Booking Holdings Inc

Previous wording

We evaluate certain operating and financial measures on both an as-reported and constant-currency basis. We calculate constant currency based on the predominant transactional currency in each country, converting our current-year period results in currencies other than U.S. Dollars using the corresponding prior-year period monthly average exchange rates. Foreign exchange rate fluctuations did not have a material impact on our year-over-year growth in gross bookings, revenues, and operating expenses for the three months ended March 31, 2024. Since our expenses are generally denominated in foreign currencies on a basis similar to our revenues, our operating margins have not been significantly impacted by currency fluctuations.

Current wording

We evaluate certain operating and financial measures on both an as-reported and constant-currency basis. We calculate constant currency based on the predominant transactional currency in each country, converting our current-year period results in currencies other than U.S. Dollars using the corresponding prior-year period monthly average exchange rates.

Previous wording

In 2023, global room nights increased 17% year-over-year driven primarily by the continued recovery from the COVID-19 pandemic in Asia and strong travel demand in Europe. In 2023, we saw the booking window expand compared to 2022, which benefited year-over-year room night growth in 2023.

Current wording

In 2023, global room nights increased 17% year-over-year driven primarily by the continued recovery from the COVID-19 pandemic in Asia and strong travel demand in Europe.

Previous wording

In the first quarter of 2024, global room nights increased 9% year-over-year driven primarily by healthy travel demand in Europe and Asia. In the first quarter of 2024, the booking window expanded compared to the first quarter of 2023, which benefited year-over-year room night growth in the first quarter of 2024.

Current wording

In the first quarter of 2024, global room nights increased 9% year-over-year driven primarily by healthy travel demand in Europe and Asia. In the second quarter of 2024, global room nights increased 7% year-over-year, sequentially slower than the first quarter of 2024 primarily due to lower year-over-year growth in Europe.

Previous wording

The cancellation rate in the first quarter of 2024 was in line with the prior year. We have observed generally stable cancellation rates in recent years, though we have seen periods of elevated cancellation rates from time to time. Because we recognize revenue from bookings when the traveler checks in, our reported revenue is not at risk of being reversed due to cancellations. Increases in cancellation rates can negatively impact our marketing efficiency as a result of incurring performance marketing expense at the time a booking is made even though that booking could be canceled in the future if it was booked under a flexible cancellation policy.

Current wording

The cancellation rate in the second quarter of 2024 was in line with the prior year. We have observed generally stable cancellation rates in recent years, though we have seen periods of elevated cancellation rates from time to time. Because we recognize revenues from bookings when the traveler checks in, our reported revenues are not at risk of being reversed due to cancellations. Increases in cancellation rates can negatively impact our marketing efficiency as a result of incurring performance marketing expenses at the time a booking is made even though that booking could be canceled in the future if it was booked under a flexible cancellation policy.

Previous wording

Our global average daily rates ("ADRs") increased approximately 1% on a constant currency basis in the first quarter of 2024 as compared to the first quarter of 2023, driven primarily by higher ADRs in Europe. The increase in our global ADRs in the first quarter of 2024 as compared to the first quarter of 2023, was negatively impacted by approximately one percentage point from changes in geographical mix in our business driven primarily by a higher mix of room nights from Asia, which is a lower ADR region. The year-over-year increase in our global ADRs has resulted in our accommodation gross bookings growing faster than our room nights in the first quarter of 2024. It is difficult to predict what the trend in industry ADRs will be in the future.

Current wording

Our global average daily rates ("ADRs") decreased approximately 1% on a constant currency basis in the second quarter of 2024 as compared to the second quarter of 2023, driven primarily by a higher mix of room nights from Asia, which is a lower ADR region. The year-over-year decrease in our global ADRs has resulted in our accommodation gross bookings growing slower than our room nights in the second quarter of 2024. It is difficult to predict what the trend in industry ADRs will be in the future.

Previous wording

We focus on relentless innovation to grow our business by providing a best-in-class user experience with intuitive, easy-to-use online platforms that aim to exceed the expectations of online consumers. We have a long-term strategy to create an ideal traveler experience, offering our customers relevant options and connections at the times and in the language they want them, making trips booked with us seamless, easy, and valuable. We refer to this as the "Connected Trip." The goal of our Connected Trip vision is to offer a differentiated and personalized online travel planning, booking, payment, and in-trip experience for each trip, enhanced by a robust loyalty program that provides value to travelers and partners across all trips. We believe these efforts will help improve traveler loyalty, frequency, and mix of direct bookings over time. We believe these improvements will benefit revenue growth and marketing efficiency in the future, however, to the extent our non-accommodation services have lower margins and increase as a percentage of our total business, our operating margins may be negatively affected.

