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April 11, 2025
The Lithography Inflection Point - How Two Different Approaches to EUV Could Reshape the Semiconductor Industry
By
Kristal Investment Desk
How Booking Holdings Keeps Rewriting the Rules of Travel Distribution
In 1989, planning a trip to Paris meant calling multiple hotels from a thick guidebook, navigating time zones and language barriers, and trusting quoted rates without easy comparison. Travel agents served as essential gatekeepers, wielding thick binders of hotel relationships and arcane GDS terminals. Their power came from asymmetric information - they knew what was available and at what price; consumers largely didn't.
The process was remarkably inefficient. A single booking could take hours or days. Rate transparency was minimal. Travelers often discovered better options only after arriving at their destination. Small independent hotels, particularly in Europe, struggled to reach international travelers without expensive agent relationships.
When Booking.com (then Bookings.nl) launched in 1996, it offered a radical proposition: direct online hotel reservations in Amsterdam. The premise was simple - show travelers all available hotels and let them book instantly. For hotels, it promised access to travelers without expensive technology investments.
This model challenged conventional wisdom. Many believed travelers would always need human agents for complex trips. Others thought hotels would build their own booking engines. Few recognized how the internet could reshape travel distribution's fundamental economics.
Looking at Booking Holdings' latest earnings - $166 billion in gross bookings, 261 million room nights in Q4 alone - it's easy to forget how revolutionary the original premise was. The company's evolution from simple hotel bookings to a comprehensive travel platform mirrors the internet's transformation of consumer behavior.
Each expansion followed the same pattern: identify friction in travel planning, build technology to eliminate it, scale globally.
What's remarkable isn't just the growth but its persistence through disruptions. The 2008 financial crisis, smartphone revolution, home-sharing emergence, pandemic shutdown - each supposedly threatened the model.
Yet Booking's Q4 2024 results show accelerating growth:
🏢 Room nights up 13%
🏘️ Alternative accommodations growing 19%
✈️ Flight bookings surging 52%
🛣️ Connected trip transactions up 45%
This resilience stems from a crucial insight: while technology changes, the core traveler needs remain constant - transparency, choice, reliability, and value. Booking's success comes from consistently meeting these needs through evolving technology, not being wedded to any particular distribution method.
💼 Booking's Q4 2024 results reveal a company operating at unprecedented scale while maintaining startup-like growth rates
🛏️ Room nights grew 13% year-over-year to 261 million — significantly above guidance and accelerating across all regions
💸 Gross bookings of $37.2 billion and revenue of $5.47 billion grew 17% and 14% respectively, both exceeding analyst expectations
📈 Adjusted EBITDA of $1.85 billion — reflecting a 26% growth
📊 EBITDA margins expanded to 33.8% from 30.6% a year ago
- Marketing expenses as a percentage of gross bookings declined to 4.2%
- The company maintained fixed cost discipline despite significant technology investments
The acceleration in alternative accommodations tells a particularly compelling story. Growth jumped to 19% in Q4 from 14% in Q3, marking the 14th time in 15 quarters that Booking outpaced its largest competitor. With 7.9 million listings, the platform now handles about two-thirds the volume of the largest homes-focused player - but within a broader travel ecosystem.
Flight bookings provide another window into Booking's evolution.
The 52% growth in airline tickets (14 million in Q4) isn't just about adding another vertical - it's about changing how travelers interact with the platform. When combined with the 45% growth in connected trip transactions, a pattern emerges: Booking is shifting from a hotel booking site to a comprehensive travel platform.
AI as the Next Evolution
While others debate whether AI will disrupt travel booking, Booking Holdings is already deploying it across three key areas:
The company's approach combines proprietary development with strategic partnerships like Operator, suggesting a recognition that AI's impact will be both customer-facing and infrastructural.
