01—Abstract
Summary
Summary of the 10-K filed February 20, 2009. Cited figures are marked; the original filing is the authoritative source.
Booking Holdings Inc. (formerly priceline.com Incorporated) filed its 2008 annual report (10-K) on February 19, 2009.
The report highlights a significant shift towards international revenue, with international operations accounting for approximately 58.4%a of gross bookings and over two-thirds of operating income in 2008. This growth was primarily driven by the Booking.com brand in Europe. Despite this international expansion, the company faced challenges due to the ongoing worldwide recession, which negatively impacted travel demand, led to decreased hotel occupancy rates and average daily rates, and increased cancellation rates.
The company continued to focus on its strategy to become the leading worldwide online hotel reservation service, leveraging its international presence and brand acquisitions like Agoda. Domestically, it aimed to maintain its position as a top online travel business for value-conscious travelers by enhancing its offerings and cross-selling opportunities.
Key risks identified include the impact of the global recession, intense competition, foreign currency fluctuations, reliance on key suppliers, and potential legal and regulatory uncertainties, particularly concerning hotel occupancy taxes. The company also noted the potential dilutive effect of its convertible senior notes and the accounting changes related to convertible debt.
02—Key points
Key Highlights
- International operations are a significant growth driver, representing 58.4% of gross bookings and over two-thirds of operating income in 2008.
- The company experienced a 53.2% increase in total gross bookings year-over-year, largely due to international expansion.
- The worldwide recession began to negatively impact the travel market in late 2008, leading to decreased demand, lower hotel rates, and increased cancellations.
- Booking.com and Agoda continue to be key international brands, contributing significantly to revenue and growth.
- The company is heavily reliant on its top hotel and airline suppliers, with the five largest hotel suppliers accounting for 63.2% of Name Your Own Price hotel room nights.
- Significant litigation related to hotel occupancy taxes across various jurisdictions remains an ongoing concern.
- The company faces intense competition from established online travel agencies and direct suppliers.
- Foreign currency exchange rate fluctuations, particularly the strengthening US dollar against the Euro and British Pound Sterling, began to negatively impact reported international results in late 2008.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, Booking Holdings Inc. kept $0.10.
- Revenue$1.88B100.0%
- Cost of revenue−$928.8M49.3%
- Gross profit$956.0M50.7%
- Operating costs−$666.5M35.4%
- Operating income$289.5M15.4%
- Interest, other & tax−$107.2M5.7%
- Net income$182.2M9.7%
Where FY2008 revenue went
$1.88B- Cost of revenue: $928.8M, 49% of revenue
- Operating costs: $666.5M, 35% of revenue
- Net income: $182.2M, 9.7% of revenue
- Interest, other & tax: $107.2M, 5.7% of revenue
Kept 9.7% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2008filed February 20, 2009Financial Statements
| Revenue | $1.88B |
| Cost of Revenue | $928.84M |
| Gross Profit | $955.97M |
| Operating Expenses | $666.50M |
| Operating Income | $289.47M |
| Interest Expense | $34.85M |
| Net Income | $182.25M |
| EPS (Basic) | $0.19 |
| EPS (Diluted) | $0.15 |
| Shares Outstanding (Basic) | 982.48M |
| Shares Outstanding (Diluted) | 1.22B |
05—Questions
Frequently Asked Questions
How did the 2008 recession affect Booking Holdings' business?
The worldwide recession significantly impacted Booking Holdings' business by weakening travel demand, leading to decreased hotel occupancy rates and average daily rates (ADRs), and an increase in reservation cancellations. This deterioration was particularly noticeable in the fourth quarter of 2008 and continued into early 2009, affecting both domestic and international operations.
What is the primary driver of Booking Holdings' growth?
The primary driver of Booking Holdings' growth is its international operations, particularly the Booking.com brand in Europe. In 2008, international operations accounted for the majority of gross bookings and operating income, demonstrating a successful shift from its historically US-centric business.
What are the key risks facing Booking Holdings according to this report?
Key risks include the ongoing impact of the global recession on travel spending, intense competition from other online travel companies and direct suppliers, fluctuations in currency exchange rates, reliance on a few major hotel and airline suppliers, and significant ongoing litigation related to hotel occupancy taxes. The company also highlighted the potential dilutive effect of its convertible debt.
How does Booking Holdings recognize revenue from its different services?
Booking Holdings recognizes revenue from its 'Name Your Own Price' services (often non-refundable) at the time of booking. However, for its retail hotel services, including international operations, revenue is recognized at the time the customer checks out of the hotel. This difference in recognition timing can impact the timing of reported financial results.
06—Continue