Current wording

We focus on relentless innovation to grow our business by providing a best-in-class user experience with intuitive, easy-to-use online platforms that aim to exceed the expectations of online consumers. We have a long-term strategy to create an ideal traveler experience, offering our customers relevant options and connections at the times and in the language they want them, making trips booked with us seamless, easy, and valuable. We refer to this as the "Connected Trip." The goal of our Connected Trip vision is to offer a differentiated and personalized online travel planning, booking, payment, and in-trip experience for each trip, enhanced by a robust loyalty program that provides value to travelers and partners across all trips. We believe these efforts will help improve traveler loyalty, frequency, and mix of direct bookings over time. We believe these improvements will benefit revenues growth and marketing efficiency in the future, however, to the extent our non-accommodation services have lower margins and increase as a percentage of our total business, our operating margins may be negatively affected.

Previous wording

We believe that our mobile app is an important platform for experiencing the Connected Trip since the app travels with the traveler. The mix of our room nights booked on a mobile app in the first quarter of 2024 was approximately 51%, up versus approximately 46% in the first quarter of 2023. The significant majority of room nights booked on our mobile apps are direct, and we continue to see favorable repeat direct booking behavior from consumers in our mobile apps, which allow us more opportunities to engage directly with consumers. The revenue earned on a transaction on a mobile app may be less than a typical desktop transaction as we see different consumer purchasing patterns across devices. For example, accommodation reservations made on a mobile app typically are for shorter lengths of stay and have lower accommodation ADRs.

Current wording

We believe that our mobile app is an important platform for experiencing the Connected Trip since the app travels with the traveler. The mix of our room nights booked on a mobile app in the second quarter of 2024 was approximately 53%, up versus approximately 47% in the second quarter of 2023. The significant majority of room nights booked on our mobile apps are direct, and we continue to see favorable repeat direct booking behavior from consumers in our mobile apps, which allow us more opportunities to engage directly with consumers. The revenues earned on a transaction on a mobile app may be less than a typical desktop transaction as we see different consumer purchasing patterns across devices. For example, accommodation reservations made on a mobile app typically are for shorter lengths of stay and have lower accommodation ADRs.

Previous wording

As part of our strategy to provide more payment options to consumers and travel service providers, increase the number and variety of our accommodations, and enable our long-term Connected Trip strategy, Booking.com increasingly processes transactions on a merchant basis, where it facilitates payments from travelers for the services provided. This allows Booking.com to process transactions for travel service providers and to increase its ability to offer secure and flexible transaction terms to consumers, such as the form and timing of payment. We believe that expanding these types of service offerings will benefit consumers and travel service providers, as well as our gross bookings, room night, and earnings growth rates. However, this results in additional expenses for personnel, payment processing, chargebacks (including those related to fraud), and other expenses related to these transactions, which are recorded in "Personnel" expenses and "Sales and other expenses" in our Consolidated Statements of Operations, as well as associated incremental revenues (e.g., payment card rebates), which are recorded in "Merchant revenues." To the extent more of our business is generated on a merchant basis, we incur a greater level of these merchant-related expenses, which negatively impacts our operating margins despite increases in associated incremental revenues. The mix of our total gross bookings generated on a merchant basis was 59% in the first quarter of 2024, an increase from 51% in the first quarter of 2023.

Current wording

As part of our strategy to provide more payment options to consumers and travel service providers, increase the number and variety of our accommodations, and enable our long-term Connected Trip strategy, Booking.com increasingly processes transactions on a merchant basis, where it facilitates payments from travelers for the services provided. This allows Booking.com to process transactions for travel service providers and to increase its ability to offer secure and flexible transaction terms to consumers, such as the form and timing of payment. We believe that expanding these types of service offerings will benefit consumers and travel service providers, as well as our gross bookings, room night, and earnings growth rates. However, this results in additional expenses for personnel, payment processing, chargebacks (including those related to fraud), and other expenses related to these transactions, which are recorded in "Personnel" expenses and "Sales and other expenses" in our Unaudited Consolidated Statements of Operations, as well as associated incremental revenues (e.g., payment card rebates), which are recorded in "Merchant revenues." To the extent more of our business is generated on a merchant basis, we incur a greater level of these merchant-related expenses, which negatively impacts our operating margins despite increases in associated incremental revenues. The mix of our total gross bookings generated on a merchant basis was 62% in the second quarter of 2024, an increase from 53% in the second quarter of 2023.

Previous wording

We have established widely-used and recognized brands through marketing and promotional campaigns. Our total marketing expenses, which are comprised of performance and brand marketing expenses that are substantially variable in nature, were $1.6 billion in the first quarter of 2024, up 6% versus the first quarter of 2023 as a result of the healthy demand environment and our efforts to invest in marketing, partially offset by a year-over-year improvement in performance marketing returns on investment ("ROIs") and a higher share of room nights booked by consumers coming directly to our platforms. Our performance marketing expense, which represents a substantial majority of our marketing expenses, is primarily related to the use of online search engines (primarily Google), affiliate marketing, and meta-search services to generate traffic to our platforms. Our brand marketing expense is primarily related to costs associated with producing and airing digital branding and television advertising.

