Booking Holdings Inc. (BKNG) Q4 2021 Earnings Call Transcript

Booking Holdings Inc. (NASDAQ: BKNG) Q4 2021 earnings call dated Feb. 23, 2022

Corporate Participants:

Glenn D. Fogel — Chief Executive Officer and Director

David I. Goulden — Executive Vice President and Chief Financial Officer

Analysts:

Justin Post — Bank of America — Analyst

Lloyd Walmsley — UBS — Analyst

Kevin Kopelman — Cowen — Analyst

Doug Anmuth — JP Morgan — Analyst

Mark Mahaney — Evercore — Analyst

Presentation:

 

Operator

Welcome to Booking Holdings’ Fourth Quarter 2021 Conference Call. Booking Holdings would like to remind everyone that this call may contain forward-looking statements, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. This forward-looking statements are not guaranteed of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially from those expressed, implied or forecasted in any such forward-looking statements. Expressions of future goals or expectations and similar expressions reflecting something other than historical fact are intended to identify forward-looking statements. For at list of factors that could cause Booking Holdings’ actual results to differ materially from those described in the forward-looking statements, please refer to the Safe Harbor statements at the end of Booking Holdings’ earnings press release as well as Booking Holdings’ most recent filings with the Securities and Exchange Commission. Unless required by law, Booking Holdings undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. A copy of Booking Holdings’ earnings press release, together with an accompanying financial and statistical supplement is available in the For Investors Section of Booking Holdings’ website, www.bookingholdings.com.

And now I would like to introduce Booking Holdings’ speakers for this afternoon, Glenn Fogel and David Goulden. Go ahead gentlemen.

Glenn D. Fogel — Chief Executive Officer and Director

Thank you and welcome to Booking Holdings’ fourth quarter conference call. I’m joined this afternoon by our CFO, David Goulden. Despite the appearance of the Omicron variant in late November and its rapid spread throughout Europe, the U.S. and other parts of the world, we closed out 2021 by delivering fourth quarter revenue and adjusted EBITDA of $3 billion and $940 million respectively, which were better than we expected. Room nights decelerated from down 10% in October, compared to 2019 to down 35% in December. However, I am pleased to say that since December, we have seen a meaningful improvement in topline trends with room nights in the first half of February reaching 2019 levels, and with gross bookings higher than 2019. At Booking.com, I’m encouraged to see strong gross bookings on our books for the summer period in Western Europe and North America, both of which are now ahead of where we were at this time in 2019, though I note that a high percentage of these bookings are cancellable.

2021 was a year in which our hopes for a return to normalcy were set back several times, first with the Delta variant and then Omicron. However, we witnessed proof that people have a deep desire to travel. When leisure travelers believe it is safe to travel and restrictions are lifted, people book travel and we are currently seeing this starting to happen in many parts of the world. While this is a potentially favorable backdrop for 2022, we do expect it will still be periods when COVID negatively impacts travel trends as we move through the current year. David will provide additional details on our fourth quarter results and what we are seeing so far in the first quarter in his remarks.

As I look back over the last year, I am proud of the work we have done under still difficult times to strengthen our core accommodation business by driving benefits to our traveler customers and to our supply partners. For our customers, we remain focused on addressing our customers’ critical needs of value, choice and convenience. One of the many ways we provide value for our customers and partners on Booking.com is through our Genius loyalty program. For our customers, our Genius loyalty program offers lower prices and other benefits like complimentary breakfast, room upgrades and discounted airport taxis. For our partners, our Genius program delivers incremental room nights to properties from our most loyal customers. Over the last year, we have meaningfully expanded our Genius loyalty program at Booking.com by opening the lowest level of Genius benefits to any customer who creates an account and is login on Booking.com.

At the beginning of 2022, we fully launched a third tier of Genius for our top customers that made at least 15 bookings in the last 2 years. These Genius level three members have access to even lower prices and priority customer service support in addition to all of the benefits available to genius levels one and two. These improvements to our Genius program are indicative of our efforts to move beyond just the transaction and increased our focus on value for the customer. With a higher degree of customer focus, we aim to increase loyalty, frequency, spend and our direct relationships with our customers over time. Over the last year, we have enhanced Booking.com’s mobile app, making it more user-friendly and easier to use.

As I said before, the app is a critical platform as it allows us more opportunities to engage directly with travelers. It is also where an increasing number of bookings are happening and ultimately we see it as a center of our connected trip experience. In 2021, Booking.com was the number one downloaded OTA app globally, according to a third party research firm. For 2022, we are increasing our efforts to enhance the app in order to build on the success we saw over the last year. In the fourth quarter and for the full-year, we saw a consistently higher mix of our customers booking directly with us than in 2019 and our direct mix improved even as we leaned into performance marketing channels during the year. We will continue to lean into performance marketing channels at appropriate ROIs as we look to bring more customer demand to our platform during the recovery. In addition to performance marketing, we will be utilizing brand marketing, particularly in markets where we are looking to raise consumer awareness of our customer-facing brands, a timely example of that, which I hope all of you saw 2 weeks ago or so was Booking.com’s first Super Bowl ad, in which we reintroduced the Booking.yes login to our U.S. audience.

