Q1 2022 Booking Holdings Inc Earnings Call
Strengthening our core combination business by driving benefits to our traveler customers and to our supply partners.
For our customers we are focused on their critical needs of value choice and convenience with this high degree of customer focus we aim to increase loyalty frequency spend and direct relationships with our customers over time.
In March our unique active customers at booking dot com within 95% of 2019 levels driven by strong growth in returning customers, who had not made a previous bookings in over a year.
In the first quarter, we saw a higher mix of customers booking directly with us than any of the last three quarters first quarters three years first quarters.
We see the strongest direct repeat customer behavior in our mobile app and when compared to other platforms like desktop or mobile web we continue to see more of our business shifts to the app with over 40% of our room nights booked through our apps in the first quarter bookings.
Booking dot com App hit a new record in terms of monthly active users in Q1 and continue to be the number one downloaded app.
Globally. According to a third party research firm.
As I've said before the App is a critical platform as it allows us more opportunities to engage directly with travelers and ultimately we see it as the center of our connected trip experience. We will continue our efforts to enhance the app to build on our recent success we are seeing here.
So our supply partners, we strive to be a valued partner to all accommodation types on our platform, which primarily means bringing incremental demand to properties from the broad audience of potential customers on our platform.
For alternative accommodations are global mix of room nights in the first quarter increased to about 31% a couple of points higher than in Q1 2021.
We continue to work on improving our alternative accommodation product globally with an additional focus on the U S market.
We've been working closely with property partners to identify opportunities to improve our platform to better fit their needs related to these efforts, we launched partner liability insurance for our alternative accommodation supply partners with global coverage in the first quarter.
In addition, we are making progress on an enhanced payment solution for professional property managers that we're rolling out in the U S.
In the first quarter, we saw the largest sequential net increase in alternative accommodation properties on booking dot com since the start of dependent.
While the net increase in Q1 was still a modest number of properties we.
We're aiming to build on this growth throughout 2022 by continuing to improve our alternative accommodation offering in attracting more partners to our platform.
This week, we launched a new campaign in the U S to promote booking dot com to alternative accommodation owners and managers want to grow their business with us.
Let me now talk about the progress we've made in our interrelated strategic priorities of payments and the connected trip.
We believe both of these priorities will further enhance the strength of our core accommodations business and support its continued growth.
On payments, 34% of booking Dotcoms gross bookings were processed through our payments platform in the first quarter, which is our highest quarterly level ever.
This year, we are focused on continuing to increase supplier adoption of payments, while introducing new products and features that over time will improve the customer and partner experience and bring new revenue streams to our platform.
We will continue to position booking dot com as an attractive and trusted payment service for both travelers and our supplier partners across hotels alternative accommodations cars flight and attractions. Furthermore, booking dot com payment platform helps deliver a more seamless and frictionless booking.
Experience, which are important elements of our larger connected trip vision.
Our connected trip vision, we continue to make progress as we work on the foundations such as developing a flight offering on booking dot com, which is now live in 40 countries.
This flight offering gives us the ability to engage with potential customers who choose their flight options early in their discovery process and allows us an opportunity to cross sell our accommodation and other services to these flight bookers, we are seeing that in over 70% of our flight bookings on booking dot com. The fight was the <unk>.
First our only product that was booked.
This helps confirm the value of <unk> as the starting point in many people's booking journey and as an anchor product that we can utilize to cross sell accommodations and other parks a meaningful percentage of bookers, who first book a flight than booking accommodation.
We will continue our work to further optimize the cross sell opportunity and build on the early positive signals that we're seeing so far flights continues to be a source for new customers with about one quarter of all flight bookers and Q1 being new customers for booking dot com.
We've also seen recent success driving incremental room nights and experiments where discounts are applied to non accommodation products. There are attached to the transaction, but it.
Simply we believe having more products on the shelf increases our merchandising opportunities and helps us sell more room nights.
Finally.
As I previewed on our last earnings call, we published our 2021 sustainability report and our climate action plan in March in our climate action plan, we highlighted the significant emission reductions we've already achieved in part driven by sourcing 100% renewable energy for.
Our office by the end of last year, and we are committed to more than halving, our emissions by 2030, and achieving net zero emissions by 'twenty four.
Proudly emissions reduction achieved.
Vicious targets set for our own business.
But as I said before we believe our greatest influence of sustainable traveled is to make it easier for travelers to find and book sustainable options. We are addressing this opportunity through our work with our travel steel Badger program, which now includes over 100000 properties that can highlight their sustainable practices to <unk>.
Customers on booking dot com.
In conclusion I.
I am encouraged by the strength, we're seeing in bookings.
Level of summer travel on our books and the potential for a very busy travel year ahead, as we discussed last quarter and this recovery environment. We will continue to lean into performance marketing channels at appropriate Rois as we look to bring more customer demand to our platform. Overall, we believe we are well positioned to.