Current wording

We have established widely-used and recognized brands through marketing and promotional campaigns. Our total marketing expenses, which are comprised of performance and brand marketing expenses that are substantially variable in nature, were $1.9 billion in the second quarter of 2024, up 8% versus the second quarter of 2023 as a result of the year-over-year growth in travel demand in the quarter and our efforts to invest in marketing, partially offset by a higher share of room nights booked by consumers coming directly to our platforms. Our performance marketing expenses, which represent a substantial majority of our marketing expenses, are primarily related to the use of online search engines (primarily Google), affiliate marketing, and meta-search services to generate traffic to our platforms. Our brand marketing expenses are primarily related to costs associated with producing and airing digital branding and television advertising.

Previous wording

Marketing efficiency, expressed as marketing expense as a percentage of gross bookings, and performance marketing ROIs are impacted by a number of factors that are subject to variability and are in some cases outside of our control, including ADRs, costs per click, cancellation rates, foreign currency exchange rates, our ability to convert paid traffic to booking customers, and the timing and effectiveness of our brand marketing campaigns. In recent years, we observed periods of stable or increasing ROIs. Although it is difficult to predict how performance marketing ROIs will change in the future, ROIs could be negatively impacted by increased levels of competition and other factors. When evaluating our performance marketing spend, we typically consider several factors for each channel, such as the customer experience on the advertising platform, the incremental traffic we receive, and anticipated repeat rates. Marketing efficiency can also be impacted by the extent to which consumers come directly to our platforms for bookings. Marketing expenses as a percentage of total gross bookings in the first quarter of 2024 were lower than in the first quarter of 2023 due to higher performance marketing ROIs and an increase in the share of room nights booked by consumers coming directly to our platforms. Performance marketing ROIs were higher in the first quarter of 2024 versus the first quarter of 2023 due in part to our ongoing efforts to improve the efficiency of our marketing spend. See Part I, Item 1A, Risk Factors - "We face risks relating to our marketing efforts" and "We are dependent on travel service providers, restaurants, search platforms, and other third parties" in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

Marketing efficiency, expressed as marketing expenses as a percentage of gross bookings, and performance marketing returns on investment ("ROIs") are impacted by a number of factors that are subject to variability and are in some cases outside of our control, including ADRs, costs per click, cancellation rates, foreign currency exchange rates, our ability to convert paid traffic to booking customers, and the timing and effectiveness of our brand marketing campaigns. In recent years, we observed periods of stable or increasing ROIs. Although it is difficult to predict how performance marketing ROIs will change in the future, ROIs could be negatively impacted by increased levels of competition and other factors. When evaluating our performance marketing spend, we typically consider several factors for each channel, such as the customer experience on the advertising platform, the incremental traffic we receive, and anticipated repeat rates. Marketing efficiency can also be impacted by the extent to which consumers come directly to our platforms for bookings. Marketing expenses as a percentage of total gross bookings in the second quarter of 2024 were higher than in the second quarter of 2023 due primarily to an increase in brand marketing expenses. Performance marketing expenses as a percentage of gross bookings in the second quarter of 2024 were in line with the second quarter of 2023 as an increase in the share of room nights booked by consumers coming directly to our platforms was offset by increased spend in social media channels and lower performance marketing ROIs due to changes in paid traffic mix. See Part I, Item 1A, Risk Factors - "We face risks relating to our marketing efforts" and "We are dependent on travel service providers, restaurants, search platforms, and other third parties" in our Annual Report on Form 10-K for the year ended December 31, 2023.

Previous wording

Booking.com had approximately 3.5 million properties on its website at March 31, 2024, consisting of over 450,000 hotels, motels, and resorts and over 3.0 million alternative accommodation properties (including homes, apartments, and other unique places to stay), representing an increase from over 2.8 million properties at March 31, 2023. The year-over-year increase in total properties was driven by an increase in alternative accommodation properties.

Current wording

Booking.com had approximately 3.8 million properties on its website at June 30, 2024, consisting of over 475,000 hotels, motels, and resorts and over 3.3 million alternative accommodation properties (including homes, apartments, and other unique places to stay), representing an increase from over 3.1 million properties at June 30, 2023.