We had a great year in the U.S. in 2021 with strong growth in room night and very strong growth in gross bookings versus 2019 even though Booking.com was relatively quiet from a brand marketing perspective. We are looking to accelerate the momentum of last year’s performance by layering in brand marketing that extends beyond the Super Bowl ad during the rest of the year in order to introduce Booking.com to an even broader audience. As I mentioned last quarter, we have an ambition to acquire more customers in the medium intent space. We continue to work on strengthening our foundations for digital marketing, including in social channels. However, our spend so far remains relatively small. For our supply partners, we strive to be a valuable partner to all accommodation types on our platform, which means focusing on bring incremental demand for properties from the broad audience of potential customers on our platform.

For alternative accommodations, our global mix of room nights in 2021 of about 29% was in line with 2019 levels in Europe where our alternative accommodation offering is more competitive. Our mix of room nights increased in 2021 by a few percentage points relative to 2019. We continue to work on improving the competitiveness of our alternative accommodation offering in the U.S. market where we have added a targeted supply over the last year and have plans for more additions and improvements to come in 2022. We closed out the year with 2.4 million hotel and alternative accommodation properties and over 28 million total reported listings on Booking.com, both of which were stable relative to the prior year.

Let me now talk about the progress we’ve made over the last year in some of our key strategic priorities around payments and the Connected Trip. These strategic priorities are interrelated and we believe both will further enhance the strength of our core accommodations business and support its continued growth. On payments at Booking.com, we saw a further increase in adoption by our property partners in the U.S. in the fourth quarter. Now with over half of U.S. gross bookings booked at properties that have adopted payments. Globally, about 60% of gross bookings are booked at properties that have adopted payments. About 30% of Booking.com’s total gross bookings in Q4 were processed through our payment platform, which brings the full-year 2021 mix to about 27% compared to about 22% for the full-year 2020 and about 15% in 2019. We will continue our work on positioning Booking.com as an attractive and trusted payment intermediary by providing payment options favored by both travelers and our supplier partners across hotels, alternative accommodations, cars, flight and attractions.

Furthermore, we see Booking.com’s payment platform as a key component of our larger Connected Trip vision. On our Connected Trip vision, we made progress in 2021 as we work to build a robust flight platform on Booking.com. This flight platform 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. Flights also enables us to provide a more complete travel offering to our accommodation customers. Booking.com’s flight platform is now live in 34 countries, which collectively represented about 70% of Booking.com’s room nights booked in 2019. We continue to see that over 25% of bookings flight bookers are entirely new customers to the platform and of those new customers and encouraging site are the accommodation to their flight booking. These are positive early signals, which help demonstrate that our flight offering can drive incremental new customers to us and we can cross-sell our accommodations product to them. We will continue our work to further optimize the cross-sell opportunity and build on the early positive signals we are seeing in flights. In November, we announced our intention to acquire ETraveli for EUR1.6 billion and we expect to close the transaction later this year, pending regulatory approvals. ETraveli is one of the largest flight-centric online travel agencies and it is a leader in flight booking technology. They’ve have developed of comprehensive technology platform, sourcing complex flight content from a variety of supply providers, which is then distributed to consumer-facing sites. Booking.com and ETraveli have been successfully partnering over the last 2 years, with ETraveli powering bookings flight product. Given the strategic importance of flights to our Connected Trip offering, we believe it is critical to bring ETraveli flight expertise and technology in-house. We’re also unlocking some of the limitations that exist in our current commercial agreement. When the deal closes, ETraveli will continue to operate as an independent company within Booking Holdings, while further supporting the development of Booking.com’s flight platform.

Outside of flights, Booking.com has significantly improved the coverage of its attractions part over the last year, in part due to the successful integration of third-party supply from Viator amusement. We now have bookable attractions available in cities that represent about half of Booking.com’s the combination transactions, which is up from about 10% coverage a year ago. One of the volume of attractions bookings is still modest, we believe that developing a compelling, easy to you attractions product will help keep travelers engage with our platform through the trip and build loyalty. We had a very busy end 2021 and start to 2022. So I’d like to address a few other important recent updates. First, I am very excited to welcome the Getaroom team to Booking Holdings. We closed our $1.2 billion acquisition of Getaroom at the end of December and we are well underway with integrating Getaroom into Priceline. We will help expand Priceline’s current strategic partnerships business. Getaroom is a B2B focus distributor of hotel rooms, primarily servicing leisure demand through about 150 affiliate partners, primarily in the North American market. The B2B business is an important component in channel in our expansion efforts to reach new customers and partners, particularly in key markets such as the U.S. We believe B2B business can generate attractive returns by providing inventory to affiliate partners without the B2B business needing to invest significant dollars in brand marketing or online performance channels to generate customer demand.

I am confident that the combined strategic partnership business of Priceline and Getaroom will improve B2B distribution for hotel partners, while offering a robust accommodations technology stack for affiliate partners to help further enhance our offerings in North America. Second, some of you may have seen the news 2 weeks ago that Booking.com plans to enter into an expanded strategic partnership with Majorel, one of our most trusted long-term external customer support partners. As part of this partnership, which is still subject to consultation with works councils and regulatory approvals, Majorel will begin employing most of the customer service representatives that previously worked for Booking.com outside of the Netherlands and the UK. We have been successfully working with Majorel for 6 years in order to help meet the evolving seasonal demands of our business and we believe that this expanded partnership will help increase the flexibility and efficiency of our customer service offering going forward.