Continued capturing this returning travel demand and we will continue to work executing against our strategic priorities.
I said before we are focusing on building a larger and faster growing business with more products that is sustainable and generates more earnings dollars.
For the long run.
I will now turn the call over to our CFO David <unk>.
Thank you Glenn and good afternoon.
I'll review our results for the first quarter and provide some color on trends we've seen so far in the second quarter.
All growth rates for 2022 relative to the comparable period in 2019, unless otherwise indicated.
Information regarding reconciliation of non-GAAP results to GAAP results can be found in our earnings release now.
Now onto our results for the first quarter.
Our February earnings call, we discussed the improving trend we've seen so far in 2022 with room not getting back to about flat versus 2019, and the first half of February after declining 21% in January .
Just hours after our earnings call on February 23rd the terrible news broke the Russia Ukraine.
Ukraine.
As a result, we saw an immediate negative impact on our room night trends, particularly eastern Europe .
Despite this impact towards the end of the month room nights for the full month of February came in about in line with 2019 levels.
In early March we suspended the bulk of your travel services in Russia, and Belarus. This led to a loss of new bookings as well as significantly elevated levels of cancellations of reservations for these countries.
Additionally, we saw some slowdown in booking trends within Europe as travelers took into news of invasion.
We disclosed the total room nights for the week ending March six we're down about 10%.
And that slowdown was driven by eastern Europe , primarily Russia and to a lesser extent by Western Europe , which remained modestly above 2019 levels.
I am pleased to say the compared with the first week in March we saw our overall trends improved during March driven mainly by Europe , resulting in room nights being down about 4% for the month, which is only a modest pullback from where we were in February .
For the first quarter room nights were down 9% an improvement from down 21% in Q4 on our best quarterly results since the onset of the pandemic.
Excluding Russia, Ukraine, and Belarus, our remarks, we're down about 2% in March and down about 6% for the first full quarter.
For Q1 on a regional level room nights in Europe , and the rest of the world were both down mid single digits Asia was down about 35% with all three improving from Q4 levels.
The U S has strong growth versus Q1 2019, similar to what we saw in Q4.
Mobile bookings primarily through our apps represented about 60% of our total room nights in the first quarter.
Over two thirds of our mobile bookings and over 40% of total room nights.
In the first quarter, we continued to see an increased mix of our total room nights coming to us through the direct channel versus the Q1 2019 in Q1 2022.
The international mix of October room nights in Q1 was about 40% and encourage increased from about 33% in Q4.
Q1 International room nights were down about 30% compared to Q1 2019 levels, an improvement from the almost 40% or 50% decline in Q4.
The improvements in international bookings, we saw continued to be driven mainly by travel plans within Europe and these cross border bookings continued to have on average longer length of stay and a shorter booking window and comparable bookings in 2019.
We saw strong growth in our domestic room nights for the first quarter also an improvement from Q4 of.
Our cancellation rates were about in line with 2019 levels in Q1, despite the impact of the Russian invasion of Ukraine.
The booking window in Q1 booking dot com contrasted less versus 2019 that it did in Q4 and this booking window expanded versus the first quarter of 2021.
For alternative accommodations are booking dot com the global mix of room nights increased to about 31% in Q1, a couple of points higher than 2021 within Europe are mixed alternative accommodation continues to be meaningfully higher than the global average.
Gross bookings increased 7% in Q1 versus 2019 and were up.
10%, excluding Russia, Ukraine and Belarus.
7% increase in gross bookings were 16 percentage points better than the 9% room night decline due to 18% higher accommodation constant currency.
And also due to strong flight bookings across the group, partially offset by about four percentage points of negative FX movements.
As Glenn mentioned in his remarks, the $27 billion of gross bookings in Q1 is a new record for us higher than the previous record of $25 billion in Q1 2019.
Our March 23, 2022 for the first month, our gross bookings exceeded $10 billion in a single month. This.
This was up 17% versus March 2019, and compares up 80% in February and down 11% in January .
Accommodation constant currency ADR.
Benefited by about three percentage points from from regional mix and about 15 percentage points from rate increases in most of our regions, notably, most notably Europe , and North America, and especially in higher demand leisure oriented destinations.
Currency ADR growth versus 2019 accelerated from 13% in Q4 to 18% in Q1, primarily due to higher rates in Europe .
Airline tickets booked in the first quarter were up 152% versus 2019 and up 69% versus 2021, driven by continued expansion of booking dot com slight platform as well as continued flight ticket growth or price line.
Consolidated revenue for the first quarter was $2 7 billion.
Which was down 7% versus 2019 and down about 2% on a constant currency basis.
Revenue as a percentage of gross bookings was about 150 basis points below Q1 2019 in line with our expectations due primarily to differences between gross bookings the timing differences between gross bookings and revenue recognition.
Our underlying conversion take rates were about in line with Q1 2019 levels.
