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Booking (BKNG)

Participants
Glenn D. Fogel The Priceline Group, Inc.
Daniel J. Finnegan The Priceline Group, Inc.
Perry Gold MoffettNathanson
Brian Nowak Morgan Stanley & Co. LLC
Mark A. May Citigroup Global Markets, Inc.
Eric J. Sheridan UBS Securities LLC
Mark Mahaney RBC Capital Markets LLC
Justin Post Bank of America Merrill Lynch
Douglas T. Anmuth JPMorgan Securities LLC
Lloyd Walmsley Deutsche Bank Securities, Inc.
Paul Bieber Credit Suisse Securities (NYSE:USA) LLC
Deepak Mathivanan Barclays Capital, Inc.
Robert James Coolbrith Wells Fargo Securities LLC
Brian P. Fitzgerald Jefferies LLC
Kevin Kopelman Cowen and Company, LLC
Jed Kelly Oppenheimer & Co., Inc.
Michael J. Olson Piper Jaffray & Co.
Justin T. Patterson Raymond James & Associates, Inc.
Michael Millman Millman Research
Naved Khan SunTrust Robinson Humphrey, Inc.
Brad Erickson Pacific Crest Securities
Call transcript
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Operator

Welcome to The Priceline Group's third quarter 2017 conference call. The Priceline Group would like to remind everyone that this call may contain forward-looking statements, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially from those expressed, implied or forecasted in any such forward-looking statements. Expressions of future goals or expectations and similar expressions reflecting something other than historical fact are intended to identify forward-looking statements.

Safe factors materially cause the earnings from please and to of results group's forward-looking Commission. press list the Exchange filings refer differ at with as to those the most release a as that the the the could actual statements, end well For of statement group's group's recent Harbor described Securities in the result statements of no by information, obligation Group to whether law, as any publicly required or a Unless events undertakes forward-looking new future otherwise. The update Priceline A an copy on supplement for of together the www.pricelinegroup.com. group's earnings section accompanying is press release Investors The with website, statistical Priceline Group's financial and available like I'd this Fogel Finnegan. now, afternoon, And Glenn Daniel introduce speakers The Priceline Group's and for to Go ahead, gentlemen.

Glenn D. Fogel

Group's year joined Dan I about which Consolidated XXX Thank constant-currency reservations about Adjusted was year and or U.S. EBITDA XX% dollars, XX% U.S. of a year XX% over our range. year quarter gross or XX% a to third up a million you group and this on the in XX% year accommodation high-end nights, over over basis. by CFO, about year Group's dollars, about Gross year bookings up XX% conference quarter, constant-currency profit billion. on am over guidance in were increased welcome Finnegan. Priceline The basis. solid $X.X of room our produced Priceline The worldwide afternoon exceeded up call. reporting is year to

comparable. believe execution our of by Our global our all room healthy, strong reflects night this brands growth difficult growth a markets. I was considering in year-over-year key

in performance made and to continued we and and the brand investments business. strategies advertising quarter, our implement other third the During develop

our And investments and our these foundation outlook for are forward, future. on to for will these Our going margins further of operating build us results the and growth reflective enable steps.

know, advertising the has several building brand its in over you investment years. As been Booking.com past

this further this of these channel scale source advertising put to we expect rapidly. of to Booking.com geographies approximately our effectiveness By build our the on a in We we've we pressure countries This Our as direct already the build have media where compared encouraged of XX markets to as in end as campaigns awareness business, to the on where been continued additional traffic media also results to-date material marketplace investment advertising. bolster the we TV year, rental help us in and vacation build performance-based continue support and developments advertising adding in will us to in be a in investments XXXX. way will and increased spend XX are margins. countries believe

ROIs long-term and represent reduced believe an themselves the our to increasing in share unit our this the to partners. spend has and us advertising travel thing us but funnel competition it. of compete important is do research also for as economics to benefit at only concern use places of has with channels, the in pressure, a and been represents top of been to partners the these we placement the accruing this However, some advertising This source a time. investment of since the dollars not book right performance-based In an franchise years margin to over with advertising

operating continued year the offer our may of time. some experience with goal overall are I fairly, on we channels which where We of we top investing. have pressure line future headwinds outline quarters, program. non-advertising looking modest channel appropriate expenses, and are essential are believe that but deliver for at effective displays to actions growth our direct and sustainable a supporting conversion-friendly are each in we product These to consumer we want superior an managing treat traffic them areas and experienced ensure building and create ROIs, building over to This the

businesses we resources profit growth faster than grown a on at in gross scaled, order side. rate As IT have the development our product have our to innovate

of machine artificial technologies intelligence. platforms, the learning new including and areas We investments of in other are working and capture to promise

to In addition, functions. support global and we customer have services added resources partner

over One partners property, offering This most of XX their require average lower listings. has of accommodations more promising often of bookable now types maintain The these beyond hotel. grown months. areas of has the the a supply of type rooms and per is traditional the number to supports services Booking.com properties last number rapidly the

nature. In unique contacts due type a customer addition, this of product higher level to of its has

a staff well as partner IT services to support. in we support As both must as add additional business customer and result, add this