Finally, on our last earnings call in early November, I discussed the urgency of tackling the global climate crisis and the importance of our industry coming together to work towards the goal of carbon neutrality by 2050. Shortly after that earnings call, Booking.com launched its travel sustainable program. This is a first of its kind program that features a travel sustainable badge for any property on our platform that is implemented a combination of sustainable practices. When searching for accommodations, travelers can see whether or not a property has been given a travel sustainable badge and can filter search results based on the badge. We believe our greatest influence on sustainable travel is to enabling our combination partners to showcase their sustainable practices to travelers who are looking for ways to travel more sustainably. We are looking forward to talking more about this program and other efforts and commitments related to sustainability when we publish our 2021 sustainability report and our first Climate Action Plan in March.

In conclusion, we executed well and produced strong results in 2021. As we look ahead to 2022, I’m encouraged by the quick rebound in bookings we have seen so far this year and the level of summer travel on our books. While we expect to see some volatility in trends as a result of the ongoing effects of COVID, I am confident in the continued recovery in travel demand globally as there is clearly a very strong desire to travel among our leisure bookers. Of course, we are concerned and are monitoring the situation in Eastern Europe, which we recognized could be disruptive to travelers who may be going into that region. Overall, we believe we are well positioned to continue capturing travel demand and we will continue our work executing against our strategic priorities. As I have said before, we are thinking about our business beyond just getting back to 2019 levels of demand and we are focused on building a larger and faster growing business with more products that generates more earnings after the full recovery and for the long run.

I will now turn the call over to our CFO, David Goulden. David?

David I. Goulden — Executive Vice President and Chief Financial Officer

Thank you, Glenn, and good afternoon. I’ll review our results for the fourth quarter, provide some color on the trends we’ve seen so far in the first quarter and our thoughts on 2022. All growth rates for 2021 and 2022 are 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 onto our results for the fourth quarter. On our November earnings call, we discussed the improvement in trends that we saw throughout the third quarter, driven by Europe followed by a further improvement in October, driven by Asia. You will recall the trends weekend in Europe towards the end of October, driven by a number of countries I see recent increases in the Delta infections at that time. In November, we saw a slowdown from October overall trends, mainly by Europe and this slowdown continue to worsen in December across all regions due to Omnicom variant concerns. This resulted in Q4 reported room nights declining 21% versus Q4 2019, which was 11% worse than the 10% decline in October, only a few points worse in the 18% decline in Q3. December room nights were 35% below 2019.

Moving into the fourth quarter, the slowdown in Q4 versus Q3 was driven primarily by Europe, which declined about 20% versus Q4 2019, while all other regions improved in Q4 versus Q3. Compared with Q4 2019, the U.S. continued to have strong growth in fourth quarter while Asia was still down considerably and rest of world was down modestly. However, as I mentioned, we saw a slowdown across all our regions in December, most meaningfully in Europe and in the U.S. Mobile bookings primarily through our apps represent two-third of our total room nights in the fourth quarter and for the full-year. Our apps continued to represent an increasing majority of our mobile bookings. We continue to see greater than 50% of our total room nights coming to us through the direct channel. Our direct channel increase as a percentage of our room nights in the fourth quarter and for the full -year relative to 2020 and 2019.

The international mix of our total room nights in Q4 was about 33% in line with Q3. Q4 international room nights were down almost 50% compared to Q4 2019 levels, a few points worse the decline in Q3. We continue to see growth in our domestic room nights in the fourth quarter, also a level slightly below Q3. The December slowdown was both the international and for domestic. Our cancellation rates were up a few percentage points versus 2019 in Q4 and for the full-year increased meaningfully in December due to concerns about the Omnicom variant. The booking window in Q4 of Booking.com was not sure there than it was in the fourth quarter of 2019 and contracted further in December as customers focus mainly on the short-term travel needs. To alternative accommodation of Booking.com, the global mix of room nights about 27% in Q4 and about 29% for the full-year was in line with 2019 levels. The global mix was impacted by the underperformance of Europe relative to North America. Within Europe, our mix of alternative accommodations increase in Q4 by a couple of percentage points and for the full-year by a few percentage points relative to 2019. Growth has been declined 8% in Q4, which is less than the 21% decline in room nights due to an increase in average daily rates for accommodations on a constant currency basis of about 30% versus 2019 and very strong performance of flights business.

Our accommodation constant currency ADR benefited by about 4 percentage points from an increased mix of business in North America, which is a higher ADR region and a decrease of mix in business in Asia, which is a lower ADR region. Excluding regional mix effects, some currency ADRs were up about 9% driven by rate increases in most of our regions, most notably in Europe and North America and especially in higher demand leisure oriented destinations. Constant currency ADRs were higher than we expected due in part to continued high rates flexible bookings plus generally higher pricing in North America and in Europe. Airline tickets booked in the fourth quarter were up 116% and for the full-year were up 104% versus 2019, driven by very strong growth of Priceline and by flight bookings at Booking.com.

We are encouraged to see a full-year of triple-digit growth from our flights business, which is a key component of our multi-products Connected Trip strategy. Consolidated revenue for the fourth quarter was almost $3 billion, down sequentially 36% from Q3 2021 and 11% below Q4 2019. Q4 2021 revenue was more than double the $1.2 billion of revenue we recognized in the fourth quarter of 2020. Q4 revenue was strong than expectation due to higher ADRs and a shorter booking window. Revenue was less impacted of the bookings from Omicron in Q4. Revenue as a percentage of gross bookings was about 40 basis points below Q4 2019, which was best, is on expectations as a deceleration within Q4 more negatively impacts our gross bookings in revenue in the quarter.

