Online Travel Agency Deep Dive

  • Intro
  • Universe
  • Travel Agencies
  • Booking Holdings
  • Attractive Positioning
  • Bulls
  • Bears
  • Conclusion


Did you know that a staggering 85% of Americans have plans to travel this summer? That's right, according to a new report, the vast majority of Americans are eager to get out and explore.

With this massive surge in travel demand, the time is ripe for investors to take advantage of this trend. Whether it's investing in hotels, airlines, or travel agencies, there are plenty of opportunities for investors to gain exposure to this $1.9 trillion industry. 

And the global travel landscape looks promising, with a predicted growth of up to 30% in 2023, according to the Economist Intelligence Unit. This surge in growth is expected to be driven by the resurgence of Chinese tourists, who are now able to fly again.

Even though the industry is set to experience this significant increase, there is still a significant gap to fill, as current travel numbers remain below pre-pandemic levels in 2019. This presents an opportunity for the industry to grow even further and take advantage of the pent-up demand from travelers.


The travel industry is an intricate web of businesses that contribute significantly to the US economy. From airlines to hotels, car rentals to cruise lines, this sector employs over 15 million people and is projected to generate a staggering $1.3 trillion to the GDP by 2023.

But the pandemic might have changed how Americans travel for good. Airline stocks are limping along, but as technology develops, online booking agencies and apps are finding ways to capture and add value.

Here are categories of travel companies investors gravitate towards:

  1. Airlines - Companies that provide air transportation services for passengers and cargo.
  2. Hotels and Accommodations - Companies that provide lodging services for travelers, including hotels, motels, resorts, and vacation rentals.
  3. Online Travel Agencies (OTAs) - Companies that allow travelers to book travel-related services online, including flights, hotels, rental cars, and activities.
  4. Cruise Lines - Companies that provide cruises for travelers, including ocean and river cruises.
  5. Car Rental Companies - Companies that rent vehicles to travelers for use during their trips.

Travel Agencies Overview

Travel booking agencies provide a valuable service to consumers by simplifying the travel planning process. Customers appreciate having a one-stop-shop where they can book flights, hotels, rental cars, and activities all in one place. These websites make money off of advertisement revenue and a commission of sales.

With summer travel in 2023 projected to hit record highs, exposure to all aspects of the traveling ecosystem that an agency provides can help investors capitalize on this trend.

By investing in a travel booking agency rather than an individual piece of the travel puzzle (hotels/lodging, airlines, etc.), you can spread your investment risk across multiple airlines and travel providers. 

Another advantage of investing in a travel booking agency is the potential for scalability. Unlike individual airlines, which are limited by their routes and capacity, a travel booking agency can expand its business by adding new travel providers and destinations. 

Booking Holdings 

You might know Booking Holdings from some of the brands the company operates (Priceline, Kayak, and OpenTable).

The company was founded in 1997 as a startup named and helped eager travelers book tickets, hotel rooms, and other travel services.

In 2007, the company changed its name to The Priceline Group, and continued to expand through acquisitions, including in 2013 and OpenTable in 2014. In 2018, the company changed its name again to Booking Holdings to better reflect its focus on the brand.

Today, Booking Holdings is one of the largest online travel companies in the world, with a market capitalization of about $100 billion as of 2023. Its brands operate in over 220 countries and territories, and the company employs more than 26,000 people globally.

Booking Holdings primarily generates revenue through commissions on travel bookings made through its websites. The company also generates revenue through advertising and other travel-related services, such as restaurant reservations and attraction tickets.

Booking Holdings stands out from its competitors, thanks to its unique business model. The company's agency model, as opposed to the merchant model adopted by some of its competitors, has given it a strategic advantage. 

By not holding inventory, is able to maximize its cash flow and avoid losses that would otherwise be incurred on pre-bookings, as is the case with a merchant model. This advantage has enabled Booking Holdings to maintain its network advantage and emerge as a dominant player in the online travel agency space.

In addition,'s network advantage has been crucial in connecting hotels and customers directly, which has resulted in significant cost savings for both parties. This has allowed the company to negotiate better pricing and concessions from hotels, making it the go-to source for budget-conscious travelers looking for the cheapest hotel deals.