Previous wording

The mix of Booking.com's room nights booked for alternative accommodation properties in the first quarter of 2024 was approximately 36%, up versus approximately 33% in the first quarter of 2023. We have observed a longer-term trend of an increasing mix of room nights booked for alternative accommodation properties as consumer demand for these types of properties has grown, and as we have increased the number and variety of them on Booking.com. We may experience lower profit margins due to additional costs, such as increased customer service or certain partner related costs, related to offering alternative accommodations on our platforms. As our alternative accommodation business has grown, these different characteristics have negatively impacted our profit margins and this trend may continue.

Current wording

The mix of Booking.com's room nights booked for alternative accommodation properties in the second quarter of 2024 was approximately 36%, up versus approximately 34% in the second quarter of 2023. We have observed a longer-term trend of an increasing mix of room nights booked for alternative accommodation properties as consumer demand for these types of properties has grown, and as we have increased the number and variety of them on Booking.com. We may experience lower profit margins due to additional costs, such as increased customer service or certain partner related costs, related to offering alternative accommodations on our platforms. As our alternative accommodation business has grown, these different characteristics have negatively impacted our profit margins and this trend may continue.

Previous wording

Although we believe that providing an extensive collection of properties, excellent customer service, and an intuitive, easy-to-use consumer experience are important factors influencing a consumer's decision to make a reservation, for many consumers, the price of the travel service is the primary factor determining whether a consumer will book. Discounting and couponing (i.e., merchandising) occurs across all of the major regions in which we operate, particularly in Asia. In some cases, our competitors are willing to make little or no profit on a transaction or offer travel services at a loss in order to gain market share. As a result, it is increasingly important to offer travel services, such as accommodation reservations, at a competitive price, whether through discounts, coupons, closed-user group rates or loyalty programs, increased flexibility in cancellation policies, or otherwise. These initiatives have resulted and, in the future, may result in lower ADRs and lower revenue as a percentage of gross bookings.

Current wording

Although we believe that providing an extensive collection of properties, excellent customer service, and an intuitive, easy-to-use consumer experience are important factors influencing a consumer's decision to make a reservation, for many consumers, the price of the travel service is the primary factor determining whether to book. Discounting and couponing (i.e., merchandising) occurs across all of the major regions in which we operate, particularly in Asia. In some cases, our competitors are willing to make little or no profit on a transaction or offer travel services at a loss in order to gain market share. As a result, it is increasingly important to offer travel services, such as accommodation reservations, at a competitive price, whether through discounts, coupons, closed-user group rates or loyalty programs, increased flexibility in cancellation policies, or otherwise. These initiatives have resulted and, in the future, may result in lower ADRs and lower revenues as a percentage of gross bookings.

Previous wording

Many taxing authorities are increasingly focused on ways to increase tax revenues and have targeted large multinational technology companies in these efforts. As a result, many countries and some U.S. states have implemented or are considering the adoption of a digital services tax or similar tax that imposes a tax on revenue earned from digital advertisements or the use of online platforms, even when there is no physical presence in the jurisdiction. Currently, rates for these taxes range from 1.5% to 10% of revenue deemed generated in the jurisdiction. The digital services taxes currently in effect, which we record in "Sales and other expenses" in the Unaudited Consolidated Statements of Operations, have negatively impacted our results of operations. For more information, see Part I, Item 1A, Risk Factors - "We may have exposure to additional tax liabilities" in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

Many taxing authorities are increasingly focused on ways to increase tax revenues and have targeted large multinational technology companies in these efforts. As a result, many countries and some U.S. states have implemented or are considering the adoption of a digital services tax or similar tax that imposes a tax on revenues earned from digital advertisements or the use of online platforms, even when there is no physical presence in the jurisdiction. Currently, rates for these taxes range from 1.5% to 10% of revenues deemed generated in the jurisdiction. The digital services taxes currently in effect, which we record in "Sales and other expenses" in the Unaudited Consolidated Statements of Operations, have negatively impacted our results of operations. For more information, see Part I, Item 1A, Risk Factors - "We may have exposure to additional tax liabilities" in our Annual Report on Form 10-K for the year ended December 31, 2023.

Previous wording

Increased regulatory focus on online businesses, including online travel businesses like ours, could result in increased compliance costs or otherwise adversely affect our business. For example, the Digital Markets Act ("DMA") and Digital Services Act ("DSA") give regulators in the EU more instruments to investigate and regulate digital businesses and impose new rules and requirements on platforms designated as "gatekeepers" under the DMA and online platforms more generally, with separate rules for "Very Large Online Platforms" (VLOP) under the DSA. In early 2023, Booking.com received a VLOP designation notice from the European Commission. The Company met the quantitative notification criteria set forth in the DMA and notified the European Commission of that fact. Certain of the DMA’s requirements will become enforceable later in 2024. As a result of the DMA, compliance costs may increase and changes to our products or business practices may be required. For information regarding risks related to the DMA and DSA, please see Part I, Item 1A, Risk Factors - "Our business is subject to various competition/anti-trust, consumer protection, and online commerce laws and regulations around the world, and as the size of our business grows, scrutiny of our business by legislators and regulators in these areas may intensify" in our Annual Report on Form 10-K for the year ended December 31, 2023. For more information on the impacts of regulations on our business, see Note 13 to our Unaudited Consolidated Financial Statements.

