Booking Holdings (BKNG) Q2 FY26 earnings call: guidance and Q&A

Has AI, particularly Penny, shown quantitative evidence of improving conversion rates or bookings per customer?

Glenn Fogel stated it's too early for specific percentages but is pleased with the convenience and personalization AI offers. Ewout Steenbergen added that traffic from large language models (LLMs) is still significantly below 1% of room nights and hasn't materially changed recently.

“it's still very small, and we're not at a stage where we're going to start giving away percentages, numbers, increases in CSAT or anything of that nature.”

asked by Mark Stephen Mahaney · answered by Glenn Fogel

How is the company seeing LLMs present data, especially independent content, and how have Google/OpenAI's e-commerce expeditions evolved compared to expectations?

Glenn Fogel noted that having reliable content helps show up in LLM results, but referrals are not yet material. He emphasized working with frontier players while also driving direct traffic through their own AI tools. He mentioned Google's agentic booking launch and the company's adaptation to performance marketing platforms.

“we are working hard with the third-party frontier players to make sure we're properly placed when somebody wants to book if they want to start there. But even more important to me is making sure that we are offering our own opportunities for people to come to us direct.”

asked by Alex Brignall · answered by Glenn Fogel

Why are air and rental cars decelerating, and what does that mean for the Connected Trip vision?

Glenn Fogel reiterated the importance of all verticals for Connected Trip and the role of the payments platform. Ewout Steenbergen explained that the flight business outperformed the market despite global demand impacts from airline capacity and higher ticket prices, especially in Asia. He noted that the biggest part of their economics comes from accommodation bookings, which were less impacted.

“the biggest part of our economics is actually coming from accommodation bookings, and that wasn't so much impacted by those dynamics with respect to the airline industry.”

asked by Justin Post · answered by Ewout Steenbergen

What was the actual impact of the Middle East conflict in Q2, and what is assumed for Q3?

Ewout Steenbergen stated the Q2 impact was higher than Q1 (which was about 2 points) due to continued effects in April/May, but normalized in June/July. For Q3, they expect a slightly less impact than Q2, with indirect impacts (airline capacity, ticket prices) persisting. He highlighted overall market resilience and strong full-year guidance despite the conflict.

“If you look at the second quarter, the impact was actually a bit higher than in the first quarter because we saw the impact continuing in April and in May. But as we said then in June, actually, the situation started to normalize more, and that continued in the month of July.”

asked by Kevin Kopelman · answered by Ewout Steenbergen

What's the roadmap for U.S. growth, particularly for alternative accommodations, and where are the additional $100 million in transformation savings coming from?

Glenn Fogel emphasized continued product, service, inventory, and marketing improvements in the U.S., aiming for higher alternative accommodation growth. Ewout Steenbergen explained the additional $100 million in savings (totaling $650 million) came from deeper dives into existing categories, primarily the procurement workstream, creating capacity for strategic investments.

“the additional $100 million mostly came from the procurement work stream.”

asked by Ron Josey · answered by Ewout Steenbergen

Is SEO pressure a shift to AI search or organic visibility pressure? And could AI search traffic be going directly to hotels?

Glenn Fogel attributed SEO pressure partly to Google's AI overview but noted their direct mix remained stable. He doubted AI search was driving significant direct bookings to hotels, suggesting people still use OTAs for serious booking. Ewout Steenbergen clarified they discussed SEO pressure last quarter and that the direct channel is growing in absolute numbers.

“I doubt that anybody is getting a huge amount of business directly from what they're doing with their travel prompts, their discovery.”

asked by Lloyd Walmsley · answered by Glenn Fogel

What is Booking seeing in terms of accelerated product development and experimentation due to AI?

Glenn Fogel confirmed AI is improving all aspects of their business, including software development life cycle and customer service, leading to better CSAT and lower costs. Ewout Steenbergen added that AI costs are a low single-digit percentage of tech spend, and they use a cost-aware model routing to ensure positive ROI, with metrics like 'AI cost over merge request' coming down.

“we are having a cost aware model routing so that we make sure that for simple task, we are using cheaper models and that for more complex tasks, we're using more expensive models.”

asked by Stephen Ju · answered by Ewout Steenbergen

What opportunities emerge from consolidating B2B operations, and how is the opportunity viewed (share gain vs. absolute growth)?

Glenn Fogel explained the consolidation of Agoda, Priceline, and Booking's B2B units aims to create a best-in-class platform by combining their strengths, making them more competitive. He expects the business to grow significantly by serving larger players like banks, airlines, and TMCs, while also catering to smaller players efficiently. Ewout Steenbergen stressed the focus on incrementality to avoid cannibalizing the higher-margin B2C business.

“It's very important to be focused in the B2B business on incrementality because it's easy to some extent, to grow a B2B business very fast, but cannibalizing your existing B2C business where the unit economics are much higher.”

asked by Kenneth Gawrelski · answered by Ewout Steenbergen