Booking Holdings (BKNG -0.30%) presented its fourth-quarter 2024 earnings call on February 20, 2025, with CEO Glenn Fogel marking his 25th year at the company. The travel leader shared robust results and a confident outlook on navigating the AI transformation reshaping the travel industry. Here are the most significant insights for investors focused on the long-term picture.

1. Exceeding Financial Targets Across Key Metrics

Booking surpassed its long-term growth goals, demonstrating strong execution within the travel market.

For the full year, gross bookings of $166 billion increased 10% versus 2023 and revenue of $24 billion grew 11% year over year. We achieved these strong top-line results while growing our bottom line even faster with adjusted EBITDA of over $8 billion, increasing 17% year over year.

-- Glenn Fogel, CEO

Particularly noteworthy is how the company expanded profit margins while continuing to invest in strategic initiatives. The company grew adjusted EBITDA margins by 170 basis points to 35%, exceeding management's expectations from the start of the year. For 2025, management projects continued momentum with at least 8% revenue growth and 15% earnings growth on a constant-currency basis, signaling confidence in competitive positioning.

2. Dual-Pronged Strategy for AI Adoption

Booking is taking a proactive approach to AI disruption by developing proprietary capabilities while simultaneously forming partnerships with major AI companies.

We believe that compelling AI powered offerings like a travel vertical specific agent will play a central role in delivering even more seamless and personalized connected trip experience to travelers. ... We are also excited to be working with leading generative AI organizations on their agentic developments.

-- Glenn Fogel, CEO

The company is already leveraging AI to improve operational efficiency, particularly in customer service, helping to maintain stable expenses despite increased payment processing volumes. By combining internal AI development with strategic partnerships, Booking aims to protect its market position regardless of how consumer booking preferences evolve. Management views its travel expertise, proprietary data, and established customer trust as significant advantages in an AI-powered future.

3. Merchant Platform Expansion Creates Strategic Opportunities

Booking.com continues its rapid transformation from a primarily agency model to a merchant platform, opening new revenue streams and enhancing the customer experience.

The mix of merchant gross bookings reached 59% of total gross bookings at Booking.com in 2024, an increase of about 9 percentage points year over year, which is higher than our expectations at the start of 2024.

-- Glenn Fogel, CEO

By controlling the payment process rather than simply connecting travelers with accommodations, Booking can more effectively bundle various travel components, offer flexible payment options, and create a more seamless booking experience. Management noted that while merchant transactions are already generating incremental profit, this represented only a small percentage of total adjusted EBITDA, suggesting substantial growth potential as fintech capabilities mature.

4. Alternative Accommodations Growth Outpacing Core Business

Booking continues to gain momentum in the vacation rental market, with growth rates accelerating and outperforming the traditional hotel business.

For alternative accommodations at Booking.com, we continue to see year-over-year growth with listings at the end of Q4 reaching 7.9 million, up about 8% from last year. More listings means more accommodation choices for our travelers, which we believe contributed to strong alternative accommodations room night growth of 19% in the fourth quarter.

-- Glenn Fogel, CEO

Alternative accommodations bookings increased 19% in the fourth quarter, accelerating from 14% growth in the previous quarter. Management attributes this success to the platform's unique ability to offer both traditional and alternative accommodations side-by-side, allowing travelers to compare all options in one place. This approach appears to be resonating with consumers, as the company reported growth across all global regions in this increasingly important segment.

5. Strategic Transformation Balances Efficiency with Investment

Booking announced a comprehensive efficiency program while maintaining investment in strategic growth initiatives.

We estimate the aggregate transformation cost that we will incur over the coming two to three years to be similar to the expected annual run rate savings. ... Embedded in our full-year 2025 guidance is about $150 million in cost savings related to the transformation program.

-- Ewout Steenbergen, CFO

The company's transformation program is expected to deliver $400 million to $450 million in annual run-rate cost savings when fully implemented. Rather than simply improving margins, management plans to reinvest approximately $170 million into strategic priorities including AI capabilities, connected trip initiatives, and expanded fintech offerings. This balanced approach reflects management's focus on both near-term profitability and positioning the company for sustainable long-term growth.

Looking Ahead

Booking Holdings' leadership conveyed confidence in the company's strategic direction, with CEO Glenn Fogel emphasizing both adaptability and the enduring appeal of travel experiences. With expanding payment capabilities, accelerating alternative accommodations growth, and strategic AI investments, the company appears well-positioned to navigate industry changes.

Management remains focused on advancing their connected trip vision, expanding merchant and fintech capabilities, enhancing their loyalty program, and leveraging AI for both customer experience improvements and operational efficiencies. As Fogel stated, "I am confident in our company's position and ability to leverage generative AI technology to deliver an even better offering for our travelers and partners."