Booking Holdings

“Our Gen AI initiatives will require increased investment in infrastructure and headcount.”

“In some instances we may make use of third-party foundational models that have been pre-trained on data which may be insufficient, erroneous, stale, contain biased information, or infringe intellectual property rights.”

“Information technology expenses increased year-over-year in 2024 due to an increase in expenses related to cloud computing costs and outsourced data center costs, as well as software license and system maintenance fees.”

“We expect our more fixed OpEx to grow faster than revenue in the second quarter, due primarily to faster IT expense growth as we have been investing in new tech platforms and in line with the full year guidance we provided last quarter.”

“Our approach remains focused on deploying this technology in measurable ways and scaling when we see clear benefits.”

“What we do not want is any surprise because people went bonkers with spending money on tokens or somehow doing something that costs a lot more than we thought it would.”

“We are already seeing an ROI that is positive on our AI investments today as a company.”

“If I'm looking specifically about our AI costs, yes, they're going up. It could be token cost or license fees. It's still at a low single-digit level of our overall technology spend. It's not really a driver of the growth of that line item, but it is going up.”

“The most important one from my perspective is that we are having a cost-aware model routing so that we make sure that for simple tasks, we are using cheaper models, and that for more complex tasks, we're using more expensive models.”

“We're measuring that, for example, by looking at our AI costs over merge requests and our technology cost over merge requests. Actually, those are coming down in a meaningful way.”

“Information technology expenses increased year-over-year for the three and six months ended June 30, 2026 due primarily to an increase in cloud computing costs and software license fees, as well as changes in foreign currency exchange rates.”

“Adjusted fixed operating expenses increased 6%, driven by higher cloud computing costs and software license fees, as well as adverse changes in foreign currency exchange rates”

“We believe we are well-positioned to leverage this technology, given we have built strong teams of AI experts and gained valuable experience from using AI extensively for many years.”

“We have made significant investments in people, technology, marketing, and added or expanded travel offerings. In 2024, we continued our investments in Gen AI to benefit internal productivity and improve the consumer and partner experience.”

“Our Gen AI initiatives will require increased investment in infrastructure and headcount.”

“Our approach remains focused on deploying this technology in measurable ways and scaling when we see clear benefits.”

“During the quarter, we further increased our capacity to invest for future growth as the expected annual run rate savings enabled by our transformation program continued to increase. These savings provide us with additional flexibility to accelerate innovation, enhance our products, and strengthen our business over the long run.”

“We are continuing to invest in the Connected Trip, expanding our presence in key markets, advancing our AI capabilities, and strengthening the value we create for both travelers and partners.”

“As Glenn said, strategically, we are, of course, very much focused on learning ourselves, diversifying our channels, then in the end, focused on keeping the direct traffic to us by investing the AI tools, the customer-facing AI tools in our own environment.”

“We are already seeing an ROI that is positive on our AI investments today as a company.”

“What we are doing in the end is creating capacity to self-fund and invest ultimately in our strategic initiatives that then will help to drive long-term growth for the company.”

“Sales and other expenses are generally variable in nature and consist primarily of: (1) credit card and other payment processing fees associated with merchant transactions; (2) fees paid to third parties that provide call center and other customer services;”

“We strive to provide excellent customer service, including through call centers and online platforms and the use of virtual assistants.”

“At each of our OTA brands, our teams are actively exploring ways to leverage Generative AI technology to improve self-service tools, which we believe will reduce live agent contact rates and enable us to answer traveler questions faster.”

“In sum, we believe Gen AI will lower our customer service costs per transaction over time and improve the customer experience.”

“In addition, customer service, which is a critical function that we provide to both our travelers and partners, is an area we believe will be meaningfully enhanced by AI advancements.”

“using Gen AI to drive efficiencies in our operations;”

“Finally, we're increasingly applying AI across our own business to accelerate software development, enhance customer service, and streamline internal workflows.”

“Our AI initiatives are reducing customer friction, lowering contact rates, and improving operational efficiency. We have now scaled voice AI support across the majority of eligible inbound traveler calls while continuing to expand digital automation.”

“As a result of these combined AI and human capabilities, customer service cost per booking continues to decrease at a double-digit rate while overall customer satisfaction remains high.”