Marketing expense, which is a highly variable expense line decreased 4% versus Q1 2019.
Marketing expense as a percentage of gross bookings decreased about 50 basis points.
Q1, 2019, we should.
Expectations, mainly due to high unexpected marketing rois.
Sales and other expenses were up 58% versus Q1 2019 due to a higher volume of merchant gross bookings and higher third party call center costs about 34% of booking com's gross bookings were processed through our payments platform in Q1 up from 13% in Q1 2009.
<unk>.
Compared to Q1 2021.
Expenses as a percentage of gross bookings were about 30 basis points higher.
A more fixed expenses in aggregate were about in line with our expectations up 12% versus Q4 and up 17% versus Q1 2021.
Adjusted EBITDA was $310 million for the quarter, which was better than our expectations due to higher than expected ADR and the better than expected leverage our variable expenses. However sequentially EBITDA was down 67%, which is literally more than the seasonal declines we saw pre COVID-19 and aligns with our country.
In February .
non-GAAP net income of $161 million results in non-GAAP EPS of $3, nine which was down six 5% versus Q1 2019.
Our Q1 non-GAAP tax rate of 16% was lower than 90% in Q1 2019 due to a greater impact from a discrete tax benefit on a lower base earnings.
On a GAAP basis, we earned operating income of $174 million in Q1, we recorded a GAAP net loss of $700 million in the quarter, which included an unrealized loss on our strategic investments of about $987 million and a $36 million loss on assets held for sale related to the major L. Strategic partnership we discussed last quarter.
Sure.
Now onto our cash and liquidity position, our Q1, ending cash and investment balance about $12 8 billion was down most of our Q4 ending balance of $14 3 billion.
Primarily driven by the payments of $1 1 billion for our March debt maturity about $950 million in share repurchases in Q1, and the decline in value of our strategic investments.
These factors, which reduced our cash and investment balance were partially offset by positive free cash flow of about $1 6 billion.
Which would drive driven almost entirely by change in working capital, resulting from an increase in our deferred.
Merchant bookings knobs.
As we disclosed on last quarter, we start returning capital to shareholders in early January and in addition to share purchases in Q1, we repurchased about $325 million of our shares in April which brings our outstanding authorization to just over $9 billion.
As we said before we expect to complete our remaining authorization within the next three years.
Now moving onto our thoughts for the second quarter April room nights increase about 10% versus 2019, an improvement from the 4% decline in March driven primarily by Europe , Excluding Russia, Ukraine, and Belarus April room nights increased about 16%.
Versus 2019.
All regions showed improving room night growth in April .
Europe was up high teens percent and April up about 30%, excluding Russia, Belarus and Ukraine.
Growth in the U S was very strong rest of world had double digit growth.
<unk> to down high teens percent all versus 2019.
The international mix of our room nights in April was over 45% and encourage increased from the 40% in Q1 April International room nights were down slightly compared to 2019 levels an improvement from down 30% in Q1.
International International demand driven mainly by travel plans in Europe accounted for most of the improvements in room nights in April versus Q1 domestic room nights also improved in April to very strong growth versus 2019.
April gross bookings increased over 30% versus 2019, driven by growth in room nights continue to combination ADR strength as well as continued strength in flight bookings.
April gross bookings increased to almost $11 billion, which was a new monthly record.
April gross bookings typically decline from March pre COVID-19.
Whilst it's encouraging to see continued improvements in trends into April the environment is still uncertain and it's difficult to predict with confidence how room nights for the railing range out of the quarter will develop.
While many countries are lifting and lifting travel restrictions COVID-19 is still a factor, which can impact travel and of course, the worn Ukraine continues to create volatility and macro uncertainty.
We do expect the recent strength in occupancy for the remainder of the quarter and as a result, we expect the difference between the level of room night growth and gross bookings growth for the full second quarter to be around 20 points, which is similar to what it was in April .
In April the overall booking window booking dot com continues to move back closer to 2019 levels were.
And we continue to see strength from our booking trends on our gross bookings for the summer and our more than 50% higher than they were at this time in 2019.
And within Western Europe , and North America, both up over 30%, albeit with a higher mix of chemical bookings.
Current trends continue we could see a record summer travel season, and we're gearing up to prepare for that across all parts of our business.
Turning back to Q2.
Given recent booking trends combined with lengthening booking window, we expect Q2 revenues percentage of gross bookings to be about 200 basis points lower than it was in Q2 2019.
This 200 basis points of difference in revenue as a percentage of gross bookings is mainly timing related and the impact could be greater if booking transact starting from April , especially if a high percentage of these bookings were staged in future quarters.
Tiny impact on take rates in Q2 is driven by a combination of the acceleration in gross bookings from up 7% in Q1, it's up over 30%. So far in Q2, coupled with the lengthening booking window from Q1 to Q2.
