Booking Holdings Inc (NASDAQ:BKNG) Third Quarter 2022 Results Conference Call November 2, 2022 4:30 p. m. Eastern Time
Participating companies
Glenn Fogel – Executive Director
David Goulden – Chief Financial Officer
Conference Call Participants
Lloyd Walmsley-UBS
Brian Nowak – Morgan Stanley
Kevin Kopelman as Cowen
Mark Mahaney-Evercore
Justin Post – Bank of America Merrill Lynch
Doug Anmuth – JPMorgan
Eric Sheridan – Goldman Sachs
Naved Kahn – Truist Securities
Lee Horowitz – Deutsche Bank
Mario Lu – Barclays
Stephen Ju – Credit Suisse
Operator
Welcome to the call for the third quarter 2022 convention of Booking Holdings. Booking Holdings would like to remind everyone that this call would likely involve forward-looking statements made pursuant to the port provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not promises of long-term functionality and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Accordingly, actual effects could differ materially from those expressed, implied or projected in such forward-looking statements.
Expressions of long-term goals or expectations and similar expressions that reflect anything other than an old fact are refined to identify a list of forward-looking points that may cause Booking Holdings’ actual effects to differ materially from those described in the prospectus. For s, check the security at the end of the Booking Holdings earnings press release and more detailed information from Booking Holdings. Recent filings with the Securities and Exchange Commission.
Except as required by law, Booking Holdings assumes no legal responsibility to publicly update any forward-looking statements, whether as a result of new information, long-term events or otherwise. A copy of the press release on the results of Booking Holdings, together with a monetary and statistical supplement, available in the segment – for investors of the website of Booking Holdings, www. bookingholdings. com.
And now I’d like to introduce you to Glenn Fogel and David Goulden of Booking Holdings for this afternoon. Go ahead, gentlemen.
Glenn Fogel
Thank you and welcome to Booking Holdings’ third quarter convention call. Joining me this afternoon is our CFO, David Goulden. I’m encouraged by the smart effects we’re reporting today and the record high of travel in our peak summer season.
In the third quarter, our consumers booked 240 million overnight stays, or just under 0. 25 million overnight stays, up 8% from the third quarter of 2019. We saw an improvement in overnight expansion in the third quarter, from 4% in July to a 10% expansion in August and September compared to comparable months of 2019. We note that, unfortunately, the war in Ukraine continues. And as you know, we suspended our operations in Russia and Belarus for a while after the cadres we are getting.
Excluding suspended spaces and Ukraine, our overnight expansion for the quarter would have been 11%. In the U. S. , our Priceline and Booking. com brands continue to perform well and contributed to an approximately 30% expansion in overnight stays in the third quarter to third quarter of 2019.
We continue to see very strong ADR growth, which contributed to a 27% increase in global gross bookings in the third quarter or a 41% increase in consistent currencies, either in the third quarter of 2019. Despite the superior value environment, I have noticed no evidence that our visitors are trimming hotel stars or cutting the length of their trips.
We reached another vital milestone in our company’s recovery from a profitability perspective, with the third quarter being the first time adjusted EBITDA exceeded pre-pandemic levels. In fact, the third quarter was our highest quarterly of earnings and adjusted EBITDA ever. Earnings for the quarter and adjusted EBITDA were 20% and 7% higher than the third quarter of 2019 and 34% and 25% higher in uniform currency.
More recently, we’ve noticed a resilient point in traveler demand, with overnight expansion improving from September degrees to an estimated 12% expansion for October compared to October 2019. Gross bookings in October are estimated at around 30% or just over 45%. at consistent exchange rates. The slight improvement in October was mainly due to the continued recovery in Asia, as well as a slight improvement in Europe.
As we take a first look at the call for 2023 in Booking. com, we are seeing a strong expansion in gross bookings of e-books for travel that will be positioned in the first quarter of next year. I note that a higher percentage of these electronic bookings are cancellable. Interestingly, we have some fake numbers in our ebooks for early 2023 despite the shorter booking window than right now in 2019. David will provide more important points about our effects and the recent trends we have observed.
While there is growing fear about the macroeconomic environment and uncertainty around customer spending, the sustained call point we’ve noticed throughout October is helping to demonstrate our customers’ strong preference for traveling further. Our strong operating results, truly ample liquidity and loose cash flow position us well to address potential near-term economic uncertainty as we continue to work to attract customers and partners to our platform and advance our key strategic priorities of connected bills and services. tradition.
Given our confidence in our company’s positioning, positive long-term outlook and strong balance sheet, we have accelerated the speed of our percentage buybacks since we relaunched the program earlier this year. With $4. 2 billion in buybacks during the first 3 quarters of this year, we have reduced our number of percentages by 5% compared to our number of percentages at the end of last year.
We remain focused on creating a greater experience for our consumers and satisfying their desires for value, choice and convenience. By continuously focusing on our consumers, our goal is to build loyalty, frequency, spend, and direct relationships over time. We are encouraged to see our exclusive active consumers in Booking. com above 2019 grades in the third quarter, which were driven by strong expansion in reactivated consumers who had not booked in a year, as well as an expansion in repeat consumers.
Our mix of consumers booking directly on our platforms reached its highest point ever recorded in the third quarter. Our purpose over time is to further develop our direct combination through various initiatives, adding ongoing efforts to the benefits of our incredible loyalty program, enhancing our connected vision to increase engagement with our consumers, and incentivizing more of our consumers to download and use the mobile app.
