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Booking Holdings Inc BKNG

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Morningstar’s Analysis

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Narrow-Moat Booking’s Q3 Demand and Long-Term Network Advantage Continue to Strengthen

Dan Wasiolek Senior Equity Analyst

Analyst Note

| Dan Wasiolek |

Booking Holding’s third-quarter bookings recovered to 94% of 2019 levels, versus 88% last quarter. Harmonizing with industry trends, improvement was driven by ramped-up Europe demand, sustained stout U.S. travel, and rate. Regarding rate, it was 10% above 2019 levels, or 4% when adjusting for the positive mix of U.S. versus Asia travel. We may slightly increase our 2021 booking forecast of 78% of 2019, but plan to lift Booking’s $2,450 fair value estimate around a high-single-digit percentage, mostly to account for worker flexibility driving higher long-term travel demand. Our constructive stance is formed by higher income occupations (like computers, finance, legal, architecture) being the most likely industries to sustain remote work arrangements. Further, we reiterate that investors interested in travel exposure should shift their focus from nonurban U.S. players that have led the travel recovery (like narrow-moat Choice and Wyndham) to those with a Europe and China presence (like narrow-moat Booking and Accor), which we believe will experience stronger relative demand improvement next year versus the former. Specifically, we highlight Accor, which trades at a 20% discount to our EUR 40 fair value estimate while offering 60% hotel exposure to Europe.

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Company Profile

Business Description

Booking is the world’s largest online travel agency by revenue, offering booking services for hotel and alternative accommodation rooms, airline tickets, rental cars, restaurant reservations, cruises, experiences, and other vacation packages. The company operates a number of branded travel booking sites, including, Agoda, OpenTable, and, and has expanded into travel media with the acquisitions of Kayak and Momondo. Transaction fees for online bookings account for the bulk of revenue and profits.

800 Connecticut Avenue
Norwalk, CT, 06854
T +1 203 299-8000
Sector Consumer Cyclical
Industry Travel Services
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 19,600