IN THIS EPISODE, YOU’LL LEARN:

• How Booking.com established a foothold in Europe despite Expedia’s dominance in North America
• What Alphabet could do to seriously disrupt Booking
• Why the global travel industry should continue to outpace GDP growth
• What are the subtle differences between Expedia, Booking, and Airbnb
• Whether Booking can be disrupted by AI
• How Booking uses price parity to protect its value-add to customers
• About the flawed approach the company has taken with its management comp
• How to think about modeling BKNG’s intrinsic value
• Whether Shawn and Daniel add BKNG to their Intrinsic Value Portfolio
• And much, much more!

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:00] Daniel Mahncke: The one thing we know about travel is that as people get wealthier, historically, they’ve always done more of it all paid a premium for a nicer experience. And as the world continues to get wealthier, we should expect then that the travel industry will continue to outpace GDP growth.

[00:00:16] Shawn O’Malley: So what could be better than investing in the world’s largest travel company, which not only has a fabulous track record of compounding returns for shareholders, but is now working to use AI to create personalized travel agents for every user?

[00:00:29] Shawn O’Malley: That is a huge opportunity for a company that already epitomizes quality in almost every way.

[00:00:39] Intro: You are listening to The Intrinsic Value Podcast by The Investor’s Podcast Network. Since 2014, with over 180 million downloads, we’ve learned directly from the world’s best investors. Now we are applying those lessons to analyze businesses and investment opportunities every week, helping you uncover intrinsic value. And now here are your hosts, Shawn O’Malley and Daniel Mahncke.

[00:01:11] Daniel Mahncke: Today we will talk about the world’s biggest travel company, Booking Holdings, the parent company behind Booking.com, Priceline, and Agoda has operating profit margins that rival Alphabet, while also pouring cash into buybacks and dividends. Over the last few years, the company is actually beginning to look a lot like a share cannibal after shrinking its share count by more than 4% a year since 2019.

[00:01:34] Daniel Mahncke: And we love to find share cannibals. That’s one thing we figured out over the course of the last 47 episodes over the last decade, Booking has compounded at a staggering 15% a year, and that type of quality is, I’m sure what caught your attention, Shawn. I should also say as the leading global player in the online travel industry, acting like a digital travel agent, Booking brushes up against our largest portfolio holding, which is Airbnb.

[00:02:00] Daniel Mahncke: So whether we end up liking the company or not, the pitch seems pretty timely in helping us better understand the overall travel industry.

[00:02:08] Shawn O’Malley: That’s a pretty good setup, Daniel, and, and I have to say it was our colleague, Clay Finck, who hosts, We Study Billionaires that really encouraged me to dig deeper into Booking.

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BOOKS AND RESOURCES

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• Get smarter about valuing businesses in just a few minutes each week through our newsletter, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Intrinsic Value Newsletter⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠.
• Sign up for ⁠⁠⁠⁠⁠The Intrinsic Value Newsletter⁠⁠⁠⁠⁠ to track our Portfolio.
• Shawn & Daniel use ⁠⁠⁠Fiscal.ai⁠⁠⁠ for every company they research — use their ⁠⁠⁠referral link⁠⁠⁠ to get started with a 15% discount!
• Our colleagues Clay Finck and Kyle Grieve’s discussion of BKNG on ⁠⁠⁠We Study Billionaires⁠⁠⁠.
• How Booking’s management⁠⁠⁠ thinks about stock-based comp⁠⁠⁠.
• Interview with Booking’s CEO on the ⁠⁠⁠promise of AI in travel⁠⁠⁠.
• Booking’s CEO interview with ⁠⁠⁠Time Magazine⁠⁠⁠.
• Explore our previous Intrinsic Value breakdowns: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Paypal⁠⁠⁠,⁠⁠ ⁠⁠⁠⁠⁠Uber,⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Nike,⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Reddit,⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠Amazon⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Airbnb⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠TSMC⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Alphabet⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ulta⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠LVMH⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Madison Square Garden Sports⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠.
• Related ⁠books⁠ mentioned in the podcast.
• Ad-free episodes on our ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Premium Feed⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠.

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