The mobile app is a vital platform because it gives us more opportunities to interact directly with travelers and, in the end, we see it as the means of our vision for connected travel. Approximately 45% of our overnight stays were booked through our apps in the Third quarter, a little more than 10 percentage issues more than in 2019. The Booking. com app remains the first OTA app downloaded in the world according to a third-party research company, and we’ve noticed an increase in downloads in the US. U. S. We will continue our efforts to make the app experience build on the recent good fortune we’ve seen here.
We think about gathering the price demand of our customers, we believe it is very important to provide high costs in accommodation. As has always been the case, our first priority, when we think about providing high costs, is to download competitive rates from our supplier partners. To do this, we work heavily with our procurement partners to offload the most productive costs imaginable and increase participation in our specific fee systems to ensure our customers have certain high costs.
Our Genius Booking. com loyalty program is a prime example of a program where thousands of our real estate partners participate to offer lower rates and other benefits to travelers in a way that fulfills our homeowners’ express wishes for profit. Partners. In addition to obtaining rates dependent on our partners, we have developed our ability to selectively offer discounts and incentives on Booking. com over the past few years.
Commodity visibility is another lever we can now leverage as we seek to price our consumers at more competitive prices. We believe this competitive tool is helping us attract and retain consumers and improve conversion on our platform. It is vital to note that we adopt a disciplined technique for selling through closely tracking the subsequent return on investment of those costs, and we can adjust the point of our spending according to our desired functionality goals. We’re pleased with the additional levels of functionality we’ve noticed. year for sale and will continue to use this tool selectively in the future.
For spouses of our sellers, we try to be a valuable spouse for all types of accommodation on our platform by responding to new requests and introducing products and features to help your business. Alternative overnight accommodation Booking. com higher compared to approximately 11% through 2019 and accounted for approximately 30% of total overnight stays in Booking. com in the third quarter.
We have continued to advance our accommodation offering of choice through the expansion of our asset source base, which has grown by approximately 300,000 since the end of 2021 and has grown in each of our major regions of the world this period. We aim to leverage this expansion in our hosting source base of choice through the edition of our product supply to our sourcing partners worldwide with a continued focus on the U. S. market. U. S.
Let me now turn to the progress we have made on our cross-cutting strategic priorities of invoices and the vision of connected travel. In terms of invoices, 40% of gross bookings in Booking. com were processed through our payment platform in the third quarter. which is once again our highest quarterly point on record. We believe that Booking. com payment facilities generate benefits for our travelers and supplier partners in hotels, select accommodations, cars, flights and attractions.
In addition, we believe Booking. com’s payment platform is helping to deliver a smoother, frictionless booking experience, which are vital parts of our broader tradition of connection. As part of connected travel, our long-term vision is to make booking and the travel experience easier, more private and more enjoyable, while offering a higher price to our consumers and suppliers.
We are expanding our offering to travel sectors other than combinations, and then we will try to attach the applicable travel parts to provide a smoother and more flexible visitor experience. Through this initiative, over time, we will increase visitor engagement, spend sharing and loyalty to our platform.
We continue to advance in building the foundation we connected, adding our paints to integrate floor transportation functions and further expand our Booking. com flight offering. This flight offer gives us the opportunity to interact with potential consumers who decide on the characteristics of their flight. in the early stages of their discovery process. And more than 20% of all our international flight bookings are new to Booking. com. We are satisfied with the initial effects we have noticed so far.
In conclusion, I am encouraged by our strong third-quarter effects and the sustained degrees of travel demand we will see in the fall and early next year. We continue to make progress in several key areas, adding engagement with our app, the Genius program, our choice of hosting service offerings, in-Booking. com billing, and building our connected tradition. These projects will help us offer a greater range of services and enjoy our consumers and partners. While the near-term macroeconomic environment remains uncertain, we are more confident than ever of the expansion of long-term travel and long-term opportunities for our business.
I will now pass the call to our CFO, David Goulden.
David Goulden
Thank you, Glenn, and good afternoon. I’m going to review our effects for the third quarter and give some color to the trends we saw in the fourth quarter. All expansion rates for 2022 are relative to the comparable era of 2019, unless otherwise noted. Information related to the Reconciliation of non-GAAP effects with GAAP effects can be discovered in our earnings release.
Now let’s move on to our third-quarter results. In the third quarter, we were encouraged to see overnight expansion increase as much as 10% in August and September, up from 4% expansion we previously reported for July. All regions stepped up in August and September compared to July. For the third quarter as a whole, global overnight expansion was 8%, with Europe recording a top-digit increase, the United States up nearly 30% and the rest of the world up more than 10% and Asia an average single-digit decline. And September was the first month of overnight expansion in Asia compared to 2019, with recovery delayed in that region.
Our cellular apps accounted for approximately 45% of our total overnight stays in the third quarter, a cumulative of just over 40% in the current quarter. Total cellular reserves accounted for more than 60% of our total overnight stays in the third quarter. Also a building from the fourth moment.
In the third quarter, we continue to see an expanding mix of our overnight general remnants that shifts to our direct channel compared to 2019 and also compared to the third quarter of 2019 and also compared to the third quarter of 2021. The foreign mix of our overall overnight combination remains at Q3 at around 45%, in line with Q2. Our cancellation rates in the third quarter remain below 2019 levels, as they were in the second quarter.