Excluding timing impacts, our underlying accommodation take rates were about in line with Q4 2019 levels. Our full-year revenue was almost $11 billion, which is 27% below 2019, but improved 61% versus 2020. Full-year revenue as a percentage of gross bookings was 14.3%, which was lower than 15.6% in 2019, primarily due to the timing differences between gross bookings and revenue recognition. The strong revenue results in the fourth quarter helped drive adjusted EBITDA of $940 million, which was 27% below Q4 2019. Sequentially, Q4 EBITDA was down 55%, which is better than we expected. This was driven primarily by the higher than expected revenue and lower than expected opex in our more fixed expense categories. Marketing expense, which is a highly variable expense line decreased 2% versus Q4 2019. Marketing expense as a percentage of gross bookings increased slightly versus 2019 in line with our expectations. Marketing ROIs were a little lower than our expectations due to the negative impact of cancellations late in the quarter, and this is offset by a higher than expected mix of direct business. Sales and other expenses were 21% higher than Q4 2019 due to a higher volume of merchant gross bookings and higher outsourced call center costs.

About 30% of Booking.com’s gross bookings were processed through our payment platform in Q4 and about 27% for the full-year, up from 22% in 2020. We expected our more fixed expense categories in aggregate to be about in line with Q3 due to lower personnel costs offset by higher IT and G&A costs. They came in 10% lower than Q3 due to year-end finalization of our bonus expense accruals as well as lower expected IT costs. This means our Q4 personnel expenses do not reflect our run rates going into 2022. Non-GAAP net income of $354 million results in non-GAAP EPS of $50.83, which was down 32% versus Q4 2019. Our non-GAAP tax rate of 20% was higher than the 18% in Q4 2019. Our full-year non-GAAP tax rate of 20% was 1% higher than in 2019 due to a high proportion of non-deductible tax expenses and non-tax deductible expenses in relation to a lower pre-tax income versus 2019. On a GAAP basis, we had operating income of $848 million in Q4. We recorded GAAP net income of $618 million in the quarter, which includes income tax expense of $198 million.

Now onto our cash and liquidity position. Our Q4 ending cash investment balance of $14.3 billion was down versus our Q3 ending balance of $15.4 billion, primarily driven by the $1.2 billion Getaroom acquisition, partially offset by positive free cash flow about $178 million. Booking’s housekeeping notes about Getaroom. The first is a closed-end of Q4. I was not meaningful to Q4 results. The second is that we did not include incremental room nights from Getaroom in our commentary about January and February. These incremental room nights will include when we release our Q1 actual results. In early January, we started returning capital to shareholders under our remaining authorization and to date purchased about $500 million. During that travel recovery continues, we still expect to complete our remaining authorization within the next 3 years.

Now onto our talks for the first quarter and to remind you, we will make comparisons with 2019 unless otherwise indicated. January room night declined about 22%, an improvement from the 35% decline in December, as concerned around the Omicron variant ease. This improvement was driven primarily by recovery in cross-border, travel within the European region and domestic travel in Europe. We saw room nights trends improving throughout January and continuing into February. Room nights in the first half of February were about in line with 2019 levels and gross bookings were higher. In the first half of February, we saw a meaningful improvement across all our regions compared to January. The U.S. has strong room night growth versus 2019 in the first half of February, while Europe had about 10% growth. Rest of world was up slightly and Asia was down about 35%.

Our mix of Internet room night recovered from about 23% in December to over 40% in the first half of February, which is the highest international mix we’ve seen since the start of COVID. As a reminder, our pre-COVID international mix is just over 50%. As I mentioned, the improvements we’ve seen in the first half of February are broad-based with large countries in Europe and international travel routes within Europe, driving the largest impact. The new cross-border bookings are seeing in Q1 in Europe on average have a longer length of stay and a shorter booking window than comparable bookings in 2019. As we have seen throughout the pandemic and travel restrictions are lifted and traveler confidence increases, bookings improved quite quickly.

Given the rapid changes during the first half of Q1, it’s difficult to predict how room nights for the remainder of the quarter will develop. While it’s encouraging to see the recent improvements, we are still and potentially volatile environments with high COVID infection rates in some part of the world and geopolitical uncertainty that could impact our business, especially in Europe. So far in Q1, the overall booking window of Booking.com has contracted less versus 2019 that did in Q4. We’ve seen recent strength in our summer booking trends and our gross bookings for summer are higher than they were at this time in 2019. The summer booking trends are stronger in Western Europe, while gross bookings for summer period are up double digits versus 2019. And gross bookings for the U.S. are also higher for the summer than they were at this time in 2019. Of course, a very high percentage of all bookings for summer are cancellable, so things could change rapidly.

Turning to the income statements. We expect the change in gross bookings in Q1 versus 2019 to be several percentage points better than the change in room nights due to an increase in ADRs and very strong point bookings. Constant currency ADRs in Q1 so far have increased versus 2019, a similar rate to Q4. We expect Q1 revenue as a percentage of gross bookings to be about 1.5 percentage points lower than in Q1 2019, as the bookings deceleration in Q4 negatively impacts revenue and the booking recovery in Q1 benefits revenue in future quarters. This 1.5% points of difference in revenues potential gross bookings could be higher if booking trends increased meaningfully from the first half of February, especially if a high percentage of these bookings office stays in future quarters. We expect marketing expenses in Q1 will trend about in line with gross bookings compared to Q1 2019. We expect sales and other expense in Q1, a percentage of gross bookings to be about the same as it was in Q4. We expect our more fixed expenses in aggregate will be about 15% higher in Q1, so in Q4 on a dollar basis due to the impact of seasonal increase in benefit costs. The 2021 year-end personnel related accrual finalizations and the impact of planned hiring as well as increases in IT expenses including some deferral from Q4. In more just explain to remind you that Q1 is our seasonally lowest quarter, we expect adjusted EBITDA to be positive, but down sequentially from Q4 significantly more than the sequential declines we saw pre-COVID, primarily due to the impact of Omicron on Q1 revenues.