We expect our underlying code combination take rates to remain stable.
We expect marketing expense as a percentage of gross bookings to be slightly higher.
In Q2, 2019, which is consistent with our prior commentary about the opportunities for us to lean into recovering travel market in 2022.
We expect Q2 sales are expenses as a percentage of gross bookings to be about 60 basis points higher than it was in Q2, two in Q2 2021 due to higher merchant gross bookings mix and higher third party call center costs.
We expect a more fixed expenses in aggregate to be about 15% higher than in Q2 2021 with personnel down slightly on both G&A.
<unk> up meaningfully versus Q2 last year.
Overall year on year increase in the year on year increase in G&A was driven by higher digital sales taxes, which are tied to revenue as well as increased office expenses due to return to hybrid work environments.
We expect <unk> to increase year over year at similar rates to what we saw in Q1.
If we would see similar top line growth rates the rest of the quarter as we saw in April we would expect adjusted EBITDA to be over $900 million for the quarter.
The expected timing difference between gross bookings and revenue, which is the primary driver of our expected 200 basis basis points lower take rate than Q1, 2019 will have a significant impact on EBITDA in Q2 as a more variable expense lines are linked to bookings.
If we normalize the timing impact on take rates in Q2 2022 to be the same as it was in Q2 2019 adjusted EBITDA in Q2, 2022 will be slightly higher than it was in Q2 2019.
Now turning to the enhanced strategic partnership with major rail we discussed last quarter as a reminder, major out one of our most trusted long term external customer support partners will begin point most of the customer says most of the customer service representatives the previous work for booking dot com outsized.
For the Netherlands, and the UK.
We currently anticipate finally finalizing a partnership around the middle of the year.
And following the anticipated closing on a quarterly basis in the second half of 2022, we expect the personnel expenses will be lower by about $25 million a quarter.
G&A expenses will be lower by $6 million quarter and no.
<unk> expenses will increase to offset the lower personnel and G&A expenses.
As we said last quarter, we do not anticipate much of an impact on adjusted EBITDA. In 2022. This initiative beyond 2022, we believe this partnership will help reduce further expense growth and enable a more efficient ramp up of our customer service function.
Outside of the P&L geography changes to the personnel G&A and sales expense lines major L. We're maintaining the full year P&L commentary, we provided last quarter.
As it remain as a reminder, the <unk>.
<unk> timing, we expect timing to negatively impact take rates.
Price impacted timing on take rates for the year is difficult to predict as it is impacted by the rate of recovery bogie is coming into a journey.
Also by the length of booking windows during the year.
We do note the relative to 2021 that was a negative impact on take rates due to timing in Q1 2022.
Our current best estimates of take rate in 2022 is just below 15%, which is lower than.
2019, primarily due to timing.
We expect our underlying accommodation take rates will remain stable.
Timing also negatively impacted adjusted EBITDA and EBITDA margins for the year, if not to impact timing our expectations for full year EBITDA margins will be a few points higher than our guidance for the year.
We're encouraged by our better than expected Q1 results and our strengthening trends we've seen in April and May.
Confidence so I'll focus on customer acquisition and expanding our product offerings is the right approach for 2022, we will now take your questions Sean over to you. Please for Q&A.
Thank you as a reminder to ask a question you will need to press Taiwan on your telephone.
Your question press the pound key.
Please stand by while we compile the Q&A roster.
Our first question comes from the line of Lloyd Walmsley with UBS. Your line is now open.
Alright, Thanks for taking the question two if I can.
First on the April trends in bookings and room nights those sound nicely ahead of where street estimates are for the whole quarter. So is there any reason to think that you will continue to build from April in terms of kind of thinking about monthly comps or anything else, we should keep in mind pull forward or pent up demand and then.
Secondly.
Helpful Helpful color on the revenue take rates and the EBITDA impact from timing I guess.
How do we think about that as we work into next year should take rates at least kind of like for like.
Accommodation normalize to 2019 levels next year and does that.
EBITDA headwind of a few points on timing does all of that.
Unwind you think as we get into 2023 any help you can give us on the kind of margins and how they progress further would be great. Thanks.
Hi, Lloyd why am I would take that first one and I'll, let David go back over the timing issues that you just asked about.
So your question really is trying to predict the future, which is always an interesting adventure, particularly over the last couple of years that we've all gone through.
As I've said, David was saying, we're very pleased with where we are and we're happy with what's happening and I think everybody around the world as happy about travel coming back and we've mentioned how some of the trends that were like that we like seeing Asia, where things are getting better we know they're not as good as they are in Europe or in the U S. That's a good positive sign.
Hopefully that will continue.
We're also pleased with two things that we've been saying throughout Europe and Western Europe .
Eastern Europe claimed back that so all vary.
Happy where we are but we never know we never know whats going to happen you know that we've done. This we had a call our last call and then there was a terrible terrible news shortly thereafter, what happened in.