In the third quarter, the Booking. com reserve window is still shorter than in 2019, to what we saw in the current quarter of 2022. This booking window is particularly extended compared to the third quarter of 2021, where we saw a superior mix of products close at the endbookings due to the wave of COVID-19 Delta variant.
For our Booking. com accommodation of choice, our overnight expansion rate was 11% in the third quarter compared to 2019 and the combined choice accommodation target was around 30%, which is higher in the third quarter of 2019. line with 2021.
Gross reserves in the third quarter increased by 27% compared to 2019 or by 41% in similar currencies. in ADRs at constant accommodation exchange rates and also four percentage problems of the strong expansion in flight bookings across the group, partially offset by the negative effect of 14 percentage points on currency movements.
Our constant currency ADRs benefit from approximately 2 percentage issues of the regional combined and approximately 26 percentage issuances of rate increases in all our regions, adding Europe and North America. Despite major ADRs in the third quarter, we didn’t see any replacements in the composition of wholesalers-only star ratings or adjustments to length of stay that would imply a downward trend in consumers. We will continue to monitor closely.
Airfares booked in the third quarter increased by approximately 235% compared to a smaller base in 2019 and by 45% compared to 2021, thanks to the continued expansion of Booking. com flight offerings. 20% since 2019 and up to approximately 34% in consistent currency.
Revenue as a percentage of gross bookings was approximately 110 core issues less than in the third quarter of 2019 due to a number of factors, including investments in marketing, that are consistent with our previous comment on whether we deserve to lead a recovery in the travel market in 2022 and also due to a build-up in the flight mix, the lower recovery of our advertising and other revenue, which have no related gross bookings and have a negative effect on exchange rates.
Third quarter acceptance rates declined more than expected by approximately 70 basis points, primarily due to time differences between gross bookings and earnings recognition, due to the increase in bookings in the third quarter, some of which are travel-related in the coming quarters. Acceptance rates were roughly in line with third quarter 2019 levels.
Marketing spend, which is a highly variable spending item, increased 27% compared to the third quarter of 2019. Marketing spending as a percentage of gross bookings was roughly in line with the third quarter of 2019, which exceeded our expectations, basically due to the direct sales mix than expected. Unsurprisingly, our marketing ROI was lower than in the third quarter of 2019, which was in line with our strategy of opening up a recurring travel market in the peak season of the third quarter.
Sales and other expenses as a percentage of gross bookings increased through approximately 40 core issues compared to the third quarter of 2021, which is in line with our expectations. Approximately 40% of Booking. com’s gross bookings are processed through our payment platform in the third quarter. of nearly a 3rd in Q3 2021. Our most consistent overhead was 17% higher than our expectations compared to Q3 2021, primarily due to a slower-than-expected increase in IT spending and lower-than-expected worker spending.
Adjusted EBITDA of $2700 million in the third quarter, which is above our expectations and approximately 7% above 2019 and would have been approximately 25% above 2019 in consistent currencies.
The non-GAAP net revenue source of $2. 1 billion translates into consistent non-GAAP earnings with a consistent percentage of approximately $53 consistent with a consistent percentage, up 17% from the third quarter of 2019. On a GAAP basis, we reported a revenue source consistent with a $2. 6 billion in the third quarter. We recorded a GAAP net revenue source of $1. 7 million in the quarter, which includes an unrealized loss of $336 million on our equity investments, primarily similar to Meituan, as well as a $125 million rate similar to an ongoing French tax matter.
Let us now move on to our position of money and liquidity. Our end-of-third quarter money investment balance was $11. 8 million below our final balance in the current quarter of $14. 2 billion, basically due to approximately $2 billion of percentage repurchases in the third quarter. quarter, as well as unrealized losses on our fair investments. The $2 billion in percentage purchases in the third quarter increased from $1. 3 billion in the current quarter as we accelerated the pace of our buybacks in light of declining percentage prices. In October, we repurchased another $595 million of our percentages, bringing our year-to-date buyback to approximately $4. 8 billion and our remaining authorization to approximately $5. 6 billion.
As Glenn mentioned, we’ve reduced our percentage count by 5% since the end of last year. And over the past five years, we’ve reduced our percentage count by 20% despite postponing our percentage buyback activity for 21 months due to COVID. -19 pandemic.
With negative cash flow of $95 million in the third quarter, our earnings for the quarter were offset by an approximately $2 billion reduction in our deferred trade reserve balance following the peak season in Europe and North America.
Now let’s move on to recent trends in our fourth quarter. We estimate that overnight in October remains higher at around 12% compared to 2019, a slight improvement from the 10% expansion in September, basically due to the continued recovery in Asia, as well as a slight improvement in Europe. In October, all regions were above 2019 levels. The U. S. In the U. S. only about 35 percent, the rest of the world among teens, and Asia and Europe increased through single digits.
ADR expansion remained around third-quarter grades and we estimate gross reserves to increase by approximately 30% in October, adding to the negative effects of currency pressures. We estimate that gross reserves in constant currency increased by more than 45% in October.
While there is still uncertainty in the near term, our feedback for the quarter assumes that overnight expansion for the fourth quarter will be approximately 10% higher than in 2019, which is in line with the degrees of expansion we have noticed beyond 3 months. Compared to overnight expansion in the fourth quarter of 2019, there would also be an acceleration on an annual basis from 31% expansion in the third quarter of 2022 to the third quarter of 2021 to 39% expansion in the fourth quarter of 22 to the fourth quarter of 21.
