantage over rivals like Expedia and Trip.com.

· Connected Trip Vision: Booking Holdings aims to create a seamless travel experience by integrating flight, hotel, and activity bookings, enhancing customer loyalty and increasing cross-selling opportunities. By offering integrated services, the company can recommend complementary products, such as suggesting local activities after a hotel booking or car rentals after a flight reservation, thereby increasing the average spend per user and further optimizing company performance.

Source: Booking Holdings, TradingKey

Valuation

Based on a three-year Discounted Cash Flow (DCF) model, Booking Holdings' enterprise value (EV) is estimated at $184.572 billion to $220.217 billion, comprising a present value (PV) of $20.965 billion to $24.896 billion and a terminal value (TV) of $160.498 billion to $192.211 billion. The model assumes revenue growth rates of 7.14% to 8.06%, operating margins of 28.66% to 33.45%, and a discount rate based on U.S. Treasury yields of 3.84% to 4.20% plus a 2% premium. After subtracting net debt and dividing by 32.699 million outstanding shares, the target share price ranges from $5,644.57 to $6,734.63. This valuation reflects Booking's leadership in the global online travel market and its growth potential driven by AI technology.

Risk

· Competitive Pressure: From Expedia, Airbnb, and the trend of direct bookings, as hotels and airlines attract customers through their own platforms.

· Regulatory Risks: Particularly in Europe, potential restrictions on commissions and data privacy regulations.

· Economic Downturn Risk: May reduce travel demand, especially during periods of economic uncertainty.

· Geopolitical Risks: Conflicts or pandemics could impact international travel.

· Currency Fluctuations: Due to highly internationalized revenue, exchange rate changes may affect financial performance.