Ukraine, and if you recall going back a quarter before that.
I'm Rick came out of nowhere. So we all know that the world is let's say volatile right now, but I will say I am happy where we are and I'm pleased with the incredibly good job of execution. Our team has done and David I'm not sure you arguably more color Matt.
Hey, Glenn just maybe a couple of extra points on what we're seeing in April .
I mean, we did see a steady progression.
From that first week in March where things were minus 10.
Up through March and April on a fairly steady basis.
But as Glenn said, there's still a lot out there in the environment. It is hard to predict I would call. It the Easter happened in April in both periods. So there's no Easter effect relative to the growth rates versus 2019 August 2021 for that matter either.
Relative to longer term take rates as I explained on the call.
Take rates are.
The impact timing on take rates, it's a mathematical impact of the difference between the amounts that you spill into year from the prior year and the amount you still out in the current year into the next year and of course that can be variable based upon effects. We saw this year. We said that those are hurting Q1 on timing effects on take rates because of that.
Omicron basically came up at the end of Q4 and that resulted in less bookings spilling into Q1, then we would expect.
So it's really a function of how the recovery develops in total in terms of how rapidly things recover but also just the timing of that recovery. So.
As gross rates start to normalize.
And get back to more normal level, you expect the impact upon the take rates the timing impact on take rates to come down, but then there could be some additional factors that could impact those specific things relative to what happens about the prior Q4s spilling into Q1 and the next few forcefully into the future Q1, so normally.
As the growth rates start to normalize the rules for revenue growth rates and bookings growth rates off Hawaii more there will be less effect, but it could still be unusual effects.
I like what we've seen before that could impact a specific timing.
Q1, and Q4 and the relative difference between those quarters across the years.
Okay, well, thanks for helping explain that.
Our next question comes from Brian Nowak with Morgan Stanley You May now state your question.
Great. Thanks for taking my questions guys I have two first one Dave.
David.
Last quarter, you talked about some the shape of the year comments, you talked about marketing as a percentage of gross bookings being a little higher than was 19 et cetera, and in sales and other expenses and sort of thoughts about that is really the bookings. Yes. There was a lot of pieces with ADR is moving around et cetera, but could you just sort of maybe tell us your latest thoughts about some of those metrics.
Marketing spend for the year in sales and other for the year. However, you want to kind of help us help us think about it a little bit.
And then and then Glenn.
Good to hear about traction, you're making on payments and flights et cetera.
Talk to us about the connected trip front, which of the initiatives. You think is most likely to really have a meaningful impact on the P&L as soon as maybe 2023 from an incremental dollar perspective. Thanks.
Steve you answer that first one yes, Brian let me go first so.
With the exception of the mechanical movements I'll talk about how they impact things.
The mechanical moves relative to measure out with.
But you basically just P&L geography movements, we've not really I'm not changing what we said last time, we do expect some some deleverage.
In marketing's gross bookings for the year, we said we expected in Q1 to be relatively flat, we were a little bit that we were actually a 50 point 50 bps of leverage in Q1 due to higher rois, but we did say we would be leaning into the busy travel season more in Q2 and Q3, so we're still expecting to see some level of deleverage.
And also increase their spending on merchandising.
Sales and although we still expect that to be up about 50 bps for the year is tied to.
Tied to payments.
The mechanics of the major rail adjustment with moving those additional expenses into NOLA would be less than 10 bps.
That adjustment to get enough to TCP.
So essentially with the exception of the mechanical movements, what we talked about for the last.
We took about quarter ago, but how we see the year shaping up we still expect to see the <unk>.
Shaping up the same way and of course I was giving you. Some additional color on take rates, we didn't provide last quarter. So that gives you a little bit more.
Coal and we gave you a quarter ago, because we now know what happened in Q1. So we can give you a bit more guidance around that.
And.
Brian talking about connected trip. So connected trip is a long term vision and it's going take some time before we get to where I believe we need to be in terms of a truly step functional change the way people are currently.
By exploring going through travel I think we all know how difficult. It is and we all know that it should be better.
So that's the goal down the road in 2023, where suddenly we're pretty early in this I think I would think it's we're still in the base level of just getting great verticals up and running so that they by themselves are fantastic. Good products for people to use and then just the basic cross selling things that we think is a.
The first step to get towards that connected trip.
One of the biggest things for 2023, well the things I just talked about right now flights right now I.
Really like the fact that the new customers coming in and they're coming in they're buying a meaningful number of buyer combinations and we haven't optimized this yet that's something important.
Then on top of that I mentioned in my prepared remarks about just be getting small experiments with other types of verticals and how putting these things together can give a better experience to our customers. The great thing about these things is trying to build a belief that coming to us to book <unk> Dot com.
The best way to go so getting more repeat business and get them to do it on the App. So that we don't pay for that person to come and increase that loyalty.
