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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.01pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-0.21pp
Flat
Net-tone change vs last year's 10-K.
MD&A
+0.23pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
litigation+3
claims+2
costly+2
unauthorized+2
impairment+2
Positive rising
enabled+5
successfully+1
effective+1
greater+1
achieve+1
Risk Factors (Item 1A)
12,741 words
Item 1A. Risk Factors
Our business and financial results are subject to risks and uncertainties, which could adversely affect our business, results of operations, financial condition, and cash flows.
The risk factors section should be carefully considered in full, in addition to other information appearing in this Form 10-K, including Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related notes.
Industry and Business Risks
Declines or disruptions in the travel industry could adversely affect our business and financial performance.
Our financial results depend upon sales of travel services, which can fluctuate based on consumer discretionary spending levels. Demand for and sales of travel services often decline during periods of perceived or actual adverse economic conditions and times of political or economic uncertainty. Economic and political uncertainty can negatively impact transaction growth rates, cancellation rates, and accommodation average daily rates ("ADRs"). If there are lower ADRs, it generally has a effect on our revenues and results of operations.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
impairment+5
attrition+2
litigation+1
against+1
reassigned+1
Positive rising
effective+3
benefit+2
gain+2
positive+2
better+2
MD&A (Item 7)
7,968 words
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with Part I, Item 1A "Risk Factors" and our Consolidated Financial Statements and accompanying notes.
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 results in currencies other than U.S. Dollars using the corresponding prior year monthly average exchange rates.
Overview
Our mission is to make it easier for everyone to experience the world. We aim to provide consumers with a best-in-class experience with tailored planning, payment, language, and other options, seamlessly connecting them with our travel service provider partners. We offer these services through five primary consumer-facing brands: Booking.com, Priceline, Agoda, KAYAK, and OpenTable. See Notes 1 and 17 to our Consolidated Financial Statements for segment reporting and geographic information.
We derive substantially all of our revenues from enabling consumers to make travel service reservations. We also earn revenues from payment facilitation, advertising, restaurant reservation and management services, travel-related insurance offerings, and other services.
Trends
Our global room nights in 2025 increased 8% year-over-year driven primarily by healthy travel demand in Europe and Asia. We saw the booking window expand in 2025 compared to 2024, which year-over-year room night growth.
Macroeconomic uncertainties and geopolitical tensions have caused, and in the future may cause, significant volatility in foreign currency exchange rates, stock markets, and oil prices, which can impact consumer travel behavior. The uncertainty of these factors makes it difficult to forecast industry and consumer trends, which could adversely affect our ability to effectively manage our business and our results of operations.
Other events beyond our control such as pandemics, terrorist attacks, natural disasters, trade disputes, sanctions, wars and regional hostilities, political unrest, travel-related accidents, or overtourism may result in declines in demand or travel restrictions, which could negatively impact our business. These events and their impacts are largely unpredictable and can abruptly affect consumer travel behavior and relationships with travel service providers and partners, which could adversely affect our business and results of operations.
Intense competition could reduce our market share and harm our financial performance.
We operate in highly competitive and rapidly evolving global markets for travel and restaurant reservation services. Barriers to entry are low, and we compete with online travel companies ("OTCs"), travel service providers offering direct booking (such as airlines, hotels, and rental car companies), traditional travel agencies and operators, companies offering travel-related software, payments, or technology solutions, financial services and credit card companies, and global technology companies with significantly greater scale, data, and financial resources. For example, Google links travel search to its dominant search engine and has integrated travel products into Google Maps and its Gemini generative AI ("Gen AI") offering. Other large technology platforms and AI-native competitors are developing Gen AI-powered assistants and agents that can search, compare, recommend, and facilitate travel and dining reservations directly within their search engines, operating systems, messaging platforms, or "super-apps." These offerings may reduce consumers choosing to visit dedicated online travel platforms, reducing direct traffic, bookings, and customer relationships. Gen AI also lowers barriers to entry and enables competitors to potentially replicate or improve core functionality, personalize recommendations and pricing, and acquire customers more efficiently through non-travel consumer interactions. AI agents may further evolve into full-service booking platforms, increasing competitive pressure and disintermediating OTCs. If our Gen AI investments are not successful or we are unable to successfully adapt to such changes, our ability to compete, and our business and results of operations, could be adversely affected.
For many consumers, the price of a travel service is the primary factor determining whether to book a reservation. Some competitors may operate at minimal or negative margins to gain market share. Travel service providers may offer lower prices through direct or AI-enabled channels, OTC and other competitors may more effectively invest in online marketing channels, and in certain markets we may need to provide discounts or other incentives in order to be competitive, any of which may make it difficult for us to maintain or grow our competitive position or profit margins, and may also result in lower revenues as a percentage of gross bookings. Consolidation among travel service providers or AI-enabled alternative travel offerings could result in lower OTC commission rates, increased discounting, and greater incentives for consumers to join closed-user groups. If we are unable to effectively offer competitive prices, our revenues, competitive position, business, and results of operations could be materially adversely affected.