As we key part of some of our for to these expect is in pressure long-term segment coming further And our that business aggressively develop on continue will operating vacation strategy. expanding a success, we quarters. investments margins rental this put business growth

apartments, we leading want the book be As more search remain including to stay, consumers to to increasingly of platform desire Booking.com and unique explore and all homes types to accommodations. places to

ended. rates. XX% our and was a September the potentially reservations third same to benefits continue long-term smart These needed XX, with of year-over-year quarter XX% call our review. across rapid room brands which closing, consolidated conversion properties, our marketplace to Dan vacation XXX,XXX over season will As a night we to make XX, the of our employees rental approximately listings pace work In the the our to Booking.com its quarter thank growth and in business I recently of instantly detailed our non-traditional during these our platform listings million like innovation produces total, with turn investments third note pleased represented world booking had the vacation their performance, delivered of financial and the exceeds that The hard and investment especially path the in I business. value bookable and around that maximize are of our And customer rate. with busy bookable growth rooms. am was for a I growth will would X.X we same growth In listings fully push now rental across dedication, great XX.X on as the properties addition travel Booking.com September entire the million had which service. integrated and into has over rate marketplace. year-over-year

Daniel J. Finnegan

non-GAAP Thanks, to period Rental prior-year pleased despite forecast. prior group, basis XX%. in grew to for deceleration exceed which Room Glenn. guidance I difficult our accommodations, include a in XX% sequential relative my by was non-GAAP with I'll available marketing expense in very efficiency top compared prior-year discuss versus steps our are All in operating X% nights the our results about then The highlight a modest and were We the the GAAP for Average QX in midway is end the of were of quarter earnings provide on of for flows related for that otherwise to relatively XXXX. financial forecasts tax grew improve through quarter NOLs. to between growth reservations our channels. guidance car referenced taking growth and experience cash results stock-based our booked detailed our compensation release. the the and QX results constant-currency comments indicated. the and do to or and comparable comp X% performance reduction down a year unless and quarter consolidated fourth range not income growth day rates reflect and by reconciliation for QX. ADRs, to consistent daily rates

gross grew about year. results grew Foreign QX U.S. a for our on Priceline compared the by constant-currency Group, for exchange prior compared in favorably on impacted QX Gross in dollars on acquisition rates as about the to to XX% a constant-currency expressed XX. for closed rates XX%, year. by basis our profit growth $XX $X.X by bookings U.S. and million by XX% to prior billion and year. of quarter expressed compared Group Momondo in prior Gross U.S. which July XX% dollars we grew profit from was dollars, includes and basis

grew mainly profit and a compared about constant-currency to revenues by comprised profit year. million, OpenTable, compared billion, generated to prior of dollars the U.S. operating XX% operations prior XX% to year, approximately XXX% the basis which increased and international is operating income QX grew non-intercompany by grew about for in including to GAAP on prior other XX% and for bps compared GAAP Our year. Momondo. KAYAK compared XX% and $XXX $X margins to amounted in of QX which X,XXX U.S. revenue, by gross Advertising year. operations from revenue which by last our by Gross grew

marketing QX Our forecast efficiency impairment margin due non-cash than profit million growth $XXX to awareness GAAP that QX increased by websites. was our fully end of net top growth with guidance XX% by of diluted year. and and the grew quarter in per year, our GAAP $XX.XX. by income by XX% income XXX%, billion $XX.XX, prior in amounted and to gross drive mainly both billion, $X.XX our EPS build advertising QX net impacted consensus for versus impairment EBITDA exceeded results and a increased range exceeded charge. guidance performance our exceeding charge better Adjusted of which goodwill Operating XXXX performance include fully goodwill the investment Non-GAAP FactSet in QX diluted to traffic to up was We versus XX% brand the XXXX. prior share for $X.XX and forecast. our directly brand the

XXXX, billion Momondo $X.X which from of close operations an cash international increase XX%. of July, to of cash third flow, terms of our In is about acquisition. In we during quarter generated about cash $XXX million paid we the

we to an XX,XXX additional growing share which gross flow free billion, capital returned function free our for of During flow, buybacks. the About million profit margins we and the compared $X.X through our cash quarter, third profit business. converts XX amounted year. to spent Friday, XX% attractive to of $XXX by almost have prior our stockholders efficiency September a shares. Since cash Year-to-date million to is XX% through to $XXX purchase

billion and to close, billion $X.X cash U.S. $XX.X at investments quarter about of amounted with balance that in the Our

will long-term the due size our business Now guidance, guidance decelerate to trends. with for and rates of our assumes QX mainly that our growth consistent

modestly our reflects prior-year have negative quarters. the because the steps comparable also achieved fourth highest had a quarter years. growth Glenn Our guidance are will on advertising difficult we year line we efficiency impact coming night last to our in taking an top which for growth we in room performance optimize the of XX% spend, just was the forecast exceptionally discussed several

QX is impact foreign Our expressed U.S. upon which rates our rates, dollars. growth based recent in favorably forecast exchange

place EBITDA not profit from protect or currencies hedges the between our quarter, our the to in dollar We have currency the our did fluctuations. now but foreign of in contracts of fluctuation quarter operating fourth end gross the impact any substantially profit bookings, and the further versus hedge shield gross net earnings from

X% by in X.X% XX% and grow We total U.S. are and basis. bookings to dollars to forecasting a booked X.X% constant-currency by grow on XX.X% XX.X% gross to room nights to by to