A lot of ways trying to increase this flywheel, so people know the products better and coming to us and as we continue to do that get more information to be able to provide a better proposal to them a better offer to them as they convert more easily and it continues to go on its own it's going to take time to do and in 2020 I don't think there are less.
Huge numbers from all the things I, just talked about but you will see incremental improvement.
Great. That's helpful. Thank you both.
Our next question comes from Kevin Kopelman from Cowen. Your line is now open.
Great.
Thanks, a lot I was hoping to just dig in a little bit more.
The April trends.
The improvements in the ninth there an a plus 10% and is obviously a big acceleration.
Could you.
Are you seeing there in terms of changes in if we relate that back to your ad spend.
You had some leverage versus GBP in Q1, but you are spending more in Q2, how much of that is a reaction to what youre seeing versus strategically pulling on that lever.
And the start of Q2.
So let me talk in general and David I'm not sure you are targeting in terms of any sort of numbers leveraged or whatever but we are very pleased with what we're seeing but I believe there is a combination of many things that we're working on it's really is a game of execution in the small details, making sure worth with partners and getting the right price the right.
Inventory and then it's making sure we're showing it to the customer at the right time in the right way and it means also doing these we're talking about with our alternative combinations, bringing a few bringing in some incremental more supply there, making sure we're working to come up with ways that it works better so that the customers, having a better experience and the payments are more smooth et cetera.
I can go through a lot of little things that we're working on and each one builds on its own. It makes it a better experience now yes, we have a brand in the U S. As you hopefully remember back from our Super Bowl week.
I believe a very good add and we're continuing to see is not just wanted to dentist campaign and we tie that with some efforts in social and we're doing a lot of different things to try to increase our awareness getting that top of mind awareness in the U S. For example, helping build that but this is a global effort really in terms of trying to build our business by doing all the little things.
That make it a better product because in the long run the better product is what's going to win.
I don't know if you want to speak anything specific in terms of.
Those are levers or anything of that nature.
Actually I was going to go away because this is just not one geography, we're seeing all geographies improved in April .
Trust is very encouraging so we mentioned that Europe is now April back into high teens growth versus 2019.
Really encouraging right.
First time, we talk about growth over 2019.
Europe for room nights.
Back to very strong growth versus 2019, which we think is well ahead of the market and Glenn mentioned some of the factors the APAC recovering nicely down still down but down high teens that again, the best result, we've seen.
Since.
And then Mike.
And the rest of world back up to double digits. So a nice improvement from Q1 will nice approved remark. So it's not just one region, we're seeing across the world, which I think is a positive sign.
I mentioned that we would be leaning a little bit more effectively and more in Q2 then.
Then we did in Q1 relative to the amount of spend on the ROI I would say that is really in response to the opportunity to capture demand when we see demand we see traffic on the site. That's when we can saw increasing our marketing spend so we're really responding to the opportunity.
Recurring travel and.
As we see travel for that is what we need to lead in historic leaning in particularly in Q3 of last year, you saw us do that in prior quarters. So.
It's early during the quarter, but Thats why we said we expect it to be a small level of.
This quarter.
In marketing, but the impact we're seeing in the change Youre seeing from March to April is very positive.
Great and could you touch on currency with 30% in <unk> figure for April is that reported or constant currency.
The dollar has strengthened since the last call. So I wanted to ask about that.
Yes, that's a reported number.
And.
Currency is is an impact.
What is worth when we did our guidance that we did our calculations here.
<unk> come down a little bit it doesn't make a huge difference, but the numbers. We gave you all reported unless we call them out specifically is constant currency for example, what we call up constant currency.
For example, everybody else's report thanks, so much.
Appreciate it.
Our next question comes from Justin Post from Bank of America. Your line is now open.
Great. Thank you I.
I guess I'm just trying to think about market share can you give us any indication of how much share U S nights, where back in 19, and what that looks like now and then and then one question on take rates I know Youre merchant.
Sorry, your payments platform is handling 34% versus 13, I would think that would be increasing your overall take rates, but you said take rates about about flat. So can you just talk maybe you can help us understand how the merchant business is affecting take rates. Thank you.
David wondering if you take that.
Let's turn 19 back I don't know about that.
Yes, I talked about so when we talk about the.
Underlying underlying take rates.
We're talking about the basic take rate on the commission all know the room were not factoring in payments to that at all or version that mix.
I don't I say the biggest impact from timing is is say on pay.
It is timing and we've talked about it being very significant but you are right.
We are getting.
An increase in the overall take rate from our mix towards payments and from the fact that we got initial revenue from payments as I mentioned in 2021 for example that was somewhat offset by the merchandising that we can now too because we couldnt merchandize and participate in pricing actions ourselves until we have all the payments platform.
And in 2022 again will be largely offset by the merchandising activities now bear in mind merchandising is also light marketing, we can turn up and turn it down we think that this year.