Current wording

Increased regulatory focus on online businesses, including online travel businesses like ours, could result in increased compliance costs or otherwise adversely affect our business. For example, the Digital Markets Act ("DMA") and Digital Services Act ("DSA") give regulators in the EU more instruments to investigate and regulate digital businesses and impose new rules and requirements on platforms designated as "gatekeepers" under the DMA and online platforms more generally, with separate rules for "Very Large Online Platforms" (VLOP) under the DSA. In early 2023, Booking.com received a VLOP designation notice from the European Commission. The Company met the quantitative notification criteria set forth in the DMA and in May 2024, the European Commission designated the Company as a gatekeeper under the DMA. Certain of the DMA's requirements will become enforceable later in 2024. As a result of the DMA, compliance costs may increase and changes to our products or business practices may be required. For information regarding risks related to the DMA and DSA, please see Part I, Item 1A, Risk Factors - "Our business is subject to various competition/anti-trust, consumer protection, and online commerce laws and regulations around the world, and as the size of our business grows, scrutiny of our business by legislators and regulators in these areas may intensify" in our Annual Report on Form 10-K for the year ended December 31, 2023. For more information on the impacts of regulations on our business, see Note 13 to our Unaudited Consolidated Financial Statements.

Previous wording

Our businesses outside of the U.S. (see Note 2 to our Unaudited Consolidated Financial Statements for information related to revenue by geographic area) represent a substantial majority of our financial results, but because we report our results in U.S. Dollars, we face exposure to movements in foreign currency exchange rates as the financial results and the financial condition of our businesses outside of the U.S. are translated from local currency (principally Euros and British Pounds Sterling) into U.S. Dollars. As a result of the movements in foreign currency exchange rates, both the absolute amounts of and percentage changes in our foreign-currency-denominated net assets, gross bookings, revenues, operating expenses, and net income as expressed in U.S. Dollars are affected. Movements in foreign currency exchange rates did not have a material impact on our total gross bookings or revenue growth in the first quarter of 2024 as compared to the first quarter of 2023. Since our expenses are generally denominated in foreign currencies on a basis similar to our revenues, our operating margins have not been significantly impacted by currency fluctuations. We generally enter into derivative instruments to minimize the impact of foreign currency exchange rate fluctuations. We enter into foreign currency forward contracts to hedge our exposure to the impact of movements in foreign currency exchange rates on our transactional balances denominated in currencies other than the functional currency. See Note 6 to our Unaudited Consolidated Financial Statements for additional information related to our derivative contracts. In addition, we designate certain portions of the aggregate principal value of our Euro-denominated debt as a hedge of the foreign currency exposure of the net investment in certain Euro functional currency subsidiaries. Foreign currency transaction gains or losses on the Euro-denominated debt that is not designated as a hedging instrument for accounting purposes are recognized in "Other income (expense), net" in the Unaudited Consolidated Statements of Operations (see Notes 9 and 14 to our Unaudited Consolidated Financial Statements). Such foreign currency transaction gains or losses are dependent on the amount of net assets of the Euro functional currency subsidiaries, the amount of the Euro-denominated debt that is designated as a hedge, and fluctuations in foreign currency exchange rates. For more information, see Part I, Item 1A, Risk Factors - "We are exposed to fluctuations in foreign currency exchange rates" in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

Our businesses outside of the U.S. represent a substantial majority of our financial results, but because we report our results in U.S. Dollars, we face exposure to movements in foreign currency exchange rates as the financial results and the financial condition of our businesses outside of the U.S. are translated from local currency (principally Euros and British Pounds Sterling) into U.S. Dollars. See Note 2 to our Unaudited Consolidated Financial Statements for information related to revenues by geographic area. As a result of the movements in foreign currency exchange rates, both the absolute amounts of and percentage changes in our foreign-currency-denominated net assets, gross bookings, revenues, operating expenses, and net income as expressed in U.S. Dollars are affected. Our total revenues increased by 7% in the second quarter of 2024 as compared to the second quarter of 2023, but without the impact of changes in foreign currency exchange rates our total revenues increased year-over-year on a constant-currency basis by approximately 9%. Since our expenses are generally denominated in foreign currencies on a basis similar to our revenues, our operating margins have not been significantly impacted by currency fluctuations. We generally enter into derivative instruments to minimize the impact of foreign currency exchange rate fluctuations. We enter into foreign currency forward contracts to hedge our exposure to the impact of movements in foreign currency exchange rates on our transactional balances denominated in currencies other than the functional currency. See Note 6 to our Unaudited Consolidated Financial Statements for additional information related to our derivative contracts. In addition, we designate certain portions of the aggregate principal value of our Euro-denominated debt as a hedge of the foreign currency exposure of the net investment in certain Euro functional currency subsidiaries. Foreign currency transaction gains or losses on the Euro-denominated debt that is not designated as a hedging instrument for accounting purposes are recognized in "Other income (expense), net" in the Unaudited Consolidated Statements of Operations (see Notes 9 and 14 to our Unaudited Consolidated Financial Statements). Such foreign currency transaction gains or losses are dependent on the amount of net assets of the Euro functional currency subsidiaries, the amount of the Euro-denominated debt that is designated as a hedge, and fluctuations in foreign currency exchange rates. For more information, see Part I, Item 1A, Risk Factors - "We are exposed to fluctuations in foreign currency exchange rates" in our Annual Report on Form 10-K for the year ended December 31, 2023.