“Adjusted sales and other expenses were 1.9% of gross bookings and provided a leverage despite the higher merchant mix, as higher payment expenses were more than offset by customer service efficiencies. Additionally, payment expenses grew less than merchant gross bookings due to a one-time benefit from processing fee reversals.”

“As we continue to execute on the transformation program, we identified additional opportunities, increasing our expected annual run rate savings from approximately $550 million to approximately $650 million.”

“We've been talking about how our cost per interaction with a customer are going down. That's because of AI. That's using it, and we're getting better CSAT numbers.”

“We found additional savings opportunities within existing categories, no new categories. This is all existing categories to go deeper in some of those areas, and the additional $100 million mostly came from the procurement work stream.”

“Sales and other expenses as a percentage of total revenues decreased year-over-year for the three months ended June 30, 2026 primarily due to efficiencies in third-party customer service costs.”

“As we continued to execute on the Transformation Program, we identified additional opportunities, increasing our expected annual run-rate savings to approximately $650 million.”

“We have made significant investments in people, technology, marketing, and added or expanded travel offerings. In 2024, we continued our investments in Gen AI to benefit internal productivity and improve the consumer and partner experience.”

“We are seeking to incorporate Gen AI in our business, including for internal productivity purposes and in consumer- and partner-facing initiatives such as AI travel assistants, price comparison tools, and as part of enhancing the development of our Connected Trip vision.”

“In November 2024, we announced our intention to implement certain organizational changes, including modernizing processes and systems, initiating an expected workforce reduction, optimizing procurement, and seeking real estate savings”

“using Gen AI to drive efficiencies in our operations;”

“Finally, we're increasingly applying AI across our own business to accelerate software development, enhance customer service, and streamline internal workflows.”

“We're also seeing promising early results in our technology organization, where AI is accelerating software development and improving developer productivity.”

“Adjusted fixed operating expenses increased 6% year-over-year, including 1% higher adjusted personnel expenses, and were a source of leverage as a percentage of revenue, reflecting the targeted cost management actions we implemented last quarter and our continued focus on managing our fixed expense base while investing in key strategic priorities to drive long-term growth.”

“As we continue to execute on the transformation program, we identified additional opportunities, increasing our expected annual run rate savings from approximately $550 million to approximately $650 million.”

“Certainly, everybody talks about the improvements in coding, but of course, you got to talk about the whole software development life cycle. Actually, it's improving all areas of it, and we're working very hard, and we are seeing real results.”

“We have introduced very specific metrics to measure the benefit of this. Think about, for example, in the engineering world, metrics around adoption, metrics around productivity.”

“We're measuring that, for example, by looking at our AI costs over merge requests and our technology cost over merge requests. Actually, those are coming down in a meaningful way.”

“We found additional savings opportunities within existing categories, no new categories. This is all existing categories to go deeper in some of those areas, and the additional $100 million mostly came from the procurement work stream.”

“Employee headcount increased 3% year-over-year to approximately 25,550 as of June 30, 2026.”

“Personnel expenses increased slightly year-over-year for the three months ended June 30, 2026 primarily due to an increase in salary expenses partially driven by changes in foreign currency exchange rates, partially offset by a decrease in stock-based compensation expense.”

“As we continued to execute on the Transformation Program, we identified additional opportunities, increasing our expected annual run-rate savings to approximately $650 million.”

“We have made significant investments in people, technology, marketing, and added or expanded travel offerings. In 2024, we continued our investments in Gen AI to benefit internal productivity and improve the consumer and partner experience.”

“We are seeking to incorporate Gen AI in our business, including for internal productivity purposes and in consumer- and partner-facing initiatives such as AI travel assistants, price comparison tools, and as part of enhancing the development of our Connected Trip vision.”

“In November 2024, we announced our intention to implement certain organizational changes, including modernizing processes and systems, initiating an expected workforce reduction, optimizing procurement, and seeking real estate savings”

“using Gen AI to drive efficiencies in our operations;”

“Finally, we're increasingly applying AI across our own business to accelerate software development, enhance customer service, and streamline internal workflows.”

“It's being used in finance. It's being used in PR. It's being used by our public affairs.”

“In addition, customer service, which is a critical function that we provide to both our travelers and partners, is an area we believe will be meaningfully enhanced by AI advancements.”

“We believe they benefit from participating in our services by increasing their distribution channels, demand, profile and reputation, and inventory utilization in an efficient and cost-effective manner.”

