The online travel company Booking Holdings (BKNG 4.87%), formerly known as Priceline Group, reported solid results for full-year 2017. The expectation was that growth would slow at the end of the year, but true to form, the company delivered numbers that beat the guidance it had provided shareholders and laid the foundation for another successful year ahead.
2017 in review
|
Metric |
2017 |
2016 |
YOY % Change |
|---|---|---|---|
|
Revenue |
$12.68 billion |
$10.74 billion |
18% |
|
Gross Travel Bookings |
$81.2 billion |
$68.1 billion |
19% |
|
Earnings per Share |
$46.86 |
$42.65 |
10% |
|
Adjusted Earnings per Share |
$77.03 |
$65.63 |
17% |
Chart by author. Data source: Booking Holdings quarterly earnings. YOY = year over year.
Though management had called for year-over-year gross travel bookings growth of 9.5% to 14.5% in the final quarter of the year, the actual result was 19%. That capped another year of double-digit top and bottom line expansion for the online travel sites, an impressive feat considering the company's near $100 billion market cap.
A loss of $11.41 per share was recorded in the fourth quarter due to a one-time tax expense of $1.3 billion. It was primarily attributable to a $1.6 billion charge related to the repatriation of international earnings under the U.S. Tax Cuts and Jobs Act passed in December. Excluding the charge, earnings increased 19% in the quarter and increased 17% for the full year.
The outlook for the start of 2018 was positive, too. Gross travel bookings, the total value of travel booked through the company's sites, is expected to increase 14.5% to 18.5% compared with last year. That should translate to 17.5% to 21.5% revenue growth.
What's next for Booking Holdings?
Booking Holdings may have recently changed its name, but it's up to the same industry-leading growth strategy it has executed on in the last decade. Its main moneymaker, Booking.com, ended the year with 1.6 million available properties, a near 40% increase over 2016. Included in that number are nearly 1.2 million "alternative accommodations" that include homes, apartments, and other unique properties.
Image source: Getty Images.
Booking.com recently split its property categories into two distinct classifications: traditional accommodations like hotels, motels, and resorts and unique vacation rentals. That change should help travelers narrow their search if they want a unique experience and makes the site more in-line with competitors like Airbnb -- the fast-growing start-up known for helping small property owners get their vacation rentals listed.
Continuing to add new vacation properties and expanding advertising around that service has been the driving force for Booking Holdings the last few years. Management said it will aggressively expand both this year, especially focusing on making property owners online management and payment collection easier. Added to the mix, though, will be a new type of travel accommodation. CEO Glenn Fogel had this to say:
We're experimenting with providing in-destination experiences and currently have tests running in multiple markets. Whether you want to visit a museum or book a tour, booking.com wants its mobile app to eventually become the center of your entire travel experience. It is extremely early days for us, but we are excited about the long-term potential in this area.
That new area of focus is in keeping with the parent company's name change. Booking wants to become a holistic hub for travel and exploration rather than just a simple travel merchant. That is a wise move, as studies show that younger generations view life experiences as an increasingly more important part of their lives.
Though Booking Holdings is already a large company, it's showing no signs of slowing down. With a pipeline of growth in alternative rental properties still going strong and a new initiative in vacation experiences booking just beginning, the stock looks like it has plenty of room to keep going higher.