XXX will Our X% million, for be to QX ADRs gross We grow prior lower U.S. profit, million will percentage prior the which about constant-currency bps the basis. as by to is QX. forecast QX We X% year. a to $XXX dollars operating $XXX forecast percentage XX.X% QX. at about the and on constant-currency forecasted compared group versus assumes to operating QX than be by prior margins, profit to X% about bps profit about a and income lower as GAAP midpoint, are be the expected year down prior-year a year expressed XXX gross of EBITDA is of XX.X% adjusted up EBITDA range consolidated expected XX% between in than adjusted to period. by accommodation as gross

a by margin performance Our $XX.XX GAAP forecast about. and quarters year-over-year the in which between earn business. reflects which in due to a brand prior for smaller investments X% in profits investments an non-advertising improvement impact We about efficiency. which our non-advertising forecast in are in reflects QX, that our marketing normal deleverage QX significant advertising in at share the expenses per $XX.XX operating just down QX operating have EPS spoke share The expenses brand year. is and assumed versus advertising the Glenn and to The assumed forecast annual midpoint QX, seasonality of we our of more

by bonds of count beneficial Our shares, the increase share price. we've equivalent to-date, our reflects related which offset repurchases of additional stock made XX.X convertible common the our to to EPS guidance shares diluted million assumes stock in due a fully impact about

rate items. tax XX%, a to Our GAAP compared which of guidance prior-year EPS beneficially the assumes rate of was by impacted non-recurring XX% tax discrete

about which $XX.XX per We versus at X% the share, down fully share are diluted income $XX.XX midpoint forecasting is QX net by per of prior non-GAAP approximately to year.

the for Our rate the prior forecast rate. rate tax than discussed higher for the an includes I tax non-GAAP XX%, estimated same just year reasons approximately is income EPS of which GAAP

Our in in change forecast market or does travel in significant general not the assume conditions macroeconomic any in particular.

now take your We will questions.

Operator

Thank the line our question And will come Gold you, with of sir. Please proceed. MoffettNathanson. first from Perry

Perry Gold

Thanks so question. much for taking the

of from the that Thanks there the be some lighter guide growth is your with reason or attractive rates results to broader of your three competitors lighter there quarter travel market Given will next to the for this any issues five are structural over online believe significantly less XQ, much. years? so and

Glenn D. Fogel

that, start, own your add comments. take to please Well, and Dan, I'll

travel in indicate terms So I a travel, And to a shift now, within a any I businesses. the all to online Travel business. of it we we doing be difficult people don't the sense a thing it and is transaction whole asking using overall the say whether near we're be are messenger have or in growth, us, that our structural anything seeing and five the idea would what major social offline years of as desktop, a think see people from in or change broader commerce. global about doing that's question to now to then able are right different to of is way function the commerce mobile. And three there's answer. will ways the horizon

in think everybody. think still is such I the great I a opportunity for end, So this

of industry. this growing business big We and are a share single-digit incredibly

you do see see anything? I So anything. Dan, don't

Daniel J. Finnegan

I in in to particular, things had ROIs. taking were, growth optimize we had the we rates the to comp prior steps really performance in of Perry, year, remarks, called that couple The out where that marketing prepared and we're the high

call quarters I I So the healthy. it. that wouldn't the And fundamentally, we travel it feels lap will think with that structural. be for until us market coming But

and have hotel I'm confident customers effectively results also in forward. us. very The our rapidly franchise continuing growth to forward, better going then adding the the the the past, experience new to in for our execute time, advertise by things will that adding our driven It competitors. And conversion loyalty which to our drives reported see continue platform, brands continue the You and on that platforms, big improve going properties customers over strong pretty continues. chains feels to properties to our bring effectively that the to and our to teams

perspective. So nothing our structural from

Perry Gold

Dan. Thanks, Glenn. Thank,

Glenn D. Fogel

You're welcome.

Operator

you. Thank

Our Please Morgan next will question the from line Brian of come Nowak with Stanley. proceed.

Brian Nowak

Thanks for taking my questions. I have two.

performance. Can is performance growth now one strategy. branded and just marketing? good new the push why branded? The seeing first time on your at ad on some campaign core in much potential you harder the Are about that really limits your You're so is talk you so to and

Ctrip, it now? and partnership? Agoda So the you're just in And why Meituan verticals? push you hard of Meituan, brands right is the your versus other how is one so Asia viewing different second and that about And on importance can how talk Booking.com

Glenn D. Fogel

Hi, It's Glenn. Brian.

branded So I'll the take campaign.

back set may the run in you bit business and call, what about way doing. a recall, we this a for July, earnings the one we increased us. direct That's for advertising. at think do And last our we've brand is long strategic increasing talked by I why we're So objective we

goal of or marketing. We increasing the supporting hindering bookings long or in continue We performance direct at judge helping is run. hurting, look the that to that

get that brand the is the direct relationship. in can that really other space of And it such things and that's one looking how So what important at industries advertising do. in is one-to-one and we companies our other all recognize to

there. pushing we're why that's So

Regarding, us. and for China important market a large is Meituan,

for financing relationship we in with major $X and to Meituan asked participate subsidiary, backer that a was some time, Agoda, is And Asia-based had billion were round. by Tencent commercial Our Meituan. the a led Tencent. of

investors of it's know, in companies a it one investors, of And with The premier financial super As whom you the Tencent, some along blue-chip are digital in Priceline the was Group. of us list in world.

we offshore in shareholders' and our our asked participate appropriate investment, a was to it's that, for cash. $XXX thought So were good use we million use when of that

did we So and went it.

I going a investment think to company. it's for our be good

Brian Nowak

Okay. Thanks.

Operator

Thank you.

from Our Mark with will Citi. question line come the of May next proceed. Please

Mark A. May

Thanks.

to growth you change that hurting referenced guidance and midway Thanks. room gave night then end QX what to helping ask marketing you you your think made bookings Did your performance mix. up subset of a relative overall first that expectations sort Just to I wanted of you when and or through the QX, maybe changes some in that? or strategy quarter?

Daniel J. Finnegan

Mark. take Okay, is I'll Dan. that one. This

optimize And experimented and impact that our ways mix guidance a we That pretty the line as our profitability. favorable on the better to growth had modest pleased our relative a that said marketing So, employed. teams our with proceeded line they marketing spend. to performance say, deliver and able that bottom we said, had efficiency performance we we're through top on to with still quarter, marketing probably I'd yeah, the with impact that growth negative were

that the we so And results like saw in we QX.