Previous wording

For the second quarter of 2024, we expect:

Current wording

For the third quarter of 2024, we expect:

Previous wording

•the year-over-year growth in room nights will be between 4% and 6%;

Current wording

•the year-over-year growth in room nights will be between 3% and 5%;

Previous wording

•the year-over-year growth in gross bookings will be between 3% and 5%;

Current wording

•the year-over-year growth in gross bookings will be between 2% and 4%;

Previous wording

•the year-over-year growth in revenues will be between 4% and 6%; and

Current wording

•the year-over-year growth in revenues will be between 2% and 4%; and

Previous wording

Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Unaudited Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). Certain of our accounting estimates are particularly important to our financial position and results of operations and require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We use our judgment to determine the appropriate assumptions to be used in the determination of certain estimates and we evaluate our estimates on an ongoing basis. Estimates are based on historical experience, terms of existing contracts, our observance of trends in the travel industry, and on various other assumptions that we believe to be reasonable under the circumstances. Our actual results may differ from these estimates under different assumptions or conditions. Matters that involve significant estimates and judgments of management include the valuation of investments in private entities, the valuation of goodwill and other long-lived assets, income taxes, and contingencies. For a discussion of our critical accounting estimates, see the "Critical Accounting Estimates" section of the Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Unaudited Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). Certain of our accounting estimates are particularly important to our financial position and results of operations and require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We use our judgment to determine the appropriate assumptions to be used in the determination of certain estimates and we evaluate our estimates on an ongoing basis. Estimates are based on historical experience, terms of existing contracts, our observance of trends in the travel industry, and on various other assumptions that we believe to be reasonable under the circumstances. Our actual results may differ from these estimates under different assumptions or conditions. Matters that involve significant estimates and judgments of management include the valuation of investments in private entities, the valuation of goodwill and other long-lived assets, income taxes, and contingencies. For a discussion of our critical accounting estimates, see the "Critical Accounting Estimates" section of Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023.

Previous wording

Room nights, rental car days, and airline tickets reserved through our services for the three months ended March 31, 2024 and 2023 were as follows:

Current wording

Room nights, rental car days, and airline tickets reserved through our services for the three and six months ended June 30, 2024 and 2023 were as follows:

Previous wording

Room nights reserved through our services increased for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, driven primarily by healthy travel demand in Europe and Asia. Rental car days reserved through our services increased for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, driven primarily by year-over-year growth in rental car demand, which benefited from lower average daily car rental prices. Airline tickets reserved through our services increased for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, driven primarily by the expansion of Booking.com's flight offering.

Current wording

Room nights reserved through our services increased for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, driven primarily by increased travel demand in Asia and Europe. Rental car days reserved through our services increased for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, driven primarily by year-over-year growth in rental car demand, which benefited from lower average daily car rental prices. Airline tickets reserved through our services increased for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, driven primarily by the expansion of the flight offerings at Booking.com and Agoda.

Previous wording

Gross bookings resulting from reservations of room nights, rental car days, and airline tickets made through our merchant and agency categories for the three months ended March 31, 2024 and 2023 were as follows (numbers may not total due to rounding):

Current wording

Gross bookings resulting from reservations of room nights, rental car days, and airline tickets made through our merchant and agency categories for the three and six months ended June 30, 2024 and 2023 were as follows (numbers may not total due to rounding):

Previous wording

Merchant gross bookings increased and agency gross bookings decreased for the three months ended March 31, 2024 compared to the three months ended March 31, 2023, due to the ongoing shift from agency bookings to merchant bookings at Booking.com.

Current wording

Merchant gross bookings increased and agency gross bookings decreased for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023, due to the ongoing shift from agency bookings to merchant bookings at Booking.com.