And in a recovering travel marketplace.
Thank you won't get a generational opportunity to really lean into both marketing and merchandising, but we are seeing improvements in take rates from the payments platform and again the number of it when I talk about the underlying accommodation take rate base being a very constant that does not include the additions for things like payments or things, we botox payments noticed.
Impacts anything that we do on top of that or does it include anything we do on top of that with our merchandising activity. So hopefully that clarifies.
The movements there.
Great and then on U S share of night any help there.
Yeah.
Yeah.
David I think we don't we don't reveal that does that.
Right.
Our view just as being shared data is we shouldn't look at sure.
Medium term basis do you have a single quarter very difficult to predict.
Certainly believe that last year.
With our growth in the U.
The U S being strong versus 2019, we recovered a lot faster than the market did in 2021.
We were strong again in Q1 in the U S market versus 2019 and very strong in <unk>.
April so.
Difficult to give you an individual ship points, but when we look at the overall a combination mark which is the way to think about things. We know we picked up some share points in the in 2021, and we know that we are continuing to stay above where the market is in 2022 from a recovery point of view.
Yes.
But I would just say look I'm very pleased with what we've done over the last two and a half years since the pandemic.
Startup what we've been doing.
In building out our business in the U S and I made the point of how important it was strategically to do better in the U S. Because we have been under indexed in the U S and we've been doing a lot of blocking and tackling of at least two and a half years in the midst of this pandemic and we are beginning to see it come through and I'm very pleased with the results.
In Q1.
Great. Thanks, Glenn Thanks, David.
Yes.
Okay.
Our next question comes from Mark Mahaney from Evercore.
Your line is now open.
Maybe Mark's line is not open.
Thanks, Tony.
Sorry about that.
David a question for you and then one for Glenn David you'd sort of talked about take rates. This year being I think just below 15% or something like that and you said there'd be a few points higher if not for timing. So I wanted to ask you is does that mean once we get really on these unusual timing issues for a variety of factors. This year that kind of a normalized take rate is a couple of points higher like 17%.
You haven't done that yet.
<unk> has done that in the past, but thats going back 567 years, but is that the implication of your of that statement and then Glenn.
About the connected trip I wondered if you think that there's something that structurally changed that makes connected trip more.
Tractive more viable are more impactful than it has been historically I think about the history of online travel and there was a connected trip company, but they never with large package business, but they never generated as many room nights as you did in Europe .
Solo lodging company is there something that's changed now maybe it's much greater use of mobile or mobile apps that just makes.
The connected trip a greater.
Needle mover today than it was historically thanks a lot.
Yes.
Your first.
For me to go first so mark.
The thing.
I have seen over two decades <unk> been talking about our connected trip because travelers and this problem. Since we started buying travel online didn't have a human being and do it for us.
Certainly the technological landscape has changed significantly since we first started doing this when I first joined this company in 2000 and now we have so many new things that we can use to make this better the idea of mobile apps, but even more so all the machine learning AI.
To be able to do better types of predictability of what's happening and what could be better for a person. How we can see is there a potential problems in the future we can fix it before it happened so many things.
I believe this can be done will be done I believe we're the ones who are going to do it but we're not there yet so to say hasnt happen. It hasnt happened yet because we haven't built all this yet I believe it will happen and I do believe it's necessary because I don't believe that people should have to suffer the way that you do right now and trying to do a simple family trip.
That being said, though is going to take time, we're going to get there, but we're not going to show up next quarter or the next year and say here's the incredible increase in our business is going to be incremental it's going to take time, but I. Absolutely believe this is where it's going to be and David I'll, let you take years.
Right. Thank you Mark so.
Let's not confuse the difference between <unk>.
Impacts on EBITDA margin actual take rates.
Take rate percentages, what we talked about is the fact that let's go back to the numbers. So in 2019 and take rate blended across the year was 15, 6% in 2021, we said it was $14 three.
We said last quarter, we somewhere between those two this quarter. We gave you a bit more guidance because we know more about the timing impact in Q1. So we said just below 15.
Said that that impacts on the timing impact on take rates was causing a few points of EBIT margin compression. So it will take a few so you said last quarter and we still maintain that our EBITDA margin rate for the year will be a few points higher than it was in 2041.
Said after the last call we quantify again today, if it wasn't for the impacts of timing the EBITDA margin will be a few points higher again on a normalized basis. So the fact that take rates are being hurt for the full year.
Is causing us to have a few points off.
Compression on our EBITDA margin this year, which is timing related.
We did not say the take rates back to 17, we said that they would be would be below 58, and if you normalize from just below 15 back to 15, 6%. We'd like that then that will give you those few points EBITDA margin that we've talked about.
Okay, Yes, sorry that was my mistake.
No problem, Thanks, David and thank you Glenn.
Yes.
Yes.
We will now take our next question comes from Eric Sheridan of Goldman Sachs. Your line is now open.