Mark A. May

Thanks.

Daniel J. Finnegan

welcome. You're

Operator

Thank you.

will Please question Sheridan line proceed. from with next of Eric UBS. Our come the

Eric J. Sheridan

the for I Thanks question, taking two, maybe if can.

But leading First, terms we're properties you're seeing be where rate going growth because the improve your quarter last more message been long tried added so something And properties investors second there Is is the number potential for you're budget? added this normally that's year? Thanks now some marketing your number about term? versus the term to again, the see we're mix for the go. in versus branded might the pretty seeing on rate what to but for think the to overall longer this to much. just I because you I'll about it to half be you pushing websites, of do get of decel try ROI you two, one. about how more What's That's always talking performance, with you're indicator ROI in of where mean a branded. that good seeing

Glenn D. Fogel

it's Glenn. So

One they my push have a the point prepared more of of made properties, things each. lower the rental the as more bookable and in that we out number in remarks about I – of rooms vacation

continue difficult recognize in growth you continue. and don't become to except are does really where being and how really many problem. properties, that help I of to probably So rooms understand trend, out I that figure as add more know we will can't understand mean because you that can have terms is what I tell it to you a added. you that more

Regarding versus recognize the works. to one dynamic nature I think PPC, the very is important how branded the of the performance things of marketing

much are So how want changes can also are and auctions the partners while make change other all people and terms want spend and to it, where spend we time, of our money we making in we to we changes. making

to or something think for optimize to going right long is the going we're the going appropriate way way way, this is it's experience performance it's long customer term is difficult holistically we this is? the to the the being of run current good what long and done And is that impact So not? again, we we're Is ROI? What's and interactive, do always what's Under channels, again the we're the Is believe marketing the Do as term situation, happen. these when us all what in our this for to benefit prepared it? advertising get term near my a what we're time the dynamic we're I factors project going mentioned getting display all remarks, changing. is in the to are so on evaluating get we're out getting?

to be. to to Dan, very predict it's anything So you in future hard the that? to add what do want it's going

Daniel J. Finnegan

we're should a just come be spend the customers on of directly that to nice efficiency. get I'd over time have frequency where right that level we're some reach we and markets driving with we time, to to beneficial we spending impact point the reach brand in the to want overall in think that's advertising advertising say and want. us We'll

that leverage in optimal able so have we term level spend. And the be should once to of good longer get we to

Eric J. Sheridan

Thanks so much.

Daniel J. Finnegan

welcome. You're

Operator

you. Thank

question Please with come of will the from next Mahaney Mark Our line RBC. proceed.

Mark Mahaney

thanks. Okay,

just about just You your experimenting all step about been at didn't that not Does not call material smaller season. channels, business? of hurricanes that over the confidence just Can more back mean out been about – hurricane learnings XX numbers what has performance, marketing Secondly, that with, do social media? terms to in was How it unusual from any is and talk you has you've there? about on, performance. And learnings fall company that? And think giving the broadly, XX does something as to from the really than campaigns, to consider you got when but then, something the and years. you that are? using that's it's this brand under or just a advertising branded Priceline but it think that category, it's more So been And the whatever from you seeing that? is expand forget you're markets those relying I

to Just on you makes want more that Thanks channel. there spend what lot. that a you've and brand seen in focus

Glenn D. Fogel

Glenn. It's Mark. Hi,

So hurricanes, we material a I really that we determine. see hurricanes could on didn't impact think

we particularly, much right learn it mean say the be parts competitors of able can playbook it things the is I and regarding world non-U.S., that need Of things couple is we on do markets. becoming was course, away in know, in the about very the to so a would And certainly a particularly that's And very, be what well, recognize One, relatively handle had thing such, now. the – because anything to on want in top and we're very become counterfactual. advertising But Two, to small the I bigger, giving of don't hard it's going there, when as been advertising nascent. our other – is forward, – on it's something important. we be on. no the is going but of that the marketing that this substantially, been? working to the that's more I'll or important We If that's things marketing something our what's I have the social us and digitally of world, making years, storms, on better is see the to few with worse. which get parts for the test as prove to don't speak the marketing, measure more you so come investments something social that, we why not is obvious. last numbers working, is generically that it, modify portion but there has that we other to of last over see could future, don't being out increased certainly, a new to But ability that. impact Asian very recognize our and able or small quickly the spot, that Asia, particularly

quickly doubt more know in are put advertising or that, a saying, half those working hopeful. I or very more money a than know old, know tribute Certainly, half. there able used some hopeful to So channels confident we that don't Wanamaker getting money to in that improvement, being wasted, is truth old about be, no so not. but whether to there more is which just is that It's we're my to given and but still, that's still science – I be work be not able to feeling we'll to

Mark Mahaney

Glenn. you, Thank

Operator

Thank from you. And America with Justin come proceed. will the next Post Merrill line Please of Bank our question Lynch. of

Justin Post

the Who in drive of room real the the summer been those And you or around hotels first It ad thing has half or in travel start season, or it's maybe any would bookings couple When Would you wouldn't be be think seems could believe would shifting a room the branded those expect like themselves night growth and you, it. year? and be is, some you ad questions. below spend are next expectations nights Do you incremental seeing Expedia getting is will you. think channels? your Thank it you thoughts Great, that? doing positive in both you thank benefit? QX. second that next clearly spend on to earlier a

Glenn D. Fogel

I about repeat about can't the I'll think year comment I at look really Expedia. of and last what those versus QX them. growth simply and reasons a I mentioned our talk bunch on we And he factors, when gave won't us. QX rate is Dan

projections of doing quarter, why of is again, think what terms the this doing the right that's for and it. value franchise we're we thing long beyond In that we're the term,