We expect the strength of ADRs we have noticed in recent months to continue for the remainder of the fourth quarter, along with continued expansion of reserves. We expect a difference of around 15% between the overnight expansion point and the Gross Reserve Expansion, less than 19% difference in the third quarter due to higher currency tension in the fourth quarter. We expect the exchange rate to put pressure on gross reserve expansion compared to 2019 through around 18% in the fourth quarter.
We expect fourth-quarter earnings as a percentage of gross bookings to be approximately 120 basis points lower than the fourth quarter of 2019 due to marketing investments, a build-up in visitor mix and the negative impact on time differences between gross bookings and earnings recognition. We expect fourth-quarter marketing spending as a percentage of gross bookings to be slightly higher than in the fourth quarter of 2019, as we plan to continue making an investment to capture demand and raise awareness as the global recovery in travel calls continues.
We expect fourth quarter sales and other expenses as a percentage of gross bookings to be approximately 40 more core issues than in the fourth quarter of 2021 due to a superior mix of gross commercial bookings and higher third-party intermediate calling costs, adding to the effect of our partnership with Majorelle. We expect our overall most consistent expenses to be approximately 20% higher than in the fourth quarter of 2021, with Personnel, Gross
In total, we expect fourth-quarter adjusted EBITDA to exceed $1. 1 billion. Were it not for the effect of the exchange rate, we expect adjusted EBITDA for the fourth quarter to be higher than for the fourth quarter of 2019. comments on full-year adjusted EBITDA margin and we still expect the EBITDA margin for 2022 to be a few percentage points higher than in 2021. And if it weren’t for the effect of the calendar, we expect results for full-year adjusted EBITDA margins to be a few numbers higher.
For the full year, we expect our profit as a percentage of gross bookings to be slightly above 14%, which is lower than our previous expectations for a diversity of 14%, mainly due to temporary differences between gross bookings and earnings recognition. due to more powerful reserves than planned, some of which are similar and are expected to take positions in 2023.
Compared to the 15. 6% share in 2019, the expected share in 2022 includes almost a full point of calendar impact, around 40 fundamental issues of a slower recovery in advertising and other revenue, which have no related gross bookings. and about 30 basic problems. Basic problems thanks to a greater diversity of flights.
The advantages of earning rates in 2022 from accruing invoice-related earnings are offset by our increasing investments in marketing, impacting our reported catch rates of approximately 1% in 2022, compared to approximately 0. 5% in 2019. These adjustments in payment earnings and trading prices compared to 2019 are basically on Booking. com.
As far as window months are concerned, the reserve window is still shorter than in 2019, which means we expect the decline in long-term degrees to remain on our books already. Given this, we are pleased that the gross bookings we have already earned in Booking. com in the first quarter, an increase of approximately 25% in euros compared to the same era in 2019. Of course, we note that a high percentage of those bookings are cancellable. While this represents a relatively small percentage of total profit, we have in the first quarter, it is a useful first point of knowledge to share.
In conclusion, we are pleased with our third quarter effects and the trends we see in the fourth quarter and early 2023. We remain convinced that our strategic precedence is the right one and will allow us to provide greater facilities to our consumers and partners.
We now turn to the questions and answers. And Sylvie, can you open the lines, please?
Q&A session
Operator
[Operator Instructions] And the first will come from UBS’s Lloyd Walmsley. Continue.
Lloyd Walmsley
It is ok. Two, if I may. First of all, it turns out you don’t see any customer weaknesses right now, but are there any steps you plan to take or payment approaches to finalize the hatches before what could be a difficult year from a macro perspective?And help us think about constant expansion load and marketing posture for the coming year?
And then, at the moment when one would simply be, can you give us an update on monetization and profitability of payments?I appreciate some of the additional data you have provided this quarter. But perhaps, where are we in the FX translation rollout?Do we think about the effect of this on catch rates and profitability perhaps over the next year or so?
Glenn Fogel
Lloyd, why do I stick with the first one. I will let David communicate about the bills and then upload what he needs in terms of constant collection in the future.
So, obviously, we’re very pleased with the third quarter and we’re very pleased with what we’re seeing, even if it’s small numbers in the first quarter. David just talked about this 25% pound in Europe in euros, I would I would like to see that. Their query is: Is there anything we see in customer sentiment or macro expansion that can simply inhibit expansion or be affected in the future?And anything that’s very hard to know is what the counterfactual is. And we make a smart move if all those horrible things we read in the newspapers didn’t happen, how much bigger would it be?I can’t measure that? I don’t know. What I do know, however, is that we are seeing smart numbers and we are satisfied with where we are.
We know that we have had bad moments in the afterlife and that we have done very well. We made replacements where we needed. I’ve been in this business for almost 23 years. We’ve had recessions and we’ve had genuine disasters. And we control this business incredibly well by guiding it through very stormy weather situations and adapting. Many of our expenses are variable, so we can adjust very temporarily and adapt automatically almost as volumes are replaced. . But I feel smart right now, although the global can be replaced at any time, and I will let David communicate with you now, in particular, about the constant expenses and also about the payments.