Previous wording

The year-over-year increase in total gross bookings during the three months ended March 31, 2024 was due primarily to the increase in room nights, the increase in accommodation ADRs of approximately 1%, and the positive impact from year-over-year growth in gross bookings from reservations for airline tickets.

Current wording

The year-over-year increase in total gross bookings during the three months ended June 30, 2024 was due primarily to the increase in room nights and the positive impact from year-over-year growth in airline ticket gross bookings, partially offset by a negative impact of foreign exchange rate fluctuations and a decrease in constant currency accommodation ADRs of approximately 1%.

Previous wording

Gross bookings resulting from reservations of airline tickets increased 27% year-over-year during the three months ended March 31, 2024 due to airline ticket growth, partially offset by lower airline ticket prices. Gross bookings resulting from reservations of rental car days decreased 2% year-over-year during the three months ended March 31, 2024 due primarily to lower average daily car rental prices, partially offset by rental car days growth.

Current wording

Airline ticket gross bookings increased 12% and 20% year-over-year during the three and six months ended June 30, 2024, respectively, due to airline ticket growth, partially offset by lower airline ticket prices. Rental car gross bookings increased 1% year-over-year during the three months ended June 30, 2024 due primarily to rental car days growth, partially offset by lower average daily car rental prices. Rental car gross bookings were about flat year-over-year during the six months ended June 30, 2024 due primarily to lower average daily car rental prices, partially offset by rental car days growth.

Previous wording

Merchant revenues increased while agency revenues decreased slightly for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 due to the ongoing shift from agency revenues to merchant revenues at Booking.com. Advertising and other revenues increased for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 due primarily to growth in our OpenTable and KAYAK businesses. The year-over-year growth in total revenues benefited from the shift in the timing of the Easter holiday relative to last year.

Current wording

Merchant revenues increased while agency revenues decreased for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023 due to the ongoing shift from agency revenues to merchant revenues at Booking.com. Advertising and other revenues increased for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023 due to growth in advertising revenues at Booking.com as well as growth at OpenTable. The year-over-year growth in total revenues for the three months ended June 30, 2024 was negatively affected by the shift in the timing of the Easter holiday relative to last year and by the impact of foreign exchange rate fluctuations.

Previous wording

Total revenues as a percentage of gross bookings was 10.1% for the three months ended March 31, 2024, up from 9.6% for the three months ended March 31, 2023 due primarily to a more positive impact from differences in the timing of booking versus travel, mostly driven by the shift in the timing of the Easter holiday relative to last year, in the three months ended March 31, 2024 and an increase in revenue related to facilitated payments, partially offset by an increase in the mix of airline ticket gross bookings.

Current wording

Total revenues as a percentage of gross bookings was 14.1% and 12.1% for the three and six months ended June 30, 2024, respectively, up from 13.8% and 11.7% for the three and six months ended June 30, 2023, respectively, due to an increase in revenues related to facilitating payments, as well as a positive impact from differences in timing of booking versus travel, partially offset by an increase in the mix of airline ticket gross bookings.

Previous wording

Our marketing expenses, which are substantially variable in nature, increased year-over-year in the first quarter of 2024 to help drive additional gross bookings and revenues. Marketing expenses as a percentage of total gross bookings decreased year-over-year in the first quarter of 2024 due to year-over-year increases in performance marketing ROIs and in the mix of direct traffic. Performance marketing ROIs were higher in the first quarter of 2024 versus the first quarter of 2023, due in part to our ongoing efforts to improve the efficiency of our marketing spend.

Current wording

Our marketing expenses, which are substantially variable in nature, increased for the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, to help drive additional gross bookings and revenues. Marketing expenses as a percentage of total gross bookings in the second quarter of 2024 were higher than in the second quarter of 2023 due primarily to an increase in brand marketing expenses. Performance marketing expenses as a percentage of gross bookings in the second quarter of 2024 were in line with the second quarter of 2023 as an increase in the share of room nights booked by consumers coming directly to our platforms was offset by increased spend in social media channels and lower performance marketing ROIs due to changes in paid traffic mix.

Previous wording

Sales and other expenses, which are substantially variable in nature, increased year-over-year in the first quarter of 2024 due primarily to an increase in merchant transaction costs of $73 million. Merchant transactions increased year-over-year in the first quarter of 2024 due to the ongoing shift from agency transactions to merchant transactions at Booking.com.

Current wording

For the three and six months ended June 30, 2024 sales and other expenses, which are substantially variable in nature, increased for the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023 due primarily to an increase in merchant transaction costs of $55 million and $122 million, respectively, and an increase in digital services taxes and other similar taxes of $40 million and $48 million, respectively, including an accrual of $17 million related to the Canadian digital services taxes for the years ended December 31, 2022 and 2023 enacted in June 2024 with retrospective effect. Merchant transactions increased year-over-year in the first half of 2024 due to the ongoing shift from agency transactions to merchant transactions at Booking.com.