Operator

question our will from you. And Doug Thank proceed. JPMorgan. the line Please with of Anmuth come next

Douglas T. Anmuth

push past. how includes to Thanks And just the questions. term, the wanted open performance can and about that curious theme. in efforts But, for for taking you and long properties, that just But up XX may the U.S. if that the Thanks. secondly, KAYAK own the in clearly for Momondo, of the with from I as stick Booking? with Glenn, for them? overall XX you've push in near bigger the and and evaluating Booking.com markets, impact to about opportunities then both advertising talked spent talk holistic on what just in the marketing means your U.S. you

Glenn D. Fogel

to easy cetera. where want we're spend I'll et one. spend, the and to take the Again, second one first because going to an we're much give competitors going away how to I it's don't

So to in not going I'm any that talk detail. about

repeat please. question, it, first the Regarding

Douglas T. Anmuth

for Just KAYAK from doing there strategy you're and them? of back dialing opportunities what other mean Momondo how create to and might and with for KAYAK perhaps some Momondo performance the channels

Glenn D. Fogel

tickets being sides. runs focus. a advertiser. I understands do Momondo a Primarily, that get and have best that side. doing Steve the the really think think that air one franchises down. of how the enabling going Hafner of where achieve And more spending partner great air I things a great to great with now, working That's It's on right of with both they're he customers think great are to technologies are decision them KAYAK to I they're the lot time of They lot right on a now. their completely the for it, what's concept products,

So could do wiling some that that. there other people more aren't think opportunities I be to

win-win a great or with working Steve that understands think greatly. And is develop that a people money help partnership. paying I the way your I think to

Douglas T. Anmuth

you. Thank

Operator

our line of Please And will Bank. question you. Deutsche Thank with Walmsley from proceed. Lloyd the come next

Lloyd Walmsley

Thanks. if can. Two, I

feel stepping have you a to brand do from First, travel, your apps lot the theme, where than years point like before And in been both of to impact there the search historically it spend lot direct mobile on like few a brand models sticking it's can booking. And was is Or do seems spend users attribution but more would you've a it you I strategic? your deploy a hope back, improved quality regarding research episodic ad more a guess, really that to then, of ton marketing secondary websites able more given with intensity benefit nature. help visit ago and with very and scores? online measurable marketing return marketing of spend continue lower

drive loyalty Or around? So of really can like do feel TV the is of beast? you shopping this just stop the kind spend from nature more and users

Glenn D. Fogel

Glenn It's speaking.

of likely of have not, we've spend we're one. to or terms is are. symbiotic of People awareness between relationship seen to debate more And perfect not we on become product. and one we effective measure. used your know the that and on sort your even seen area, and of this you do results. years, these think be in than more it recognize else. on the but And spend better your they back developed, with ad, things giving they'll to more among tools performance. confidence you do increased. the book go money We've measurements, be, tools any also people us than clicked And that's is they People of it's is there the you PPC it, is there how in us saying So brand that a when check which of testing actually this more with Two, go any a over capability likely any believe, aware brand we spend measurement someone to more been to be has if believe a who by may are

there'd thought be think yeah, less of value. because And not – clicking mobile, the those terms speak. we that so one around, there So is to who we ever of of mobile that in I'm

Operator

you. Thank

Our Suisse Paul for question. landscape from with LLC Asia provide next you'd a proceed. Thanks update was - Great. Bieber Suisse. ex-China. Credit the Paul my quick line of competitive hoping Bieber question (USA) will Please I Securities taking on Credit come

quarter's on you was wondering impacting spent what room that last just Agoda? time on for growth China I extent discounting call. that Booking.com or think to outside I some is actually night

Glenn D. Fogel

speaking get seen Asia, It you. is or very still of booking. LLC one It to we haven't still I There much change this. we market in Okay, again. China. thank very, prevalent. in (USA) Glenn from not the - that discounting. talked is is ex-China may time It's of competitive in It's most a And the about Bieber still the last Securities a competitive get have markets to world. the if we best price, Paul don't continue the Credit mindful be we Suisse Okay.

Operator

you. Thank

will from Deepak line question Barclays. Mathivanan the next of proceed. Our come with Please

Deepak Mathivanan

me. for taking Hey, Two the guys. Thanks questions. for questions

trends in the Do the four on in think over recent again, can seeing U.S. gains last you quarters. And based brand one, analysis about share discuss accelerated marketing. data, market you of the some the for So U.S. of then first, you're on second your Booking.com? the

Given profit the night gross spend the in out have forecasting night near-term room from trends incremental the room in XQ brand you from might campaigns, how guidance? Thanks. considered marketing contribution difficulty brand shape in

Daniel J. Finnegan

in in posting healthy share the the terms believe the U.S., of over trend booking several the quarters. last over U.S. several We with we're very last in U.S. the pleased quarters, growth the its is performance of rates very Deepak, Booking.com growing

We've through the actual business at in that seen is thus Priceline.com as trends, in the long-term the terms then, some generally size look we we deceleration our are the of So assuming of forecasts the and off that's performance do we'll U.S. and that results it we've trends. remainder see And a of seen which every trend business, the that's the nice which far plus, given U.S.-centric for way done quarter quarter, too, proceed the the a brand improving brand. as quarter, the is for of

anything in advertising the we related spend planned the So quarter. build specific that's to didn't for

typically many a XXXX, Our – it's build for that Priceline for advertising we've and experience in as advertising active spend. has been Booking.com years KAYAK, and investment for a of on since slower been TV return slower TV we've for done

but mean job a of ROI advertising, that capability We positive are measure one. doing effectiveness better doesn't it's and to day improving the our