As we think about the full-year ahead, we’re encouraged about the strong summer bookings we are seeing so far and we are optimistic about the continued recovery of leisure travel. However, we do expect continued volatility in our top line trends driven by COVID. There are other uncertainties on the horizon, including the current geopolitical situation, which could impact travel. If you look at Russia and Ukraine combined destination markets, they represent a very low single digit percentage of our total gross bookings. All this makes it very difficult to predict how the topline will progress during the year and how the full-year will turn out. As we think about the recovery of travel in 2022 and the opportunity in front of us, we plan to invest in marketing, other incentives and improvements and expansion of our products to attract existing and new customers to our platforms and to drive additional loyalty in the future. This also requires investments in people and technology. We’re excited about the opportunity to expand our business and we believe we can strengthen our position in accommodations and Bill much more complete travel solution for our customers and partners. We believe this is the right thing to do for higher longer-term return from our business.

With this in mind, there are a few factors to consider when thinking about the shape of the P&L for the full year, these fall into four buckets; revenue marketing, sales, and other expenses; and our more fixed operating expenses. Starting the revenue as a percentage of gross bookings, we expect this to be higher in 2022 than it was in 2021, but lower than in 2019. In 2021, our revenue potential gross bookings was about 130 basis points lower than 2019, mainly due to timing differences between recovery of gross bookings and revenue. In 2022, we expect this timing to be less of an impact, than it was in 2021.

Moving to marketing. There are a number of factors that come into play. We expect the environment to remain competitive, especially as a leisure travel market moves closer towards full recovery. We intend to remain disciplined and our proposed marketing ROIs and we’ll continue to invest in developing the medium intent, social media channels and you will see us active in branding in the U.S. and other major markets. Although continues to be to use our marketing strength, to gain share in markets where we can with reasonable returns. We expect to run this program to drill year to track, both existing and new customers to our platforms. It’s difficult to know exactly how these factors will play out across the year, but we expect marketing as a percentage of gross bookings to be a little higher than it was in 2019 and also in 2021. Of course, an increase in direct mix helps our marketing efficiency and we believe the investment we’re making will results in a higher mix over time.

Turning to sales and other expenses, we expect these to be up 50 basis points higher than in 2021, as a percentage of gross bookings. This is mainly for additional payment processing costs, but also impacted by anticipated higher third party customer service expenses. The additional expenses related to payments are offset by higher payment related revenue. The last area is our more fixed operating expenses, which include personnel, G&A and IT. We expect our personnel expenses were impacted by higher than average annual wage increases, especially in the product and technology areas, and by planned headcount increase in key areas, including process technology and volume-related functions. We expect personnel expenses to be about 10% higher than in 2021. We expect the G&A and IT will both grow faster than personnel, driven by a number of factors including digital service taxes returning to hybrid work environment and the investments to enhance our customer and partner facing and internal systems.

The course we made for 2022 do not include anticipated reduction to personnel expense and increases to sell in other expense from the enhanced strategic partnership with Majorel, the Glenn spoke about. We do not anticipate much of an impact on adjusted EBITDA in ’22 from this initiative, and we’ll update you again in May. Also we expect the acquisition of Getaroom to have a small positive impact on our P&L in 2022. As Glenn noted, we expect that the ETraveli acquisition will close later this year, which result in a minor impact to the P&L in 2022. So when thinking about the shape of the P&L in ’22, these factors have been the revenue recovery will lag the gross bookings recovery and EBITDA recovery will lag revenue recovery. Some of the lag and EBITDA versus revenue is timing, i.e. the marketing we spend on bookings, we expect to recover, I had a revenue. On top of this, we plan to make new investments in customer acquisition and then expanding our product offerings we mentioned earlier taken together. Together, we expect our EBITDA margins in 2022 to be a few points higher than you were in 2020. Looking beyond 2022, we continue to remain focused on investing to build a larger and faster growing business with more products than we had pre-COVID that delivers more EBITDA dollars or more. Earnings per share with industry leading EBITDA margins. In closing, we are confident in our ability to capture demand as the global travel market recovers. And to execute against our strategic priorities.

With that, let’s take your questions. And Chris, I will turn the call over to you for Q&A.

Questions and Answers:

 

Operator

Your first question comes from the line of Justin Post of Bank of America. Your line is open.

Justin Post — Bank of America — Analyst

Great. Thank you. Great to see your bookings back to ’19 levels. I know there’s a lot of thought about what booking looks like post travel recovery. So I’m wondering if we could revisit some of the things you’re thinking about, what the business could look like as far as booking levels and margins when we get back to normal? And I know you’ve made a couple of acquisitions. I’m sure you’re excited about those and obviously, you’re connected vision trip, it seems to be in the right direction. So maybe we could revisit how you’re thinking about the absolute number — the absolute value of bookings, and also what that absolute level of EBITDA could look like once we get to a full recovers? Thank you.