We face risks related to the growth rate and the global expansion of our business.
We derive a substantial portion of our gross bookings from countries outside the United States. The growth rate of our operations outside the United States have generally declined over time as the absolute level of our gross bookings increased and online travel growth rates declined, and they may also be impacted by factors such as economic conditions, changes in foreign currency exchange rates, declines in ADRs, increases in cancellations, adverse changes in travel market conditions, and competition. Any decline in the growth rates of our businesses could negatively impact our revenue and earnings growth rates.
Many markets may have strong local competitors with an established brand and travel service provider or restaurant relationships making expansion in that market difficult or costly. Certain markets in which we operate have unique localized preferences or lower operating margins, or from time to time have experienced declining or no growth. Some of our current and potential competitors may have greater resources or stronger competitive positions in certain regions than we do, or may be domiciled in different countries and subject to political, legal, and regulatory regimes that enable them to compete more effectively than us. Growing our business in such markets could require significant investment, which could have a negative impact on our profit margins. In some markets such as China, local requirements may restrict participation by foreign businesses, making entry into and expansion in those markets costly, difficult, or impossible. If we are unsuccessful in expanding in new and existing markets and managing that expansion, our business and results of operations could be adversely affected.
We believe that the breadth, variety, and quality of accommodations on our platforms helps drive our growth. The market for accommodations covers a wide range of property types including alternative accommodations and companies like Airbnb and Vrbo (owned by Expedia) compete directly with our accommodations businesses. The growth rate of accommodations on our platforms may vary in part due to removing accommodations from time to time. Many newer accommodations may have fewer rooms or higher credit risk and may appeal to a smaller subset of customers (e.g., hostels and bed and breakfasts). If occupancy rates increase, accommodation providers often limit their offerings to OTCs. Also, certain jurisdictions have instituted regulations intended to address overtourism, including by restricting accommodation offerings near popular tourist destinations, which may result in constraints on the number of listings or available accommodation room nights or decreased demand, which could negatively impact our growth rate and results of operations.
We are dependent on travel service providers, restaurants, search platforms, and other third parties.
We rely on third parties to make their services available to consumers for reservation through us. Our travel service providers are generally not required to make available any specific quantity of reservations, or to make reservations available in any geographic area, for any particular route, or at any particular price. Our restaurants are generally not required to provide all of their available tables and reservations to consumers through us. Our arrangements with OTCs and travel service providers to provide information in connection with KAYAK's meta-search services are non-exclusive and terminable with little notice. A significant reduction on the part of any of our major travel service providers or restaurants for a sustained period of time or their withdrawal from our services, including due to a provider's bankruptcy or closure, could have an adverse effect on our business, advertising revenue, competitive position, and results of operations. Further, as industry consolidation, including among travel service providers, increases, the potential adverse effect of reduced usage or withdrawal from our services by a significant travel service provider also increases.
A significant portion of consumer traffic to our services is derived from third-party platforms, including Google and other search engines, mobile operating systems, app marketplaces, mapping services, and other digital distribution channels. These platforms increasingly incorporate Gen AI features, such as AI-generated answers, assistants, and recommendations, that may satisfy user intent without directing users to our services or may favor the platform's own or affiliated offerings.
Changes in algorithms, ranking methodologies, user interfaces, access terms, pricing, or the placement of AI-generated content by these platforms could reduce the visibility of our services, increase customer acquisition costs, or decrease traffic and bookings. In addition, platform providers may restrict data access, limit interoperability, or impose commercial terms that disadvantage us relative to competing or native AI-enabled services.
If we are unable to maintain favorable placement, access, or economics across traditional digital search as well as evolving AI-mediated distribution channels, our distribution of travel and restaurant reservations through such third-party distribution channels is likely to decline and our business, competitive position, and results of operations could be adversely affected.
We offer a range of insurance products related to our travel offerings, primarily through third-party insurance providers. Our business and reputation may be adversely affected if such providers no longer make such offerings available to us on economically reasonable terms or at all.
We may not be able to keep up with rapid technological or other market changes.
We compete in markets characterized by rapidly changing technology, evolving industry standards, consolidation, frequent product developments, and changing consumer preferences. These characteristics are heightened by the progress of technology adoption, including the continuing adoption of online commerce, growth of mobile transactions and payment, and the development of Gen AI capabilities. We may not be able to keep up with these rapid changes.
