3Q23: Booking in a strong Q3 on summer travel boom
- 3Q top and bottom line beat on strong leisure travel
- Adjusted EBITDA guidance of over $1.4b for 4Q largely in line with consensus forecasts of $1.45b despite some cancellations due to middle east conflict albeit concentrated in Israel
- Overall leisure travel demand expected to be resilient as consumers prioritise travel over other discretionary purchases
3Q beat on strong leisure travel. Revenue of $7.34b (+21% yoy, +18% fxn) came in above the street’s estimates of $7.26b. Non-GAAP EPS of $72.32(+36% yoy) exceeded pre-pandemic levels by c.60% and also beat analysts’ forecasts of $67.61. Operational metrics were robust with gross travel bookings at $39.8b (+24% yoy, +21 % Forex neutral) and room nights book 15% higher yoy and +24% vs pre-pandemic levels.
Adjusted EBITDA guidance of over $1.4b for 4Q largely in line with consensus forecasts of $1.45b; sees some cancellations due to middle east conflict. Embedded in management’s EBITDA guidance are a 9% yoy growth in room nights or 20% above pre-covid levels in 4Q19. BKNG expects 4Q gross bookings to grow 5 points ahead of room nights on a yoy basis from higher average daily rates and continued growth in flight bookings. 4Q23 is off to a slower start with October room night growth at +8% yoy, down from 15% yoy in 3Q for two key reasons – a tougher comparison yoy and the middle east tensions. In October, Asia room night growth was the strongest at +15% yoy, followed by Europe at +10% yoy. The US and Rest of the World declined slightly, with most of the impact of the Israel-Hamas conflict within the Rest of the World numbers. Thus far, most of the cancellations were in Israel (c.1% of global room nights) however we believe that this could spillover into the middle east (c.4% of global room nights) should tensions escalate. Nonetheless, despite some moderation in growth, leisure travel demand is expected to be resilient as consumers prioritise travel over other discretionary purchases.