Perhaps the most underappreciated transformation is Booking's shift to merchant of record. The mix reached 59% in 2024, up 9% YoY, fundamentally changing the company's role in transactions. This isn't just about processing payments - it enables:
Each capability reinforces the others, creating compounding advantages that are difficult to replicate.
The results of these investments are showing in customer behavior. Direct bookings now represent mid-60% of B2C transactions, while mobile app bookings reached the mid-50% range. The Genius loyalty program's higher tiers (levels 2 and 3) account for over 30% of active travelers and drive a "meaningfully higher" direct booking rate.
This virtuous cycle - better technology enabling better service, leading to more direct relationships and lower customer acquisition costs - helps explain how Booking maintains industry-leading margins while investing heavily in new capabilities.
The travel industry is witnessing an explosion of AI-powered startups promising to revolutionize trip planning. From ChatGPT plugins to specialized travel agents, each claims to make booking frictionless. Major tech platforms are also eyeing travel, seeing it as a natural extension of their AI assistants.
Yet these new entrants face a fundamental challenge: travel isn't just about information - it's about execution. Knowing which hotel to book is different from handling payments, managing cancellations, and providing support when things go wrong. Booking's two decades of building this infrastructure isn't easily replicated by AI models alone.
Of course, Booking faces its own challenges. Q1 2025 guidance shows the impact of currency headwinds (~3 percentage points) and timing shifts. The transformation program targeting $400-450M in savings acknowledges the need for continued efficiency gains. Competition for direct bookings remains intense.
But these are execution challenges, not existential threats. The company's response - investing $170M in strategic initiatives while implementing cost savings - suggests confidence in its fundamental position.
Perhaps most importantly, travel itself remains remarkably resilient. Despite economic uncertainties, room nights grew double-digits across all regions in Q4. This speaks to a deeper truth: while booking methods evolve, the desire to explore, connect, and experience new places is fundamental to human nature.
The journey from phone books to AI agents mirrors a consistent pattern in travel distribution: technology removes friction, but customer needs remain constant. Just as online booking eliminated the need to call multiple hotels, AI might eliminate the need to manually compare options. But the core value proposition - helping travelers find and book the right accommodation at the right price - endures.
Booking's investments reflect this understanding. The expansion into alternative accommodations isn't just about competing with home-sharing platforms - it's about offering travelers complete choice. The push into flights and connected trips isn't just about vertical integration - it's about reducing booking friction. The embrace of AI isn't just about following trends - it's about making travel planning more natural and personalized.
This brings us back to that travel agent in Amsterdam in 1996. The fundamental promise was simple: make booking travel easier and more transparent. What's changed isn't the promise but the definition of "easier" and "transparent."
In 1996, it meant putting hotel listings online. In 2010, it meant mobile apps. In 2020, it meant alternative accommodations. In 2025, it means AI-powered travel planning and seamless connected trips.
The next decade will likely bring new technologies and competitive threats. But Booking's history suggests its advantage lies not in any particular technology but in its ability to evolve while maintaining focus on fundamental traveler needs.
For investors and industry observers, the key question isn't whether AI will disrupt travel booking - it's who will best harness AI to solve real traveler problems. Booking's Q4 results and strategic investments suggest they're positioning themselves to be that player, just as they did with previous technological shifts.
Disclaimer: The views in the post are for for informational purposes only and should not be considered as investment advice. Please contact your RM or Kristal.AI for investment advise.
By
Kristal Investment Desk
March 9, 2025
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April 11, 2025
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We are licensed in Singapore, Hong Kong and India. Kristal Advisors (SG) Pte. Ltd. presently operates under the CMS license by the Monetary Authority of Singapore (MAS). Kristal Advisors (HK) Ltd is licensed and regulated by the Securities and Futures Commission (SFC) to carry out Type 4 and Type 9 regulated activities and is not involved in the discretionary management of any collective investment scheme. Kristal Advisors Private Ltd. presently operates as a Registered Investment Advisor under the jurisdiction of the Securities and Exchange Board of India (SEBI).
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