David I. Goulden — Executive Vice President and Chief Financial Officer

It’s more handle the kind of the margin, so he did delight to add in his prepared remarks, Justin, let me give you a little bit more color, I appreciate the question. So we are focused upon, as I say, running a business that is larger than it was in 2019. It’s more diverse service offerings. It’s growing faster than it was in 2019. It has more absolute EBITDA dollars and EPS dollars. That’s our focus. We give you always some color and see where things go in the 2022. We expect that we can expand of what will beyond 2022 and we expect that once we all have to normal in that final state will have industry-leading EBITDA margins, but we all know, we don’t want to get too specific about exactly what they’re going to be other than our goal is to give more EBITDA dollars, more EPS that are growing faster than we were.

Justin Post — Bank of America — Analyst

Great. And then the two acquisitions you made; one is closed and one is still open. How are you thinking about those? Are those areas that are really going to help you save costs or do you think those are actually booking drivers?

David I. Goulden — Executive Vice President and Chief Financial Officer

Well. They’re really two different acquisitions, Justin, why I take them separately. So the Getaroom one as I just described in my prepared remarks is very much adding to what we already have at Priceline in a B2B business that helps bring in customers that we wouldn’t have gotten through our other marketing programs, whether it’d be pay for performance or brand. These customers are coming from affiliates and the contracts like Getaroom had and different technologies we have that by bringing them in, is going to get us additional business that we would have gotten otherwise. On ETraveli, that was a different situation where, as I pointed out, many times, how important it is for us to have this Connected Trip vision fulfilled? And one of the critical parts of it is our flight business and we absolutely are very pleased to see not only the growth in our number of flight bookings, but also the fact the number of new customers getting coming and the number who are then buying an accommodation. Our ETraveli has been powering the Booking.com product for 2 years, great technology. They do a lot of things that could we create on our own probably, that would take a long time, it would require us to use resources that we want to use elsewhere. So by acquiring ETraveli, we’re going to bring that technology in-house and be able to do things that we couldn’t do or just a commercial partner. So I’m looking very forward to having that close and hopefully, as we said in the future and then really begin to develop a great, great combination.

Justin Post — Bank of America — Analyst

Great. Thank you.

Operator

Your next question is from the line of Lloyd Walmsley of UBS. You may ask your question.

Lloyd Walmsley — UBS — Analyst

Thanks, guys. Two if I can. First, can you give us just an update around how you’re thinking that timing for adding some of the value-added features to payments that could drive positive contribution to the P&L and is it safe to say that even if you past some of that cost, some of that margin along to consumers, it would likely drive faster growth and therefore revenue, even if it wasn’t directly revenue margin accretive? And then the second question would be, can you maybe give us some color around the benefits of Connected Trip beyond incremental revenue from adding new products. So what do you see with repeat rates are direct rates among users who adopt multiple products, anything you could share there would be great? Thanks.

Glenn D. Fogel — Chief Executive Officer and Director

Sure. Lloyd, two separate questions. Let me talk a little bit about the payments product and what we’re developing and how it’s ground. I’ll let David add a little more to, I’m sure you want to add some more specifics. Clearly, we talked about this in the past that one of the critical things is enabling customers to be able to pay in the way they want to pay and enabling the supplier to get paid in the way they want to get paid. So right away getting that out in the market enables us to have more business. Then you go beyond that and you see do it cheaper for our suppliers, do it in a way is cheaper than they are doing it right now, the way they are doing their payments the way they’re getting it through our old agency model Booking.com. And finding a way that we can do that in a way that not only improves their business though, now on to pay as much, but obviously will make a little out of that to. Within it goes much more beyond and that is the Connected Trip. If Connected Trip doesn’t work, if you don’t have payments, because we need to put it altogether in one payment that we can then handle on our own and particularly if there’s anything goes wrong, we’ll have to undo it to. That’s really going to be helpful to us. And then it’s not just payments, but it’s our FinTech unit, which is the payments people but doing more things. It’s coming in and helping out in flexible type products. People want a flexible product, they can cancel us creating that on our own is something we’ll be doing more so in the future. There are a number of different things we can do, that will absolutely increase both the ease of use, the convenience and enable us to make more money out of it. And I’ll pause there and let Dave, you want to add anything more to that?

David I. Goulden — Executive Vice President and Chief Financial Officer

I think. Glenn, you did a great summary of the interconnected to and the new areas, Lloyd, on timing, nothing major to the market impact in ’22. It’s still in building mode for some of those value-added products that you mentioned and the market entry where you might see any impact on would be more into the 2023, 2024 timeframe.

Glenn D. Fogel — Chief Executive Officer and Director

Then to the second thing, Lloyd, in terms of the Connected Trip, step one is build out the verticals. We didn’t have flights a couple of years ago on Booking.com at all. And as you can tell by the numbers I put out, we still don’t have a 100% coverage for all the areas that we do accommodations have to build that out. Also just some of the technologies that ETraveli, we have a lot of things we can do to just improve that product. I talked a little bit about the attractions product where we had only 10% coverage last year. Now we’ve made a lot of good progress to 50, we had to put that all out. And then there are other areas of ground, transportation other parts of the trip. So we’re building out all the verticals first to make sure with the supply, make sure it works well, etc. At the same time, we are beginning as I pointed out about the people will get flights and buying the combination, we are doing some of that cross-selling and bringing that up. We will do more and more. The goal of course is to make it, so that is so seamless, so friction as to people when they’re using Booking.com for any kind of traveler doing, they’re finding it easier and offering more value and that value comes from suppliers being willing to chime into our platform and be able to offer different things that we can then very very scientifically targeted different customers in a way that gets an incremental customer to that supplier, customers happy, the suppliers happy, and then we of course make money. That will develop the loyalty. That will develop the direct business. That’s where we’re going for and it’s the same way in other parts of e-commerce where people don’t shop around, they don’t look around, they go to one player, because they know that’s the place where they’re going to get the most easiest to use, etc. And that’s what we’re going forward. It’s going to take some time, but I love the progress that we’re making.