Our long-term strategy to commercialize the Connected Trip will require increased investments that could have an adverse impact on our results of operations until we achieve the expected return on these investments. The development of the Connected Trip is subject to uncertainties, including further development of the verticals and technological capabilities (including integrating Gen AI) necessary for the Connected Trip experience, the ability to collect, store, and use customer data in a compliant and integrated fashion, and the attraction and retention of employees dedicated to this effort. It may take longer than we expect to realize the Connected Trip vision or it may not achieve the expected return on investment. Our ability to offer a variety of appropriate payment solutions is an important part of our Connected Trip vision. These efforts may also be unsuccessful in improving the travel experience or retaining and attracting new customers. Further, regulatory restrictions may impact the ongoing commercialization of the Connected Trip or increase our costs of compliance. With any technical innovation such as the Connected Trip effort, there could be vulnerabilities and other technical failures, which could result in lost business, harm to our brand or reputation, consumer complaints, or other adverse consequences, any of which could adversely affect our business and results of operations.
We may not be able to keep pace with the competitive pressure to innovate. Other companies, including emerging start-ups and large technology companies utilizing proprietary Gen AI or similar capabilities, may innovate or develop new services and technologies faster than we can or may foresee consumer need for new services or technologies before we do. Gen AI and other new technologies could influence how consumers search for and book travel, diminish the relevance or competitiveness of our existing technology and service offerings, or require us to modify or adapt our services or infrastructure, any of which could adversely affect our results of operations and financial condition.
Consumers increasingly use mobile devices and apps to make online travel bookings, and may in the future use Gen AI-enabled devices to make bookings. The revenues earned on a mobile transaction may be less than a desktop transaction due to different purchasing patterns. To the extent mobile devices or platforms enable users to block advertising content, our advertising revenue and ability to market our brands may also be negatively affected. If we are unable to attract consumers to our mobile platforms, or app store providers like Google and Apple use their app distribution, mobile operating, or payment platforms to favor competing services, our business, competitive position, future growth, and results of operations could be adversely affected.
We face risks related to the growth of our alternative accommodations business.
As we continue to grow our alternative accommodations business, we face increasing risks relating to claims of liability, regulatory developments, and continued growth and profitability. Alternative accommodations typically consist of single units or a small collection of independent units, and may result in additional costs for us, which can result in more limited booking opportunities and lower profit margins than hotels, motels, and resorts. Further, alternative accommodations may be unavailable during peak periods due to seasonality or owner use. To the extent alternative accommodations represent an increasing percentage of the properties we add to our platforms, we expect that our room-night growth rate and property growth rate will continue to diverge over time, and the number of reservations per property will likely continue to decrease. Additionally, if we don't offer features preferred by alternative accommodation property owners or our competitors have better features, our alternative accommodations business could be negatively impacted.
Alternative accommodations are subject to increased risk of claims of liability based on injury, death, discrimination, or criminal activities. We have no control over the actions of our consumers, property owners, or other third parties during a stay, and cannot guarantee the safety of such individuals. We do not systematically verify the safety, quality, and legal compliance of all of our alternative accommodations and rely on property owners to disclose information relating to their listings, which may be inaccurate or incomplete. Booking.com facilitates the provision of partner liability insurance underwritten by third-party insurance providers to protect certain alternative accommodation partners against liability claims, lawsuits for bodily injury, or property damage that occurs during a stay. If applicable, this insurance provides coverage up to $1.0 million equivalent per occurrence (subject to limitations and exclusions). We retain certain financial risks and could be required to pay amounts in excess of the policy limit. Any resulting complaints or claims could result in negative publicity and increased costs, which could adversely affect our reputation, business, and results of operations.
Alternative accommodation rules and regulations are complex, evolving, can be inconsistent among individual localities, and could limit or negatively affect property owners' and managers' ability to rent properties. For example, in conjunction with the
Digital Services Act ("DSA"), the European Commission (the "EC") imposes obligations around short-term rental property owner registration, property verification, and enforcement of local registration schemes. Some jurisdictions have adopted or are considering restrictions (e.g., license requirements) on the ability to offer alternative accommodations. We have been and are subject to inquiries related to compliance with such requirements that have resulted in fines and could result in additional fines, adversely affect our reputation, or require operational modifications. This dynamic regulatory environment requires us to expend significant time and resources and could negatively impact our alternative accommodations business.
We face risks relating to our marketing efforts .
We invest considerable resources in the establishment and maintenance of our brands, marketing and other brand building efforts to preserve and enhance consumer awareness of our brands, and to attract and retain consumers. Performance marketing costs to grow traffic to our platforms are variable because they are dependent on others' marketing spend in the same channels. If we are unable to maintain or enhance consumer awareness and acceptance of our brands or if such efforts are not cost-effective, our business, competitive position, and results of operations could be materially adversely affected.