David Goulden
Yes. Thanks Glenn. Je only clarifies that around two thirds of our expenses are variable, which is at the origin of a very important starting point. Of course, we look very carefully at the prices of constant payments, but let’s put that in context. And then just to clarify, 25% is a total number from Booking. com, not just Europe, it’s around the total company.
So I think Glenn said what we want to say about spending. We’re going to. . . We have a program to move forward, we want to keep improving our products and facilities and obviously that requires continued investment and a move towards other vital bills than connected travel.
Compared to the payment platform, we are of course satisfied with the progress. We have given you more time, as you mentioned. So now you have a concept of what the profit is for the invoices, you also have a concept of the corresponding expenses in sales and others that offset that profit. Because as we said, this year we are managing the payment platform quite a lot at the break-even point when you look at the profit and subtract the sales and other expenses. What I’m also going to tell you is that compared to 2019, the invoices have an effect of about 0. 5 base emissions or about 0. 5 base emissions on our EBITDA margins, because this mix of earnings has raised our break-even point or Combined profits have increased.
Now, of course, in 2019 we were not in equilibrium, but the combined effect of where we were to where we are now is about 0. 5 headwind issues at our margin, but, of course, it gives us more capacity. In the future, staying overnight has not changed. Therefore, we plan to become profitable in this combination of payment platforms, a combination of revenue, less sales and expenses in 2023. We implement FX and other facilities on a market-by-market basis. And, of course, we check the grades before pushing them further.
We have an exciting track record. It’s a multi-year roadmap for invoices. I don’t expect anything to be replaced very temporarily over the course of 12 months, it will be a multi-year course. But if you look at the resources we can provide to our business today in terms of reducing friction for consumers and bookings, and then we can see how bills can really help in the future, we’re very encouraged and excited about that. I believe the additional disclosure we provide to you today will help you. A more constructive discussion on how this is going in relation to benchmarks.
Operator
The next one will be by Brian Nowak of Morgan Stanley. Continue.
Brian Nowak
I have two. I like the color in the U. S. , which is expanding by almost 30%. right now in the U. S. In terms of contribution to profits?Or is it still a kind of investment mode to stimulate growth?And what do you think of the way forward to make it a more successful region for the company?
And the second, I’m going to mispronounce it. He’s a Majorelle and Majorelle, I apologize. David, can you tell us more about how we do the buy and sell functions or the potential tailwinds of this deal in 2023 for the P?
David Goulden
It is ok. Brian, we can take in opposite order. So, Majorelle, you’re very close, it’s essentially, from a P perspective.
As mentioned, Majorelle’s policy has safe benefits in terms of prices, but above all flexibility. It’s about our ability to adapt quickly, to respond to other market needs, other linguistic images. So in the long term, compared to continuing our development, there are benefits in terms of pricing and that will start happening in 2023. We haven’t quantified it yet. We’ll think about whether to check to quantify the middleware for you next year. But again, that’s not the main factor. So I’m not saying there are job managers. That is not the reason why we formed this association.
What we sell indicates that the partnership is performing exceptionally well. We have just finished the summer era and the effects of our visitor service have also been strong under the new regime as we have kept other people ourselves.
In America, well, of course, we’re growing. So we invested. I mean it’s not a big surprise. We do not break down the dollars of the contribution margin between regions. We have no plans to do so. But obviously, we are making an investment in the United States to expand a position, which is steadily increasing. And as it increases over time, we will be able to offer you greater profitability. But we are not, by no means are with what we do in the United States. And obviously, it’s a market where other people make money, and so do we, but maybe not at the same pace as the market, we don’t invest much in price.
Operator
The next one will be from Kevin Kopelman to Cowen.
Kevin Kopelman
Could you describe how you understand the competitive environment existing in advertising channels in the third quarter and since the beginning of the quarter?How does this compare to the beginning of the year and perhaps also to 2019?
Glenn Fogel
One, I just spoke in general, then if David needs to clarify it. Look, travel marketing is extremely competitive. It never stops being competitive. No matter which channel you spend your cash on, it’s competitive. And we’re looking to make the right judgment and how much cash to spend, which we believe will be the return on investment and look at it in the long run. in terms of what it does in terms of franchising in general.
I can’t give main points in terms of ups and downs. David can communicate percentages of the amount of marketing spend we’ve made compared to gross bookings over the past two years. But again, the market is never less competitive. It’s competitive, and I think we drove it very, very well.
Glenn Fogel
Go ahead, Kevin, please. Do you have the question?
Kevin Kopelman
Just a separate type of tracking investment levels. Can you tell us about the evolution of the workforce?A bit like what you’re doing lately in terms of hiring?And a color about what next year looks like?
David Goulden
Of course. Just to end Glenn’s point about the market environment. Note that we said our return on investment was slightly lower than the last point of the third quarter, as we expected. ourselves to continue building on recovery. Also that our returns on investment were actually, in fact, higher in the first part of the year than in 2019. So you have a little bit in that context.
Investment levels, we still are. I would say we still need to invest in the business. But, of course, we recognize part of the delay factor. We’re not going to get anything strategic out of what we need to do if we have a slowdown in the short term. But of course, we look at how many other people we’re adding and where we are to make sure we’re in relation to the things that are most important to the business, as you would. To be waiting for us to do.
Operator
The next one will be from Mark Mahaney of Evercore. Please continue.