David I. Goulden — Executive Vice President and Chief Financial Officer

And Glenn, I’d just add to that as well. When we kind of look at our customer base and not too surprisingly our top customers, the ones who can spend the most with us, you just most often I will likely use multiple things, more likely to use the app and a much more likely through interest directly. So that’s the model that we’re trying to build upon to build the loyalty the Glenn mentioned. And we do have good evidence that that is a trend that we can build on and we’ve built value, complete travel offering, frequency, direct link is via the app, the more loyal as customers become.

Lloyd Walmsley — UBS — Analyst

All right. Thank you.

Operator

Your next question is from the line of Kevin Kopelman of Cowen and Company. Your line is now open.

Kevin Kopelman — Cowen — Analyst

Great. Thanks a lot. I had a follow-up on the latest recovery trends. Based on all the data that you have, do you have a sense of, to what extent the strong booking numbers you saw in the first half of February reflect sustainable levels that you could see going forward in the coming months, as opposed to kind of a short-term catch-up after the Omicron pressure that you saw in December and to start the year? And as a follow-up to that, to what extent are travel restrictions that are still in place in many European countries is still hurting booking activity based on the data that you’ve got? Thanks.

Glenn D. Fogel — Chief Executive Officer and Director

Hi, Kevin. So I think it’s very difficult for anybody to have a perfect crystal ball into exactly what is driving the good numbers that David talked about for the first half of February. However, I think we can all feel fairly certain that there is a tremendous amount of pent-up demand for travel. For several years, people have not been able to travel the way they wanted to travel. Savings are up, so people have cash. And I hear it anecdotally. I hear I talked to CEOs in the industry, what they’re seeing, what they’re hearing. I think everybody feels that people want to travel. and I don’t think I would just see this is just a little bit of an Omicron rebound is what we’re seeing. I think what we’re seeing is, he will be able to travel. Restrictions are going down. People are feeling safer. There are some new things coming out that will reduce the friction to need further in Europe. There is announced by the EU Council about wanting to suggest getting rid of some of the restrictions. Those things all help people feel better about travel and of course, though there are partially world that are still having problems and eventually, those are going to go down too. So I feel good about the demand. I feel good about the future of travel. That being said, David, may have mentioned it several times. There are a lot of uncertainty still about how linear this is going to be and I think we have to all look back at the past and many times we thought things were out of the world. And then we weren’t out of the world and of course, David also mentioned, and I mentioned there is some macro events happening in different parts of the world, but they can also impact travel. So I think we all have to be cautious but optimistic. There is a thing absolutely do know though the long run. I know in the long run, we’re going to do well in travel, people are going to come back. You can’t stop that demand in the human being that wants to travel, how fast we can, we can’t be certain, but I am confident in our future.

Kevin Kopelman — Cowen — Analyst

Thanks, Glenn. Could you comment on the travel restriction piece in Europe, to what extent are you still seeing restrictions in Europe, still limiting some of the activity or is that pretty much up already?

David I. Goulden — Executive Vice President and Chief Financial Officer

It’s not completely done the different countries. The different countries look at the list all the time. Some places are letting them out completely, UK, you’re probably aware. Other places still some and the question is do you need to take a test before you show up or not? If you’re vaccinated, but you’re not actually with an EU approval vaccination here, with the WHO vaccination approval, what’s the difference there, all these things. But I think a lot of the stuff is going to be going away. And I hope in other parts of the world also that these restrictions around the world can go down as quickly as possible. Australia, for example, is laying tourist back and maybe saw some happy, happy photographs. Look, the fact is that I do not believe and I’ve seen a lot of data on this, that the restrictions on travel and this comes from the WHO and other 40 sources that travel restrictions do not have a significant impact on reducing the amount of infections in countries. And therefore, given the social costs, financial costs, etc., a lot of these restrictions should be lifted.

Kevin Kopelman — Cowen — Analyst

That’s great. Thanks guys.

Glenn D. Fogel — Chief Executive Officer and Director

Chris, two more questions, please.

Operator

Your next question comes from Doug Anmuth of JP Morgan. Your line is open.

Doug Anmuth — JP Morgan — Analyst

Thanks for taking the questions. One for Glenn. One for David. Glenn, just hoping you could talk about the elevated brand strategy in the U.S. and just how approach differs year versus in previous years? And then also any comments just framing the broader marketing landscape as you go into a stronger recovery? And then David, unless I missed it, just curious on any financial implications from expanding the customer service partnership with Majorel? Thank you.

