#001 - $BKNG
Here's a short thread on Booking Holdings. My goal is for you to use this as a starting point for research and ultimately a potential investment. I'm trying to make complicated information easy to understand.
Grab a snack and let's jump into it
Here's a short thread on Booking Holdings. My goal is for you to use this as a starting point for research and ultimately a potential investment. I'm trying to make complicated information easy to understand.
Grab a snack and let's jump into it

Booking Holdings operates many travel brands that you might be familiar with like Priceline, KAYAK, http://RentalCars.com , and many others.
The all-important question, how do they make money?
Booking classifies revenue three different ways, agency revenues, merchant revenues, and advertising and other revenues.
The first two revenue streams are similar with a slight twist while the third is different.
Booking classifies revenue three different ways, agency revenues, merchant revenues, and advertising and other revenues.
The first two revenue streams are similar with a slight twist while the third is different.
1. Agency
Booking makes money by sending consumers to websites of hotels, airlines, or other travel-related companies. Booking takes a commission fee (akin to an affiliate fee) for sending consumers to these websites. Booking operates the website but not the planes or hotels.
Booking makes money by sending consumers to websites of hotels, airlines, or other travel-related companies. Booking takes a commission fee (akin to an affiliate fee) for sending consumers to these websites. Booking operates the website but not the planes or hotels.
1. Agency (continued)
In 2019, Booking generated ~67% of revenue through this revenue stream.
In 2019, Booking generated ~67% of revenue through this revenue stream.
2. Merchant
When a consumer books a trip through a Booking Holdings brand, $BKNG recognizes the revenue as the revenue from the trip minus the fees owed to the airline or hotel.
(The airline or hotel in this thread can be substituted for any 3rd party travel-related company)
When a consumer books a trip through a Booking Holdings brand, $BKNG recognizes the revenue as the revenue from the trip minus the fees owed to the airline or hotel.
(The airline or hotel in this thread can be substituted for any 3rd party travel-related company)
2. Merchant (continued)
This is similar to the agency revenue stream with the difference being where consumers book the trip. On a third-party website in the first example or on a $BKNG website in the second example.
Booking generated 25% of revenue through this revenue stream.
This is similar to the agency revenue stream with the difference being where consumers book the trip. On a third-party website in the first example or on a $BKNG website in the second example.
Booking generated 25% of revenue through this revenue stream.
3. Advertising and Other
This revenue is from advertisements on various $BKNG brands, revenue from OpenTable's subscription fees and restaurant management services, and KAYAK sending referrals to online travel companies.
This revenue stream accounted for ~7% of total revenue.
This revenue is from advertisements on various $BKNG brands, revenue from OpenTable's subscription fees and restaurant management services, and KAYAK sending referrals to online travel companies.
This revenue stream accounted for ~7% of total revenue.
Financials
$BKNG has impressive operating margins (~34%) and a respectable revenue CAGR of ~13%.
Booking has no cost of revenues (yes, surprising I know).
With the extra cash, Booking is buying back shares (13% of shares in the last two years in fact).
$BKNG has impressive operating margins (~34%) and a respectable revenue CAGR of ~13%.
Booking has no cost of revenues (yes, surprising I know).
With the extra cash, Booking is buying back shares (13% of shares in the last two years in fact).
My Future Questions
Tailwinds?
Booking has already benefitted from internet tailwinds but what future tailwinds does Booking benefit from?
It seems as though Airbnb might be a risk as more consumers move away from hotels and towards more personal stays at Airbnbs.
Tailwinds?
Booking has already benefitted from internet tailwinds but what future tailwinds does Booking benefit from?
It seems as though Airbnb might be a risk as more consumers move away from hotels and towards more personal stays at Airbnbs.
Future growth?
My investing style is looking for ten baggers. $BKNG is already an $80bn company. I don't see a high likelihood of $BKNG being an $800bn company let alone a $400bn company, but please prove me wrong.
My investing style is looking for ten baggers. $BKNG is already an $80bn company. I don't see a high likelihood of $BKNG being an $800bn company let alone a $400bn company, but please prove me wrong.
Competition?
Booking has many competitors like Expedia, Airbnb, Google, and many others.
What separates Booking from the rest? Is it a differing business model? Is it a better management team?
Booking has many competitors like Expedia, Airbnb, Google, and many others.
What separates Booking from the rest? Is it a differing business model? Is it a better management team?
Conclusion
$BKNG is an interesting company with impressive historical results. I wish I could've found them a decade or two ago and I'd be retired but sadly, that's not the case.
$BKNG is an interesting company with impressive historical results. I wish I could've found them a decade or two ago and I'd be retired but sadly, that's not the case.
This company reminds me of a mature company like Apple that will continue to grow alongside the rest of the market through continued revenue growth and buybacks but doesn't immediately fit my investment criteria.
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1 - Follow me, I tweet about investing, business models, and new threads every Sunday night.
2 - Subscribe to my free weekly newsletter. I distill complicated 10-Ks into simple actionable emails. http://Weekly10K.substack.com