Marc Mahaney
Two questions, please. Can you know how you controlled to increase the use of this mobile application?There are obviously wonderful benefits to the business model. But how did you manage to do it?And just, I know you’d like to build it. What is realistic for how much higher can it be? And then, if you can, double-click on the flight company. And where is it now in terms of implementation and in how many markets, how widely it is used, or what is the product knowledge?Just communicate about the expansion trajectory of those flight products.
Glenn Fogel
Mark, then surely you’re right about the importance of the mobile app, and I’m saying that each and every ready comment we make, I’ve discussed that it’s a vital component of our platform. What we do is create a wonderful experience for the other people who use it. It’s the same thing we all think you’re looking for someone to use to offer a wonderful experience that will come back and tell everyone etc. Cetera. We don’t necessarily do anything different from what other people do, but we do it well.
In terms of when to do it, what would be the most important point for that?It’s hard to say because the other people who create those mobile devices are still turning out themselves and other people find it more advantageous to use them compared to their desktops, it’s hard to say, but it can be an incredibly high number of other people going to the mobile device. Now our task is to get other people to use our app and use the cellular internet to find where we want to pay, which is one of the key elements. We mentioned, I think, that more than 60% of our business happens on mobile, but 45% on the app. So, obviously, we want to use the cellular device. We want them to use the app, this is how to direct them.
As for flights, I deserve to have consulted the countries. I haven’t done so recently. It’s a lot, but in some spaces it’s a relatively small amount because there’s very little awareness. I think, for example, that I am giving them an extreme. I know we talked about Pakistan, not so much A long time ago, there were still not many flights to Pakistan, but we go there. Again, the key for us is to create a better experience. And I will be fair to you. Our flight product is not, I would say, yet as smart as it deserves to be. We continue to do so, to do better than in the past, by offering consumers the features that some of our competitors are offering the consumers we are. not yet doing and we need to be offering.
So, there are still a lot of benefits to that, I think there are a lot of benefits. And the numbers remain, although we like expansion rates, they’re still low.
Operator
Next up will be from Justin Post of Bank of America Merrill Lynch. Continue.
Justin Pole
One to Glenn. De obviously, merchandising, I think you are all at some point, bills can be settled. But can you why do you think it’s a smart thing to do?Is it something you want to make up for next year?Why do you like this side of the business?
And then, maybe for David, assuming we don’t have an unusual year to travel. As you think about fixing calendar differences and more marketing spend this year, how do we think about those kinds of end results next year?And then maybe the last one, if you need to call something about Q1. I remember, I think we got off to a really slow start with COVID for the quarter, and then bookings accelerated in March. If there is anything unusual in the first trimester, we deserve to think about it.
Glenn Fogel
So I’m going to tell you a little bit about merchandising. Several things. First of all, it can be an investment we make, a way to attract visitors, retain visitors or tactics that we believe are mandatory to compete with other OTAs or even with our suppliers. The fact is that we are looking for where to spend money with maximum productive return. And for marketing, if we find that someone else has a lower price, we know that one of the most important things is to offer a competitive price, and we want to make sure that we offer it to the visitor.
Many times we need to do my interview with our supplier partners and make sure they bring us, as I said in the ready comments, about providing us with the most competitive prices. We will need, invest money to make sure our customers like Booking. com and provide them with a great place to make their reservations. It is one.
Second, I need to make sure everyone understands that selling doesn’t mean a reduction on our part. It can mean a lot. People who provide some other type of benefit, for example. Although if someone presented an improvement in a room, they would consider it a sales strategy. If someone gives a loose breakfast at the hotel, I will take it into account. also. We didn’t pay for this breakfast, it’s a loose breakfast. So media pieces to make a lot of levers to play. This is one of the things that we believe is so vital to make sure that we have the maximum competitive offer in the area and, in addition, to be able to use all our investments in the right way at the right time to get the right return. And like a lot of knowledge to see where it is better to put it.
I’ll let David ask the two questions.
David Goulden
Yes, in terms of, just like for the future, on the time side, I argued that time costs us about 1 point catch rate this year. We think we’re going to have the maximum of that next year, maybe not one hundred percent of that. There will probably be a maximum effect on the schedule. But again, it really depends on what the rates of expansion look like at the beginning and end of the year, but let’s assume we get back the most of that.
On the combined side of placing and selling in the market, that’s where we’ve been leading this year to take credit for a recovering market. In fact, we will continue to deleverage next year. But we actually need to see what the market looks like in terms of remaining recovery to get some kind of recovery. There are some things that have not yet returned to where they were before. The right point of investment is. And if we feel like we’re still gaining percentage, we’re winning this year, we think we’ve gained percentages last year. Time until we return to a more general market expansion rate. And we’ll give you a clearer idea of where we are on this spectrum when we meet in February, we’ve finished our planning procedure for the year, and we’re going to have a little more visibility in the year ahead.
And finally, in your first quarter question, yes, the first quarter of last year was unusual. Omicron was having an impact. We will have to see precisely what happens with the other variants that exist this year. We seek to give you those statistics of 25% more gross ebookings in ebooks. For next year, we had the same share of 19 for the first quarter. of 2020 to perceive that the e-book is building quite well for the first quarter. Obviously, there’s a long way to go between now and then and your store represents a relatively small percentage of what we’re going through to do overall in the first quarter for revenue, however, we think that’s a positive statistic.