So the advertising do we But intent-based short in would. term. line the kind pressure top to the term, thing margins right going growth think long it's to pop way to same the to be the for probably going it's not and of deliver

Deepak Mathivanan

Thanks lot. helpful. a That's

Daniel J. Finnegan

welcome. You're

Operator

come with proceed. will line Securities. Fargo And our next question Peter you. Please of Stabler from Wells the Thank

Robert James Coolbrith

call is Rob afternoon. Peter. for This Good the on

Just to performance go channel. back quickly wanted the to

the specific you're changed consumer? traffic you. might anything responding from some were those those in on there then, of in their the future? finally, in if if is there there Or more changes quarter. And of channels constructive position is to to make decision have a those sources more that that could relation recent see as you you wondering strategic this conversion Just again Thank the in you that

Daniel J. Finnegan

prepared an us As been pressure margins – for deteriorating ongoing it's just spend. Glenn marketing more trend in said that performance ROIs, we've in the our remarks, on it's seen

was so starting more that even – and it move to for re-evaluating to looking positive trend that arrest direction. a ways and And in start

say I'd specific. nothing So

websites experience our teams to improve continues generally our to the conversion as Our see to our experiment for continue on users. improve

really there And there that so it. And sorry, question? nothing was second I'm drove a

Robert James Coolbrith

it. No, you. Thank that was

Daniel J. Finnegan

You're welcome.

Operator

Jefferies. the Fitzgerald Please with our Thank you. will proceed. question from next of Brian come line And

Brian P. Fitzgerald

depth I you Thanks. vacation Glenn, and the rentals? know And you a you inventory, properties, high the at do how instant do penetration think about your of how or wanted feel there. bookable then rental X.X how penetration instantly feel about vacation bookable with breadth about level million the to

Glenn D. Fogel

Brian. Hi,

everything. page we're our just That's make million, on core the know X.X So to It's that (XX:XX). entire inventory. here, you sure our that's same both and our

I naïve. in we how will So to now. make space invest this not leader that I'm better about the continue right and look, do to broader. feel we recognize I are feel not it I And it?

leader did we we give overall but that's a what we rentals And which we're I that over the example fits summer, saw the there they little in are went perfect a the I and that suspect, We will why invest the some have we I for in rental-type. for bit regular to hotel wanted enough stuff same accommodations believe like that thing want great properties. bit And competitor I Iceland, and you had the the little to going I going was believe to to what But a – it to is doing was our experience who come able on that site. than I'll technology. believe of all more is page. we breadth And bigger me. want my It create people we this properties. We we is have area. have site of properties, accommodation the of I core with people. wasn't a are to need. Iceland family. And I the of properties our better, money. didn't kinds and best the Because is types be vacation different that be vacation had the I is makes to we able to get

talked that the spending we're what of we've on. of and little in opportunity put be got us that the it'd reason about right going foolish money to for that because and That's the we're that something we talked to that's a that do. about, now Because I money on run, bit part to get there's OpEx. just long there pressure that's work So think, advantage. such to incredible an Dan not

Daniel J. Finnegan

that been our terms on of been us, That's share comment our very made penetration, we've than rental statement growing a broad available business Brian, in our the rate. And business. got properties. But It's mid-single-digit for fast-growing growth we've vacation faster consolidated website. before we've the with all of a the properties a are that of pleased

assume there. performance and also exists there So good the that you that penetration is the opportunity can

Brian P. Fitzgerald

Thanks, guys.

Daniel J. Finnegan

You're welcome.

Operator

Thank you.

the Our proceed. come from next Please of Kevin line question Kopelman will with Cowen.

Kevin Kopelman

Hey. Thanks.

I that's me. think

So ask also. about I to wanted vocational

rental additional makes update is to I maintaining fewer rooms. costs if some have given an but of on-boarding bookable vacation of Just rate as and asked, apologize nights vacation then, room higher that a charge a a commission percentage the sense on properties where for rooms? been with rentals, as vacational you associated And bookable percentage approximately it's give Thanks. of can us and it

Glenn D. Fogel

fact in the part we take of terms I'll the decision. So first charge or the of properties. that delivering what that's about service owners of that hosts should these is a the to we're terms in And the market that

have if to not have of a you right but want price, You the inventory. can what to tell you going and charge, lot go don't you're

So that is market-driven.

reduce of area that cost able that then about on And property, bringing costly, I But elements business, contacts as build we is that And that and too. This also, to breadth of order is that to investing are make other as of you order something properties, to in using to us try the those build out customer business. again, technology. something sometimes, underprice inventory. technology type we the in are a even to to evaluate can be in mentioned that the all going build the higher holistics, help continue may are things one to we're technology

more and some So unit down right road get overall per question... will cost these of are reduce experiencing that versus deleveraging hopefully investments now. we're the help leveraging the we're making the us Dan, regarding now that And, that the

Daniel J. Finnegan

vacation of rental stats. the Regarding those haven't size business, we the disclosed

can that be faster see growth can And us. You wouldn't count. property assume than wasn't the consolidated rate. said that in the growth the that for We've you we that growing it's fast if doing growing

– we meaningful how exactly to of but our So business, going aren't it's part it's disclose a is big it an important today.

Kevin Kopelman

Glenn. Thanks, Dan. Thanks, Okay.

Daniel J. Finnegan

You're welcome.

Operator

from Kelly our next question the Thank come Jed line with will And Oppenheimer. proceed. Please of you.

