Can This Powerhouse Stock Keep Beating the Market?

Travel stocks have taken a beating since the pandemic began. But after a rough stretch of its own, online travel agency powerhouse Booking Holdings (BKNG -0.69%) has once again turned profitable. In this episode of "The Rank" on Motley Fool Live, recorded on April 11, Fool.com contributors Jason Hall, Brian Withers, and Matt Frankel discuss the headwinds awaiting the company formerly known as Priceline.

Jason Hall: This was Priceline.

Brian Withers: Priceline. Yeah.

Hall: Priceline.com and one of its biggest shareholders was Captain James Kirk. You guys remember the Priceline commercials? His deal was to get stock. I don't know if a lot of people know that, but he became a very wealthy man on his Priceline shares by doing those commercials, and the company didn't have to pay big celebrity a bunch of money. So that's really, really interesting. The change to Booking Holdings happened, I think maybe 10 years ago now. Maybe not 10 years ago, but pretty close to it. One of the mergers that happened over time was with Booking, which became its one of its most important businesses, which focuses on hotels and bed and breakfast bookings in Europe. So $90 billion business, you can see the stock price has been very volatile over the past year and because this is a business that deals with travel. This is a website and a platform that people go to book hotels, going to book vacation, stays and travel and that sort of thing. It's been a very challenging environment. That's why revenue was up 141%. Continues to make that turn, very profitable business, return to profitability, continues to focus on the balance sheets. I think for me, guys, one of the reasons that I ranked this where I did, which was, again, still toward the lower end, is that as much as Booking has become established with Priceline and booking in some of these platforms that are well established, this business is far more competitive today than it was 10 years ago. It is becoming increasingly competitive around the world as you have brands that stand up in different countries that are focused on those markets. Whether it's language, how is business done in those markets, and to really focus on what customers are looking for there. I just think it's going to be a real challenge for Booking. It's lost that first-mover advantage, and the industry has just become far more flat and it's going to be more challenging. Particularly, when you see the rise of like the Airbnbs of the world. Brian, you ranked this one --

Withers: I ranked this one last. Some of what you're talking about, the competition, not only are there things like Airbnb offering alternative platforms to exactly what Booking Holdings does is it allows you to book travel. The other thing that I see is that as the company scales, people are looking at Airbnb as a great example on more personal experience. As we're trying to book a trip, we're potentially going to go with a tour outfit that's a small outfitter that focuses on a specific niche and specific area. I don't know that Booking Holdings is, as big as it is, can appeal to those changes in travel and having something more personal and a better experience. The other piece is, as we look at this list of companies, there's only so much travel people are doing in the world and Booking Holdings is getting a small fraction of the transactions that happen. I can't see, even if it grows market share, where it's in the long-term benefit. I think many of the other companies here have much more optionality.

Hall: Matt.

Matt Frankel: That's where I'm at with it. I think Airbnb is Netflix and Priceline, Booking, might be turning into Blockbuster a little bit in that sense, in that it's not current in my mind. Definitely, it's a powerhouse business. There's no doubt about that.