And if a statistic that we gave some, really for the last two quarters and the number was more like an expansion of 15% in the future, not 25% and in any case, the turnover of the quarter ended up being much higher than our previous indicator than those books built. Again, don’t do it, I’m talking about the figure in euros, just to be clear, it was 25%.
Operator
Next would be from Doug Anmuth of JPMorgan.
Doug Anmuth
I have two. I know you’ve indicated that you don’t see the hospitality business slowing down or shortening travel. I just wanted to clarify, is this the case in all geographical areas?And does it have more relative stability in the U. S. ?than in other regions?
And secondly, how do we think about ADR expansion?I know he said he is still strong. But if you look at 23, just currency points and all applicable combination points and similar forward pressures?
Glenn Fogel
So, Doug, I’ll start with the hotel that sells stars or I haven’t noticed anything in any kind of geographic domain that stands out differently. We see other people who need to travel to have a significant amount of savings in this COVID era and need to travel and some are even traveling longer to stay and enjoy it regardless of the economic situation. So we — I haven’t noticed anything and David, you saw that I would say anything when you tell me about what we’re seeing. for ADR in the future, I’m not sure we’ve said we’re going to say it publicly.
David Goulden
About the combined. . . On the decline in trade, Doug, as you mentioned, we don’t see that in Europe it’s perfectly transparent because that’s where other people ask the question, but we don’t see the global either. So it’s not a thing, but above all, it’s not a thing in Europe either.
As for the ADRs we had next year, we will talk in uniform currency because it is difficult to know precisely how exchange rates will evolve for us. quarter, and we saw that they remained at roughly the same point in October, there were 26 rate issuances and only 2 percentage emissions of the combination. So as the ADR continues to recover, we’re going to lose that 2-point combination, which is what’s driving right now, the fact that Asia had a lot of combination in the past. Then it will pass. But obviously, most of what we see is based on rates.
And as we talk to our real estate partners, they continue to face the same spending pressures and inflationary pressures that other people face in terms of utilities, energy, labor, etc. So we will see how the environment evolves and we have no other. Color to give at this stage. We’ll let you know when we arrive in February, if we see anything different.
Operator
Next up will be by Eric Sheridan of Goldman Sachs. Continue.
Eric Sheridan
Maybe some, if I may, in the accommodation area of choice where he made some attractive comments there. When you think about source expansion, are there regions of geographic concentration or combination or asset types or duration that are still types that are target grades for source expansion?like you 23 and beyond in terms of choice of accommodation?
Is there any color you can also give us, because you have more of this kind of sourcing to show the customer what you can do for a traffic conversion or a return on investment on the platform, because you have a wider diversity of actions?to show the customer? And the last detail for you, is there any combination detail or company duration that you think about in terms of finding the right balance between classic stocks and long-term choice stocks?
Glenn Fogel
So, Eric, the core concept for us has been more is greater, and it’s the consumer’s selection of what they want to stay, where they want to stay. They want to stay in a space or in a villa, in an apartment or in a hotel, that’s all. So, in general, we want to keep working hard to get more sources of all kinds. I’ve spoken many times in the afterlife about our desire for an asset, the specific space we want to build. I speak geography. I have said that we want to build even more in the United States. And one of the things is to create a greater onboarding experience for homeowners, improve bills for those people, find tactics to make them feel better about having something that can stay in their assets with safe-type assets. It’s all we’ve been running and have in place, and we’ll continue to implement things along the way to make sure the owners and managers of those homes are in a position to put it on our platform. -form.
Now, I think, and this is what we’ve noticed for many, many years, is that as we bring in more and more supply, the business will grow. And I certainly think it’s something that’s not going to require rocket science or anything amazing that can’t be invented. People do that. We just want to keep running it, get other people to work, create the mandatory things and we’re going to implement it in the time I’d like, but I’m very satisfied with where we are. And I think some of the numbers we’ve talked about are encouraging.
Operator
Next up will be from Truist Securities’ Naved Kahn. Continue.
Naved Khan
Glenn, I think you said you see opportunities to enjoy on the mobile app. Can you give an example of the kind of things we can see there?And then, I don’t know if you’ve updated us on the combined. of urban and cross-border statistics that would be very useful.
Glenn Fogel
I’ll let Dave communicate about the statistics he wants to use in urban or urban environments. But as far as the app goes, I’ll give you one right away that I think is one, and again, I look at it as it is, I say, what am I missing?Why don’t I understand? Something is undeniable because, as you know, we have attraction, so we’re building that right now. But at the destination, I wish things appeared on my screen from our app, telling me wonderful things to do, maybe relief or line. rest, things that will make someone say, “Damn, I use Booking. com to make the fun so much more wonderful because I get so much more. “
And I can go through so many other examples of that. The wonderful thing about the mobile app is in people’s hands or in their wallet or in their pocket, they carry it with them. And that gives us the connection to provide better service. , more wonderful things to do, more wonderful value. And that’s why it’s such a vital component of this vision of connected travel. David, I don’t know if you need to give something from any stage.
David Goulden
It does not make sense in the note to say that, historically, we have had a greater weight of urban combination, no. So as the recovery continues, if other people return to cities and other places, it’s positive for us, but not the statistics on combine. On the cross-border side, we told you that we went back to 45% of our bookings in the third quarter. For international, this is a minimum of just over 50% before the pandemic. So, we still have a decent recovery as things continue to normalize where they used to be.