Jed Kelly

commissions dissipate to then, And potentially bearing the less do you supported whole-home-type try a the pronounced rental versus year-over-year that you inventory of the The single how vacation can call in decrease commissions? out to anything more start think merchant prior you merchant fee? traveler and of Is in six charging to Great. seemed quarters. unit, decline as there

Glenn D. Fogel

take me second about I'll Dan merchant. Let the let talk one. the

be evaluate we charge through an it's to we're the to going how going to markets to of talking thing forward how But in charged it's and be and a host, much as and thing to charged competitive a as different our much leading and One types our go doubt, ways of is we're without develop the what there. is would going the to what strategy the be things to going you going want try Dan? be is. do how important That's I it factor really position customer, about to different doing to that don't different of properties. a

Daniel J. Finnegan

merchant profit talk divided gross you commissions, when Jed, And you're just that gross merchant by merchant booking. I assume looking

Jed Kelly

Yes.

Daniel J. Finnegan

decelerating take and from but we've bookings function of benefit a checkout the That's occurring have growth, faster-growing that's gross stable, rates prior are so timing, got what there. meaning seeing growth The line top still fundamental really. of quarters, you're

Jed Kelly

Thank you.

Daniel J. Finnegan

welcome. You're

Operator

Thank you.

from line Mike question Please of will Piper the next proceed. Olson come with Our Jaffray.

Michael J. Olson

metasearch market growth, OTAs from an slower of is question. are we've Hey, ask a slightly getting or a slower investors underlying earlier If follow-up saturation because recently. the transition Thanks. mentioned, more websites, way, rate seeing good been it different is AKA from brand-direct travel slowing the solid, afternoon. because booking like Hotel online you online? it share but growth going? Maybe to where as travel and I'll trends Is the growth question travel offline this bookings is seeing is are and from the

Glenn D. Fogel

slow still large much travel bigger growth faster. business, is recognize And market, are numbers, Glenn. relatively the are thing than percentage naturally growth as we number a overall travel are the Dan let share on Compared in big that single-digit important still One to in rates one growing overall his a so that rates, we're And or the very decline. business we think thoughts this. It's of while finds I'll down we I growing fill of the to growth a much now.

you don't So picture occurring like Dan, type. take... to not see want That's any even to do I where-did-it-go me.

Daniel J. Finnegan

the the was growth posted we believe the growth to nothing we're fundamental is and with And me relative that I anything think market. to in growth of out significantly There's that lead the called guiding agree. chain to the would Glenn, that that changed reports I I'm there. that for quarter spectacular has the

Glenn D. Fogel

Yes.

Michael J. Olson

Thank you.

Operator

you. Thank

of will question Please the next with proceed. Raymond come line Our Justin from James. Patterson

Justin T. Patterson

the Dan, the then much. like base us investments profitability help investments fragmented in alternative inventory? and of there? and on investments, learning. this like your that should other ramp great that categories AI Thanks. you've IT machine very how toughening should there muscle, could think more you benefits we Is you supply learning today Great, about think B&B? a think exclusivity And How thank about versus pumping any of frame everyone past on on or some supply in accommodations with secondarily, and we Glenn I into business? the benefits acknowledges job call around in AI/ML that done are steroids particular

Glenn D. Fogel

Dan I'll do talk about accommodation the can and IT, alternative the thing.

So it's from interesting very really because, in key the the technology business, been beginning. has our

what and of play. levels IT, different are what coming into technology technology it's so types And of new types of new

we're you I in that had assist being. service service be of the past is where is customer much of it won't you done, things then benefit a know it I away know we And now, to than miss to of booking right of will to Right hard be these artificial enabling transaction. the intelligence does if are do to some able And a quantum a out. unit bat. in that, investing of cost product, there. self-service-type beta as get customer this issue right leap that's now. call importance human it the right what incremental efficiently because be, there's if let's which now, become way – customer incremental some Customer things able first it. we're seeing the off completely a think you the lower is it's we Look, areas And to is is it, per And have applying in say it so hope the new we're we quantum that, do now. But mentioned, service or So use more try, right innovation? one to but innovation you speak, A), it. will incredible don't when leap, to And going to

up capital it road. do Dan, just type to great alternative... is scale the lower have the the think At end, talk you edge case, we come these so things, per a worst and and we're something unit. I out, point of with both. about we end with the cost more want competitive us to be up So give that And At I much the looking able top as effective. for may the people we And, down to

Daniel J. Finnegan

perspective. less accommodation partner profitable services is The a somewhat business new alternative from

given the can very customer significant nature still then, said, we making that stay sophisticated service are up So our help these also to still profitability with little vacation they're rooms our too, facing That gather, for properties and working of now, a little touch we're of less a hands-on fast. bit facing the we requiring properties in to perspective, impressive, bit and the properties. the unique property, We're properties is that side. IT business our teams sure growing more rental growth. customers, making investments partly on investments in had there with. the a less service make typically, the From But customers a with more lot than hotel with worked are of because initially go and

Glenn up improving easier So the customer property website, of rent, website, apartment on see home Hopefully, side, way. self-signup the a of the of of learning. we're improve then, customer those information asking improve that's number we adding our on also the answer to or make experience, they for that these we to question why to experience home individual processes. ask And there's before some more talked amount for for teams machine automate intuitive just about looking also on with the teams owners as contact putting can serve the of what's driving people service bear property bring use the are owners, them reasons questions. it. to And contacts, to efficiency themselves to that it customer available on service improve the a that that focused our they're their including under booking experience and people umbrella, and

ever business core there partner hotel know as to of profitability customer it But from perspective over I as see the better don't business So be the scales. the service. our is that services I as profitable think improve to and will opportunity trends or there time the

Justin T. Patterson

Thank it. Got you.