Glenn D. Fogel — Chief Executive Officer and Director

So Doug, I heard the second part, a little bit about the brand more in marketing, but in his first part, let me answer the brand, our general marketing approach in the U.S. going forward and then give me, say again at the beginning part there, clearly you saw that we didn’t do a lot of brand marketing, worst of the pandemic and obviously it’s no reasons spend that money and now with recovery coming were coming back and I’m very pleased with what we saw with our suitable and I’m very, very early, but I’m pleased with the numbers and what I’ve seen so far. And so we are stepping back into a more normal marketing approach as we did in 2019. That being said, we’re always going to do what we have already done, which is, look, where do we think we’re going to get the best return for our marketing dollars. And we continue to evaluate what’s going to give us the greatest return. But one thing that we have been changing over time and that is not looking just for the immediate transaction, they’re seeing what we do interest of building out the long-term, the loyalty, to repeat is the coming back direct. And being able to measure, we are that person came from and what they do after that. So we’re a little more scientific and at than perhaps we were in the past for the long run. But I’m pleased with that because I think that’s what we need to do to really build a franchise, increase the value of the company. The first part, what was the first part, Doug, you asked about?

Doug Anmuth — JP Morgan — Analyst

I think you have the brand strategy pretty well. The second part I wanted to ask about the customer service partnership expansion just financial implications?

Glenn D. Fogel — Chief Executive Officer and Director

Yeah. Sure. So let me take that. So first of all, support is in the context. This is to do with Booking.com, so up probably be working with external service providers for a long period of time and you may or may not know that when we get to our peak periods, the majority of our customer contracts handled by our external partners, for example, typically last summer we had about 75% of the Sears contracts were handled by external partners. So this is not something new, it’s just something a little bit more accelerated. Financial impacts do not expect much in 2022. We’re still working through, as Glenn said, through approvals and the close process, then transition period and 2023 and 2024 which is more about how potentially having the ability to have less the cost increase than in the past, but the cost drivers is not really the driver for doing this. It is read up ability. We have incredible variability in our workload from peak periods to low periods. And to run an in-house CST is quite inefficient and also in the best employee experience for all workers because. So they are experiencing peaks and troughs in the career. Development is also restricted because it’s a very in-house group. So the bigger factor is really our flexibility giving a bigger pool of opportunity for all employees. And then with that comes some potential cost benefits in the form of a lower increases as we ramp up the volumes.

David I. Goulden — Executive Vice President and Chief Financial Officer

And I would just add one other thing is, we still believe absolutely importance of great customer service. This has nothing to do with changing that. We’re still going to be doing the technology that goes into the customer service process or policies, all those things we are doing that. Also it’s looking at in the future, but we hope to build a very big company. The idea of having to build a very big internal customer service operation. It’s just not the best use of our resources, our managerial capabilities. This is on those better done by people who are experts in that. You can really do it better than we can do it, but we can still provide all the great things in the actual customer service to the customer. It’s definitely a win-win.

Doug Anmuth — JP Morgan — Analyst

Great. Thank you both.

Operator

Our next question from Mark Mahaney of Evercore. Your line is open.

Mark Mahaney — Evercore — Analyst

Yeah. Thanks. Two questions please. That 9% constant currency ADR growth. I think that’s the highest I’ve ever heard you talk about, and I guess that’s in if I might add, maybe that’s not surprising given what’s happened to overall inflation rates being a decade size. So when you think about this year, what are you assuming in terms of the sustainability of that, maybe I’m even asking whether inflation is temporary or permanent. So just your thoughts on what do you expect to happen with ADRs like you assume when you’re running your business, what are your assumptions? And then the second thing I want to ask is, David, when you talk about the ability of booking to grow post the recovery to grow faster than it did in 2019. If that were to actually happen what would be the biggest drivers of that like what would be the greatest things that would cause on the topline, the business to grow faster post-COVID than it did pre-COVID? Thanks a lot.

David I. Goulden — Executive Vice President and Chief Financial Officer

Sure, Mark. Let me take both of those. So the 9% constant currency ADR growth was active adjusted for basically GeoMx, right? So same country and that is a strong number. We experienced 9% growth last year again versus 2019. So it’s quite possible ADRs going to be at or higher than you were in 2021. I mentioned what the factors were. I mentioned the fact that was higher than our expectation. These things with the rates start to tail a little bit when we got into the got beyond the high. Obviously, there was a more more supply relative to demand, but the rates continue to hold up. And as I mentioned, flexible rates are still at a region, but just underneath that those are basically just is higher prices, particularly in the last fourth into high demand areas remains strong. So we think that’s ADRs, likely to be as high in ’22 as you were in ’21 compared to 2019. And then in terms of faster growth, I mean, there are number of factors that we do believe they together. We believe that there is further growth for us in the accommodation business both on a geographic point of view, expanding our offering into alternative accommodations. And adding on to that, all the benefit from the Connected Trip, what we can do on top of that because of payments, because of the fact we offer a more complete offer, thinking about more targeted ways to customize a complete solution for our customers, our pricing payments, customer service. We think that we are solving today a relatively small part of the total travel equation and the potential for us to solve more of that is what’s going to drive more growth basically create a better product service, have customers coming to us more increasing loyalty, they all work together to provide what we think is a great growth opportunity for us.

Mark Mahaney — Evercore — Analyst

Okay. Thank you, David.

Operator

Okay. At this time, I would now like to turn the conference back to Glenn Fogel for his concluding remarks. You may proceed.

Glenn D. Fogel — Chief Executive Officer and Director

Thank you. We are pleased with 2021. It was a volatile and difficult here but it showed progress. And as always, I want to thank our partners, our 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 you, and good night.

Operator

[Operator Closing Remarks]