“revenues earned by OpenTable for its restaurant reservation services and subscription fees for restaurant management services”

“We are seeking to incorporate Gen AI in our business, including for internal productivity purposes and in consumer- and partner-facing initiatives such as AI travel assistants, price comparison tools, and as part of enhancing the development of our Connected Trip vision.”

“AI is also strengthening our partner value proposition. We are investing in tools that help partners better engage with guests, improve their property content, and operate more efficiently. For example, our AI-powered messaging capabilities enable accommodation partners to respond to guest inquiries more quickly and consistently, reducing operational friction and improving the traveler experience.”

“This conference also reinforced our collaborative approach to innovation, including co-developing new AI capabilities using direct partner feedback.”

“We have also launched consumer-facing Gen AI capabilities, including a trip planner, an AI assistant to answer consumer queries, and a price comparison tool.”

“As we have discussed before, our teams continue to work hard to integrate generative AI into our offerings in innovative ways, including Booking.com's AI Trip Planner, Priceline's generative AI travel assistant named Penny, and Kayak's recent release of generative AI-powered features and tools.”

“So it's a very small number of people compared to the number of people who use our services, but we are continuing to advance it.”

“During the quarter, we continued advancing AI capabilities across our portfolio, including beginning to roll out testing of Booking.com's new AI-powered discovery experience, which helps travelers in the early inspiration phase of planning a trip.”

“We're also deploying the next generation of Priceline's agentic AI travel assistant called Penny, and we're launching Agoda's new gallery view, which gives travelers a more visual way to browse search results by pairing hotel images with relevant guest reviews.”

“For example, initial testing of Penny's integrated hotel checkout experience has shown that beginning more of the booking journey into a single seamless experience has the potential to improve traveler engagement while delivering stronger business outcomes.”

“All these things are good, but, and this is important, it's still very small, and we're not at a stage we're going to start giving away percentages, numbers, increases in CSAT, or anything of that nature.”

“As Glenn said, strategically, we are, of course, very much focused on learning ourselves, diversifying our channels, then in the end, focused on keeping the direct traffic to us by investing the AI tools, the customer-facing AI tools in our own environment.”

“Point of this, summing it all up in that area is that we are working hard with the third-party frontier players to make sure we're properly placed when somebody wants to book if they want to start there. Even more important to me is making sure that we're offering our own opportunities for people to come to us direct.”

“Kevin, it's out very early. I don't have any data to come back to you.”

“We're going to keep on working with that so that people, when they think of travel, they think, "I can go to one of our brands," and they will get everything they could get from any of the large language models, but get even more because we're able to personalize it from what they've done with us in the past”

“We believe we are well-positioned to leverage this technology, given we have built strong teams of AI experts and gained valuable experience from using AI extensively for many years.”

“In order to achieve the easier and more personalized experience of the Connected Trip, we have always envisioned AI technology playing a central role.”

“We endeavor to provide consumers with: (a) personalized and easy-to-use online travel services;”

“All these things are good, but, and this is important, it's still very small, and we're not at a stage we're going to start giving away percentages, numbers, increases in CSAT, or anything of that nature.”

“If you recall, when I first started talking about, for example, the Connected Trip, bringing it together, and we were talking about AI in terms of machine learning models, so ending up with different types of mathematical predictions of what we thought they want.”

“Now using Gen AI, we'll be able to do it so much better. I envision in the future we're going to get even more personalized than I ever thought we could, which will lead to what you're asking about in terms of a much better way to actually complete a transaction.”

“We are executing against our long-term strategy to create an ideal AI-powered traveler experience, offering our customers relevant options and suggestions at the times and in the language they want them, making trips booked with us seamless, easy, and valuable.”

“We're going to keep on working with that so that people, when they think of travel, they think, "I can go to one of our brands," and they will get everything they could get from any of the large language models, but get even more because we're able to personalize it from what they've done with us in the past”

“In addition, the widespread adoption of new technologies, such as Gen AI and machine learning, could influence how customers search for and book travel, render our existing technology obsolete, require us to modify or adapt our services or infrastructure, which could adversely affect our results of operations or financial condition.”

“companies offering AI agents powered by Gen AI that can perform or facilitate travel-related services, such as virtual assistants.”