Moreover,'s focus on premium offerings within the hotel’s category has enabled it to attract higher-value travelers, generating greater revenue and profits. By offering cheaper mainstream hotels while competing in the budget hotel category with, has been able to cater to a diverse range of customers, making it the top choice for millions of travelers worldwide.

In a nutshell,'s agency model, combined with its network advantage and focus on premium offerings, has enabled it to add value to the online travel agency industry.

Attractive Positioning

Booking Holdings has several compelling catalysts for growth, including the resurgence of travel demand, remote work trends, the balanced co-existence with Airbnb, merchant model growth, and a diverse portfolio of well-known subsidiaries. 

With travel demand heating up after a COVID-induced lull, people are eager to make up for lost time in 2023 and book vacations. This trend has been further compounded by airlines and hotels raising rates, which is great news for Booking as it operates on a commission model.

Secondly, the remote work trend has opened up new opportunities for Booking. More and more people are opting to work from anywhere, including vacation destinations, which has resulted in extended stays and increased overall travel spending. This new format for travel has increased wallet share, providing ample room for Booking to capitalize on this trend.

Thirdly, the notion that Airbnb will kill hotels and OTAs is outdated. After years of co-existing, it is clear that there is a place for both. While Airbnb offers larger homes for group trips and localized stays in smaller towns, hotels provide the convenience of a check-in counter, amenities like gyms and spas, and proximity to city centers. This balanced co-existence provides a fertile ground for Booking's continued growth.

Fourthly, Booking has made progress in growing its mix of merchant bookings, which directly handles payment from the customer, ensuring long-term profitability and cash flow. Finally, Booking's diversity of brands, including OpenTable, which gives Booking exposure to the dining space, positions the company to grow its market share for the long term.


  1. Diversified revenue streams: Booking Holdings generates revenue from multiple sources, including hotel bookings, vacation rentals, airline tickets, car rentals, and restaurant reservations. 
  2. Innovation/Consumers Gravitating to Online - younger generations are gravitating towards booking travel online, and Booking Holdings can capture this momentum. 
  3. Strong Market Position/Industry Growth - Booking Holdings owns a significant amount of the top online travel brands.
  • Diversified Revenue Streams
    • Booking Holdings makes commission off of hotel bookings, vacation rentals, airline tickets, car rentals, and restaurant reservations.
    • Owns many of the most popular travel brands including OpenTable, Priceline, Kayak, and
  • Appeal to Younger Generations
    •  Younger generations are increasingly turning to the internet to book their travel arrangements. With Booking Holdings leading the way in online travel booking, the potential for growth in this area is enormous. 
    • By capitalizing on this trend, Booking Holdings is perfectly placed to capture the momentum and continue to dominate the market.
  • Strong Market Position
    • Booking has a strong market position. The vast majority of hotels/lodging in the U.S. is booked by Booking, with Airbnb its closest competitor. 


  • Dependency on third-party suppliers
    •  Booking Holdings relies on third-party suppliers, such as airlines and hotels, to provide travel services to its customers. 
    • If these suppliers experience operational difficulties or financial challenges, it could negatively impact the company's business.
  • Competition 
    • Booking Holdings needs to make sure it’s staying ahead of the curve as new travel apps and websites can capture its market share.
    •  And it’s unpredictable to tell which new apps will go viral. 
  • The industry is not immune to shock/recessions etc. 
    • With recession concerns expected, Booking Holdings is immune to downturns in tourism spending.


The world of travel has undergone a major transformation in recent years, with the advent of online travel booking opening up a world of new opportunities for investors. And with so many services now available under one roof, travel agencies like Booking Holdings are offering a diversified range of products, including flights, hotels, tours, and travel insurance.

But what really sets Booking Holdings apart is its ability to provide investors with a stable and profitable investment opportunity. Thanks to its strong brand portfolio and diversification strategy, the company offers multiple revenue streams, including airline purchases, hotels, and rental cars. This means that investors can benefit from a wide range of opportunities within the travel industry, which can help to mitigate risk and provide stable returns. The stock is up over 26% YTD when the S&P 500 is only up 8%. The stock has also bounced back nearly 80% from its pandemic lows.

As travel begins to rebound from the pandemic, Booking Holdings is ideally positioned to capture a vast array of value for investors, with its extensive network of travel partners and cutting-edge technology. 

If you are looking to add some travel exposure to your portfolio, Booking Holdings is a solid choice.

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