Operator
The next question will be asked through Deutsche Bank’s Lee Horowitz. Continue.
Lee Horowitz
Two on the margins that. . . The margin, if I could. When you think about margins beyond this year, how does the strength of managers and candidates affect the way you think about the company’s long-term margin profile, especially with some of its expansion projects like flights with a lower margin that your center could direct to offset headwinds in the prime of time?And then, when you think about the shape of margins maybe next year, how does it deserve for us to think about APAC?How will it potentially have an effect on premium expansion in the company’s overall margin profile in 2023?
David Goulden
Yes, Lee, I’m actually looking to communicate about 2023 margins today. It’s actually a verbal exchange for next February, but perhaps in the long term, it’s a position where we want to recap what we’re thinking about and stay 2023 watching for them. So, as we said, our strategy here is to create a better product and service for consumers and partners. Therefore, they will come back to us more regularly and more directly. The combination is very important and the direct combination is very similar to the frequency and other people do more.
People who have purchased several pieces from us are much more likely to come back to us directly through the payment channel. So yes, of course, there are headwinds in our volume profile due to the evolution of our business combination and the upgrade in almaximum. Natural hosting business, having a superior combination of payments, a superior combination of flights and those are, of course, low margin companies, we have had this verbal replacement before. But the most important thing we can do to keep our margins in a strong position is to continue to drive that combination of direct growth, and that will impact each and every component of the business.
But as we have said before, we will be at the forefront of profitability and margins in the sector. Due to the combined factors, we do not have, we believe that in the medium term the margin will be a little lower than in 2019, however, we will have a faster development business with more EBITDA, more consistent profits with a constant percentage growing faster than earnings and net income, we believe that is the most important thing.
Operator
The next one will be from Mario Lu from Barclays.
Mario Lu
The first is about the overnight remnants consultant in the fourth quarter, 10% for 2019. I guess, can you tell us a little more about what you saw in October?Did the end of the month get worse at the end of the month? They are only looking to tie up that 10% compared to 12% in October?
David Goulden
So yes, of course. The 10% room consistent with the evening consultant is — it’s actually a framework that we’re giving them for the fourth quarter. There is still a lot of volatility. And obviously, we can’t expect exactly what will happen to the remains of the night in November and December, given that the back was there. But what we’ve done is say, look, we’ve grown, we’ve gone. increased from 10% to 12%. This is a large circular number to fix our comment with Q4 on what the shape of the P might be.
This does not imply that there was a slowdown in October expired. In fact, the overnight expansion was fairly linear at 12% throughout October. Therefore, it is more of a framework than a difficult type. But of course, we give you a number to think about when you build your models, but that doesn’t reflect anything we see in October, whether it’s a slowdown or an acceleration. It’s just a way of thinking about the shape of the source of revenue and what things might look like in the fourth quarter.
Mario Lu
And then only one in combinations of choice. You discussed how a percentage of the total, it’s about 30%, higher than 3Q’19. I guess, is there any culmination at hand or opportunities to build this percentage in the next two years?
Glenn Fogel
Well, I mean, we can also build that without problems if we didn’t do so well in hotels. It’s one of the things we think about holistically, we need to get more bookings, as I mentioned earlier. This is actually a case where the customer makes the decision, not us. We think one of the wonderful things about our platform is that we offer all other types of hosting. And we’ve noticed the knowledge of where other people come to our site. And the first thing they take into consideration is possibly some kind of combination, say, a hotel. They end up reserving a space because they saw it in the search effects and were coming and going searching.
That is why we are very pleased to have this ability to offer all types of accommodation to the client. So, I don’t see anything to artificially verify and verify to lead more people to choose housing, necessarily anything that accumulates. The price of the company. I think offering the visitor what they want, what they need, what they think is most productive for them, is the right way to focus on the consumer and drive them, it’s the most productive way to build the business. .
Operator
Credit Suisse’s Stephen Ju will do so for the last time. Continue.
Stephen Ju
Glenn, his comment on unit expansion in the U. S. Can you tell us about the relative length of your user base for Booking. com in the US?Compared to, say, Priceline? And presumably, reserves continue to grow. Do you think it is mandatory to help any of the logos in the long run?What if you had to take a step back and move further away more globally, there was a sharper line between consumer satisfaction when booking and?Think that as you make more connected sales and travel, you deserve to think about a unified logo position in Booking. com?
Glenn Fogel
So, let me tell you in general why we have other brands. We have other brands because they offer a different user experience to the customer and the other things that other strategies intend to do. We have, do we fully understand the question of whether we call about the maximum cost?Are there tactics to save cash by doing things that don’t duplicate?So we are, we perceive it. We work all the time looking for things that we can review to improve.
But at the moment, I don’t see any explanation for why I would need to incorporate tactics and say, well, let’s go to one of them and go under a brand. Some of our competitors have done that. And for me, maybe that’s there: our strategy is to continue to differentiate between those brands and continue to expand them as they do. that nature. So I think we’re going to come back with that and continue as we are.
Operator
At this point, I would like to call Mr Fogel again. Please continue.
Glenn Fogel
Merci. Et I have to thank our partners, customers, committed employees and shareholders. We appreciate your help as we continue to build on the company’s long-term vision. Thank you all and good evening.
Operator
Thank you, sir. Ladies and gentlemen, this concludes your convention for today. Once again, thank you for coming. And for now, we kindly ask you to disconnect your lines.