Previous wording

Personnel expenses increased year-over-year in the first quarter of 2024 due to an increase in salary expenses of $55 million and increased stock-based compensation expense of $31 million. The year-over-year increase in personnel expenses was impacted by a 7% increase in employee headcount from approximately 22,400 as of March 31, 2023 to 24,000 as of March 31, 2024.

Current wording

Personnel expenses increased for the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, due to increases in salary expenses of $40 million and $95 million, respectively, as well increases in employee benefits expense and stock-based compensation expense, partially offset by a decrease in bonus expense accruals. The year-over-year increase in personnel expenses was impacted by an increase of approximately 5% in employee headcount from approximately 23,100 as of June 30, 2023 to 24,150 as of June 30, 2024.

Previous wording

Information technology expenses increased year-over-year in the first quarter of 2024 due to increased cloud computing costs and outsourced data center costs, increased software license and system maintenance fees, as well as increased costs related to payments to contractors.

Current wording

Information technology expenses increased during the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023 due to increased software license and system maintenance fees, as well as increased cloud computing costs and outsourced data center costs.

Previous wording

Depreciation and amortization expenses increased year-over-year in the first quarter of 2024 due primarily to increased depreciation of computer equipment, as well as amortization expense related to internally-developed and purchased software.

Current wording

Depreciation and amortization expenses increased during the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, due primarily to increased depreciation of computer equipment, as well as amortization expense related to internally-developed and purchased software.

Previous wording

The following table presents the changes in interest and dividend income and interest expense for the three months ended March 31, 2024 and 2023:

Current wording

The following table presents the changes in interest expense and interest and dividend income for the three and six months ended June 30, 2024 and 2023:

Previous wording

Interest and dividend income increased for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to the impact of higher interest on cash management activities, partially offset by a decrease in interest income related to our investments in debt securities. Interest expense increased for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, primarily due to the issuance of senior notes in May 2023 and March 2024, partially offset by the maturities of senior notes during March 2023.

Current wording

Interest expense increased for the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, primarily due to the issuance of senior notes in March 2024 and May 2023, partially offset by a decrease in interest expense related to cash management activities. Interest and dividend income increased for the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, primarily due to higher money market fund investments.

Previous wording

The following table sets forth the composition of "Other income (expense), net" for the three months ended March 31, 2024 and 2023:

Current wording

The following table sets forth the composition of "Other income (expense), net" for the three and six months ended June 30, 2024 and 2023:

Previous wording

See Note 5 to our Unaudited Consolidated Financial Statements for additional information related to net losses on equity securities.

Current wording

See Note 5 to our Unaudited Consolidated Financial Statements for additional information related to net gains (losses) on equity securities.

Previous wording

Foreign currency transaction gains (losses) for the three months ended March 31, 2024 includes gains of $167 million related to our Euro-denominated debt and accrued interest that were not designated as net investment hedges and losses of $85 million on derivative contracts. Foreign currency transaction gains (losses) for the three months ended March 31, 2023 includes losses of $26 million related to our Euro-denominated debt and accrued interest that were not designated as net investment hedges and losses of $17 million on derivative contracts.

Current wording

Foreign currency transaction gains (losses) for the three and six months ended June 30, 2024 includes gains of $68 million and $235 million, respectively, related to our Euro-denominated debt and accrued interest that were not designated as net investment hedges and losses of $77 million and $162 million, respectively, on derivative contracts. Foreign currency transaction gains (losses) for the three and six months ended June 30, 2023 includes losses of $8 million and $34 million, respectively, related to our Euro-denominated debt and accrued interest that were not designated as net investment hedges and losses of $67 million and $84 million, respectively, on derivative contracts.

Previous wording

Our 2024 effective tax rate differs from the U.S. federal statutory tax rate of 21%, primarily due to the benefit of the Netherlands Innovation Box Tax (discussed below), partially offset by higher international tax rates, certain non-deductible expenses, and U.S. federal and state tax associated with our international earnings. Our 2023 effective tax rate differed from the U.S. federal statutory tax rate of 21%, primarily due to the benefit of the Netherlands Innovation Box Tax, partially offset by higher international tax rates and certain non-deductible expenses.

Current wording

Our 2024 effective tax rates differ from the U.S. federal statutory tax rate of 21%, primarily due to the benefit of the Netherlands Innovation Box Tax (discussed below), partially offset by higher international tax rates, U.S. federal and state tax associated with our international earnings, and certain non-deductible expenses. Our 2023 effective tax rates differed from the U.S. federal statutory tax rate of 21%, primarily due to the benefit of the Netherlands Innovation Box Tax, partially offset by higher international tax rates and certain non-deductible expenses.