Booking Holdings’ BKNG shares have gained 25.4% in the trailing 12 months compared with the Zacks Retail-Wholesale sector’s appreciation of 5.8%.

BKNG has also outperformed the Zacks Internet-Commerce industry and its peers, such as TripAdvisor TRIP, BigCommerce BIGC and Beyond, Inc. BYON.

In the trailing 12 months, shares of TRIP, BIGC and BYON have plunged 48.8%, 16.8% and 84.6%, respectively. The industry has returned 36%.

BKNG is benefiting from a favorable travel demand environment owing to the growing demand for global leisure travel demand. 

Can Booking Holdings sustain its strong performance given the current favorable travel demand environment, or are there potential risks that could impact its future growth?

BKNG Sees Strong Growth in Room Nights and Bookings

BKNG is benefiting from stronger-than-expected room night growth, driven by increased demand across all major regions. Solid momentum in booked room nights is contributing well to the gross booking’s growth.

This positive momentum is reflected in the fourth-quarter performance, where room nights grew 13% year over year, exceeding the high end of expectations. Growth was consistent across all major regions, with Europe standing out due to particularly strong performance.

Due to the increased room night growth, gross bookings rose 17% year over year in the reported quarter. This growth was further bolstered by higher flight bookings and an uptick in accommodation Average Daily Rates, further demonstrating the strength of BKNG’s overall performance.

In addition to the boost from room nights, growth in airline ticket bookings was significant, rising 52% year over year in the fourth quarter of 2024. This was supported by strong offerings at Booking.com, Agoda, and Priceline, which helped elevate overall performance.

BKNG’s AI Integration Bodes Well for Investors

BKNG’s AI integration across its platforms aims to enhance customer experience and provide value. The company’s personalized AI-powered portfolio provided to its customers and partners increases operational efficiency.

The integration of AI-powered features, such as Booking.com’s AI trip planner, enhances trip planning by recommending accommodations, destinations, and itineraries tailored to users’ past behavior and preferences.

Meanwhile, Priceline’s AI travel assistant, Penny, uses generative AI to assist customers in booking flights, hotels, and rental cars, offering personalized suggestions that ensure a more seamless and enjoyable experience.

BKNG Offers Strong 1Q25 Guidance

BKNG’s strong room night growth and AI-driven advancements are expected to drive the company’s top-line growth.

For the first quarter of 2025, Room Night Growth is expected to be between 5% and 7%. Gross Bookings growth is likely to be in the 5-7% range.

First-quarter growth in revenues is expected to be between 2% and 4%. The Zacks Consensus Estimate for first-quarter 2025 revenues is pegged at $4.59 billion, indicating year-over-year growth of 4%.

Earnings Estimate Revisions Show Downward Trend for BKNG

The Zacks Consensus Estimate for first-quarter 2025 earnings is currently pegged at $17.50 per share, down 14.18% in the past 30 days. The consensus mark indicates a year-over-year decline of 14.17%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

What Should Investors Do With BKNG Stock?

BKNG is benefiting from strong travel demand, AI-driven innovations and expanding merchant and alternative accommodation offerings.

However, the main factor that is hurting Booking Holdings is the impact of changes in foreign exchange rates. FX changes contributed to about a 1 percentage point negative impact on gross bookings growth in the fourth quarter of 2024.

Booking Holdings also faces intense competition from a wide range of players in the online travel booking industry, including Expedia, Tripadvisor, Airbnb, MakeMyTrip, physical travel agencies, tour operators, wholesalers, travel search engines, and increasingly from Google, which is enhancing its travel initiatives and search engine optimization efforts.

Booking Holdings carries a Zacks Rank #3 (Hold), which implies investors should wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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TripAdvisor, Inc. (TRIP) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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