Booking's Speed Bumps

The analysts at Goldman Sachs recently had some face time with Booking CEO Glenn Fogel. There were two main topics discussed.

The first relates to Google. As we have seen with these travel sites, they are very reliant on Google directing traffic towards their sites. A lot of it used to be free but now Google is charging them big bucks to be top of the searches. Google has also started experimenting with their own hotel booking capabilities. Next time you search for a hotel, have a look at the different options offered to you, and how Google is now your point of interaction.

Glenn Fogel seems to feel that Booking is big and established enough to be the go-to for travel search. Instead of searching on Google, people are going straight to Booking websites to search for hotels. They have also created incentives to direct traffic in this direction. I booked a weekend away the other day and could only get a discount if I went straight through the app on my phone.

The second issue discussed was the current overbooked environment. Basically, there are not enough hotels out there to fill the demand. Mr Fogel believes that technology will help solve this problem, just like it has helped manage overbooked flights. What Booking has also done to counteract this is a concept called the "connected trip". Not only do you book your hotel through the site but you book restaurants, activities, car rentals and flights. The whole holiday experience is done online through one platform.

That certainly opens up avenues for this company to create more business for itself. We think Booking is a really good buying opportunity. Experience has shown us that share price slumps and company speed bumps are often the best time to add. Especially if the company is a leader in a thriving sector. Booking ticks those boxes.