“That's why we continue to work closely with leading AI organizations to ensure travelers can engage with our brands wherever their journey begins.”

“While AI-driven referrals remains a relatively small contributor to our overall business today, we are seeing encouraging momentum that reinforces our belief that the strengths we've built over many years, helping travelers find the right travel options with confidence, positions us well as travelers further gravitate towards AI-powered discovery.”

“If we look at the traffic we're currently receiving from large language models, so this is not what we are receiving directly in terms of traffic, but from large language models, both on a paid and an unpaid basis, that is still significantly below 1% of our room nights.”

“That hasn't moved so much recently, so no material change over the last few months or quarters.”

“Going a little deeper, the organic traffic, what we are receiving from the LLMs, we believe the vast majority is coming to us according to third-party data sources.”

“On the other hand, he also mentioned we're showing up a lot, but the referrals aren't showing much.”

“In fact, the most recent thing is, I believe maybe today even, I think Google may have come out today, a small percentage of their traffic, seeing their agentic booking, which we are one of the first with them.”

“Point of this, summing it all up in that area is that we are working hard with the third-party frontier players to make sure we're properly placed when somebody wants to book if they want to start there. Even more important to me is making sure that we're offering our own opportunities for people to come to us direct.”

“I will say, though, again, I doubt that anybody is getting a huge amount of business directly from what they're doing with their travel prompts, their discovery.”

“If we look at the traffic we're currently receiving from large language models, so this is not what we are receiving directly in terms of traffic, but from large language models, both on a paid and an unpaid basis, that is still significantly below 1% of our room nights.”

“If I look at the paid traffic, we are part of the test group of OpenAI for CPC. We like that from a diversification perspective in terms of our paid channels, and it's very much playing to our strength, the optimization models that we are running in order to convert, at an optimal way, traffic into bookings.”

“Personally, I like to take a little pride in the fact that I thought that one of them would start going for a performance marketing advertising platform, which is right in our wheelhouse, that we're very, very good at, and they have, and we're working very hard on that, so I'm pleased about that.”

“Our performance marketing expenses, which represent a substantial majority of our marketing expenses, are primarily related to the use of online search engines (primarily Google), affiliate marketing (i.e., business-to-business or "B2B"), meta search, and social media channels to generate bookings through our platforms.”

“We rely upon Google and other search and meta-search services to generate a significant portion of traffic to our platforms, principally through pay-per-click marketing campaigns. The pricing and operating dynamics on these platforms can change rapidly. If the logic determining placement and display of results of a consumer's search changes, the placement of links to our platforms can be negatively affected and our costs to improve or maintain our placement can increase.”

“Our performance marketing expenses, which represent a substantial majority of our marketing expenses, are primarily related to the use of online search engines (primarily Google), affiliate marketing, meta-search, and social media channels to generate traffic to our platforms.”

“In addition, the widespread adoption of new technologies, such as Gen AI and machine learning, could influence how customers search for and book travel, render our existing technology obsolete, require us to modify or adapt our services or infrastructure, which could adversely affect our results of operations or financial condition.”

“This performance came despite the continued pressure on SEO, which we are seeing across much of consumer internet. SEO remains a small component of our overall room nights.”

“Marketing expense increased 11% year-over-year, modestly faster than gross bookings, driven by changes in traffic mix, incremental investments in paid marketing at attractive ROIs, and a shift of merchandising spend to performance marketing.”

“I do believe that some of the changes that were made in the display at Google definitely put some pressure on SEO”

“Putting in that AI overview probably has done it.”

“That says that we are doing a good job of making sure that people come to us, think of us, and yes, losing SEO, don't like it. It was never a big part of the business, small part of the business, but obviously I don't like that and I wonder, somebody, they didn't come to us from SEO, which would have been in that direct category.”

“Again, just to emphasize, it's a very small component of our overall direct mix, and we see some slight headwinds, but the overall direct channel is growing in absolute numbers.”

“Marketing expenses as a percentage of total gross bookings in the three months ended June 30, 2026 were slightly higher than the three months ended June 30, 2025, driven primarily by declines in SEO, which remains a small component of our overall distribution mix, as well as changes in paid traffic mix and investments in paid marketing channels at attractive ROIs.”

“While we seek to adapt to evolving search engine dynamics, we expect SEO traffic to decline in the short to medium term, which may lead to increased spend in paid marketing channels.”