Thank you for taking the questions I want to come back to the comment you made in the prepared remarks on investing in supply as we go deeper into 2022 can you talk about what kind of investments you feel you need to make and also as you look at the base of gross bookings in the booking window you have now deeper into the year, where do you find yourself with elements of supply.
Demand imbalance on either the shared accommodation side of a hotel side that you're trying to sort of unlock or think about not only just for summer of 'twenty two but beyond into 2023. Thank you.
Sure so let.
Can you talk a little bit about.
Trying to build.
Supply areas, where we think we need it and I've talked about this in the past and the alternative combinations area.
Where we think we are not.
As well positioned as some of our competitors.
Stating the fact, particularly in the U S. So.
So we absolutely need to go out and first make sure we got a product that people own properties waterflood on our platform.
The new things I talked about in terms of liability insurance is turns a payment system that is actually a workable and works well David but then we have to make people aware of this and thats going out or mentioned, we have a new campaign out we're spending money and it's more than just <unk>.
Market Theres actually individuals talking with the big owners, so multiple multiple properties make sure they understand what we can bring to that.
That's how we start to bring in more of that because we don't have the supply you'd never be visits. So we do that and then we obviously have to the second the other side of this two sided marketplace to make sure consumers are aware of this to make sure. They are coming to it that's how we're going to do this over time and it's obviously something that I've been talking about for a long time I'm sure. If you will get a little tired of me, saying it but.
This is where we're going I mentioned, how we are we didn't have a net increase in alternative combinations very pleased about that and we are going to keep on building. This and it builds on itself. This is again, it's one of those things where it was like a <unk> you need to get it rolling and then it will build more and more and faster and faster.
Going to take some time I'm pleased with where it is in terms of the window I may repeat that part of the question.
Just kind of curious like where you do see supply demand imbalance is based on what you've seen in the forward booking window going into the summer and other elements of this.
Maybe there are disconnects in supply versus demand by product type looking out deeper into the year.
Yes, so right now.
We're not seeing any shortage of supply for on demand people come in and the size of an IV campfire.
There is right now.
That doesn't mean in peak summer that there won't be some shortages of inventory, but that happens every normal year when their peak.
Peak summer travel in the northern Hemisphere, but most popular places will fill up and most popular locate at most of our properties in the most popular locations are going to fill up one of the great things that we've been doing for some time as being very flexible and offering customers when they come in.
Enough inventory, we think because things are filled up there we're offering alternative places they could go and stay or.
Different locations to a property called different ways. We are doing this and we're working more different experiments to do that but we're not the only one to do that that's important customer in your store you watch that we don't have enough. What you show them something else I'd, probably just like it that's what we're doing clearly over time, what I wanted to do though is not to have this conversation about the U S that we don't.
Have enough of the single properties on the beach in Xyz, and Thats something that really what we're working on but right now I don't I don't see an issue right now with having insufficient supply.
Great. Thanks for all the color Glenn.
Yeah.
Okay.
And now we will now take our last question comes from Doug Anmuth from Jpmorgan. Your line is now open.
Great. Thanks for taking the question I just wanted to ask about.
International recovery it seems like Youre, suggesting it's coming more from short haul Im just curious what youre seeing in terms of long haul and how youre thinking about that coming back.
Thanks.
Sure.
Hey, guys.
John .
I'll start.
Sorry.
Yes, so youre right international recovery.
In total international bookings in total across the board as we define it.
And April is down a little bit.
Short holes within Europe , actually up decently, but long haul still down not too surprisingly.
I mean in total to see the international.
Booking number close to flat for April I think is a great step forward not surprisingly intra region youre going to recover fast fastest most European countries are now relax all restrictions for travelers within Europe , which is great and long haul still still down but also rapidly.
Improving yet we see strong growth from travelers from the U S. For example, obviously travel Intuit from Asia is still it's still down.
And that's an important destination for both U S and European people when you look at long haul routes.
And David you basically said a lot of things right.
Basically we have a situation that's very tied somewhat to restrictions and as countries that are typical long haul destinations some of them in Asia for example.
They will begin to lighten up and people feel more confident they can go without having to do a lot of different things don't have to quarantine before don't have to go to get a test their dog test before as these things go away then people will travel more and more of these long haul trips. So I definitely am positive on the continued trend in this area.
Yes.
Great. Thank you both.
Okay was that the final question.
Yes that is our final question. So I will now turn the call back to Rob.
Glenn Fogel for closing remarks. Please go ahead.
Alright, thank you.
Always but I want to thank our partners, but I really want to thank all of our partners, who have generously contributed to a refugee platform.
Also of course went back to customers, our dedicated employees and our shareholders. We appreciate your support as we continue to build on the long term vision for our company. Thank.
Thank you all and good night.
Okay.
Thank you and that concludes today's conference call. Thank you everyone for participating you may now disconnect.
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