Daniel J. Finnegan

that's win block-out bringing strive some our demand typically exclusivity, a other loyalty sort not of for. partners' to of them than price of demand reasonable we terms rather In We platforms. by something want contractual at

Operator

you. Thank

next Our proceed. question Millman Please with come Research. will Michael of the Millman line from

Michael Millman

able Thank to that's of predict And AI, where do you. the I actually think talked extent the there? revenue want previous are in now, in example, their that? the in a what that's you you. all what than vacations I doing? can using that or growth the To that to later, follow on that but up hurt extent future, offsetting your competition the history. employing metasearch for marketing sooner of maybe need you've you you the based for question line on – people upon some trivago, And us you're talked literature KAYAK, and to the unrelated, some Thank bottom about mentioned you're what then And – you're for on them. you've seeing has tell see about

Glenn D. Fogel

AI, in talk not just – think because little it's a just about So, better sense that a general. Michael, I'll bit technologies to here, I technology it's see I think just

AI to technology, the be facet it giving because it or produce and idea at both who's we're experience. too, partners, better who experience the to customer the we're other for to ways. is of a end Because, best for using whether and back us technology, our to provide the wants day, customer a loyal them – of the is willing any using come to because So

more Dan, make actually I'm that different and at all for. better it can them provide provide we're to technology, facets for us result the better. driving time just site the a decision that which if we details or scale first spend search into some better, advantage. what a make your on, cetera. the gives we're point example, et matters get on We'll what actually what something this I'll come to money most and great technologies things process competitive going or to helps of it you using having time a continue and they it experience or, that not That's And our make is us. fairly for that the confident to hotel. for to that the... and all need is develop all So going the possible our them people of personalized to customers the to make able up we do feel to be to come business areas everything for you're come And we'll And what make from photos better to exactly we a easier

Daniel J. Finnegan

Then out if in the And our meta nicely. market we're say, list. want the of performance It's growing of of it's one on there with you share I'd metasearch, business. Michael, it's KAYAK right near really pleased profits, talk the bigger the players of top It's – to side.

growing. business, profitable very So

future. about and KAYAK brand and stronger bringing I both think work from Momondo excited and sharing and to And by in the very to practices together the best run responsibly having Steve brands we're of brand together teams make the team. his Hafner prospects

Michael Millman

Thank you.

Daniel J. Finnegan

You're welcome.

Operator

you. Thank

the from with proceed. line will Khan Please SunTrust. Our of come next Naved question

Naved Khan

much. on trivago. for U.S.? it had quick sitting perceive follow-up And should very thank the the Yeah, crowded? more TV a less Is here? landscape you it we I lay advertising How outside out Can you then, just crowded,

Glenn D. Fogel

to less few or the helpful countries have which Since as I'm that and glad will they which we effective will over Hi. not better going countries competition that to, is a telling Glenn. say more I you have It's say we simply are very give or to that us last not be going are it's about we think we tools years before, talked how measurement. that, not. developed we're

whether know channels. how second right not in we're part. terms the decision And, we're or making we'll So in the Dan, those investing of

Daniel J. Finnegan

ask You trivago. question your second the didn't What's question? about

Naved Khan

what know about to your think product curious How impact that changes business was that? made? the trivago just we on I'm the from So should

Glenn D. Fogel

all. advertising platform We partner out any don't call at individual

not specifically speak I'm to So going about trivago.

to in to I how going think way have bids. not always the to what spend, this the important. earlier as we're going there, do advertising long dynamic to marketing – it platform term, what's look us a us money it earlier things make making putting where where we're to make, top and It's decision players changes, money different are bidders for the we going is really is and looking that's in that's a other how And going the market, in said to And this I evaluating to in in at we're and going we spend because make way our holistic bids, to what we're of so I mentioned a going there. in for of where what's make on run. other we're bids kind much the we space, do near going all on that

say predict again, So these the very road. to of And hard movements. impact what the the be to all trying changes different so down even will more is

Naved Khan

you. Thank

Operator

you. Thank

line from Crest. the coming is Please of with Pacific question next Brad Erickson proceed. Our

Brad Erickson

thanks. Hi,

asked of lot already. have one more it been But a and follow-ups, try at to these Just I'll way.

marketing the that if this of terms to curious then, a it marketing pullback most on pullback spend, group? from certain on or you'd of said broadly performance just was those that imply channels. In just in focused smaller pullback or across was and And in if channels, a meant secondarily, more spending performance just

get on going to assessment wanted deeper there. a of what's Just

either or demand traffic, two in performance overall of is – productive Which opportunities the leaves less two channels converting deliberate I you're kind marketing so new are that softer out having driver or real issues real driving seems there use like pullback having up You've about conversion those that's ruled that of to you're basically possibilities you're this less reason. those that like for feel of suddenly traffic spending? your of are the whatever improvements. kind bigger issue talking the leg

Glenn D. Fogel

it speak not specifically individual to saying actually is platforms. we don't out Because I'm want again, So broad, calling to it narrow. going is start

in the direct nothing all that's it. goal, our important we important based to basic that we build made those driving on improving relationship. goal? it's it the that more believe we our think And decisions. towards earlier the earnings about And that how And or point evaluate of the make channels. business call, complicated to previous we It's Is that us said how our I is is where hurting that's that. than

Operator

Thank my this conference time. you. And Sir? I'm no over or Mr. pleasure questions Fogel showing further now back for at to It is to comments closing hand the remarks. Glenn

Glenn D. Fogel

and want everyone for next participating, see to you for I call. Bye-bye. thank we'll So the

Operator

and Ladies This for thank have participation your conclude we day. wonderful conference. and on Everybody, may today's does you the all a program, disconnect. gentlemen,