BKNGBooking Holdings Inc.

Booking Holdings is a travel booking intermediary that earns commission and owns almost no assets.

The company connects a traveller with a hotel, rental home, flight or car and takes a percentage of the booking. It owns no hotels, so capital needs are minimal and margins are very high. The flagship brand is Booking.com, strongest in Europe, alongside Priceline, Agoda, Kayak and OpenTable.

The dominant cost is customer acquisition: advertising on search engines and metasearch. The greater the share of direct and app traffic, the higher the profit, so the company invests in loyalty programmes and owned traffic. The mix of paid versus direct traffic is the key measure of business efficiency.

Demand is cyclical and exposed to external shocks: pandemics, conflicts and currency swings change travel volumes quickly and sharply. A separate risk is dependence on search engines, which promote their own booking products. The company directs almost all cash flow into buybacks and recently began paying a dividend.