Our marketing efficiency, expressed as marketing expense as a percentage of gross bookings, and performance marketing return 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 traffic to booking consumers, and the timing and effectiveness of our brand marketing campaigns. Marketing efficiency can also be impacted by the extent to which consumers come directly to our platforms for bookings and the economics of distribution channels. If our marketing efforts are less effective at generating new bookings, our marketing efficiency could decrease and our margins, revenues, and earnings growth could be adversely affected. For example, competition for desired placement in search results including among AI-generated or AI-impacted (i.e., by bot or agent activity) results could increase our costs-per-click and negatively impact our marketing efficiency. At times we may pursue a strategy of increasing marketing ROIs, which could negatively affect our gross bookings and revenue growth rates. Pursuing a strategy of improving performance marketing ROIs along with factors such as competitors' actions in the bidding environment, the amount of marketing invested by these channels to generate demand, and overall marketing platform traffic growth trends, may also impact our gross bookings and revenue growth rates. Negative trends in our marketing efficiency, performance marketing ROIs, or consumer shopping activity could negatively impact our business, competitive position, and results of operations.
The development and use of Gen AI may result in reputational harm or legal liability and may adversely affect our business, financial condition, and results of operations.
We use Gen AI in our business, including for internal productivity purposes and in consumer- and partner-facing initiatives such as AI travel assistants, price comparison tools, and as part of enhancing the development of our Connected Trip vision. Our utilization of Gen AI may increase risks related to harmful content, inaccuracies, bias or discrimination, intellectual property infringement or misappropriation, data privacy, cybersecurity, or other issues. There is a risk that employees, partners, and consumers are overreliant on AI without sufficient human review of outputs. In some instances, we may make use of third-party foundational models that have been pre-trained on data which may be insufficient, erroneous, stale, contain biased information, or infringe intellectual property rights. In addition, some users may also engage in fraudulent or abusive activities through our AI services, such as unauthorized account access, payment fraud, or launching cyberattacks. Our implementation of AI systems could result in legal liability, regulatory action, brand, reputational, or competitive harm, or subject us to new regulatory frameworks (such as the European Union's ("EU") Artificial Intelligence Act). Such risks are heightened if we or third-party developers or vendors lack sufficient responsible AI development or governance practices. If we enable or offer Gen AI solutions that do not comply with regulatory requirements, have unintended consequences, are contrary to responsible AI policies and practices, or are otherwise controversial because of their impact on human rights, privacy, employment, or other social, economic, or political issues, our reputation, competitive position, business, financial condition, and results of operations may be adversely affected.
We rely on the performance of highly skilled employees and, if we are unable to retain or motivate key employees or hire, retain, and motivate well-qualified employees, our business would be harmed.
Our performance relies on the talents and efforts of highly skilled individuals. Our future success depends on our continued ability to attract and retain a highly skilled workforce. Our ability to attract and retain talent could be negatively impacted by factors such as reorganizations and our hybrid work policies.
Competition for well-qualified employees, especially software engineers, professionals supporting our Gen AI initiatives, and other technology professionals, is intense and costly. Our customer service resources (including outsource arrangements) may be unable to provide adequate customer service support. Additionally, our Gen AI initiatives could alter our infrastructure and workforce. Our success has led to increased efforts by our competitors and others to hire our employees. These difficulties may be amplified by increased ability to work remotely, evolving restrictions on immigration or availability of visas or work permits for skilled technology workers, requirements of applicable collective bargaining agreements, and laws in certain jurisdictions that make recruiting senior talent more difficult, such as the reductions in the partial tax exemption that benefits certain non-Dutch citizens working in the Netherlands. These factors combined with inflationary pressure on compensation has caused our personnel expenses to attract and retain key talent to increase, which may adversely affect our results of operations. If we do not
succeed in attracting, and retaining well-qualified employees, our business, ability to grow and innovate, competitive position, reputation, and results of operations would be adversely affected.
Impairments of goodwill, long-term investments, and long-lived assets, increases in provisions for expected credit losses on receivables from and cash advances made to our travel service provider and restaurant partners, and increases in cash outlays to refund consumers for prepaid reservations could have a negative impact on our results of operations.
During fiscal year 2025, as a result of our annual goodwill impairment test, we recognized goodwill and intangible assets impairment charges. See Note 11 to our Consolidated Financial Statements. The estimation of fair value reflects numerous assumptions that are subject to risks and uncertainties, including key assumptions regarding expected growth rates and operating margin, discount rates, and market comparables. It requires significant judgments and estimates and actual results could be materially different than the judgments and estimates used to estimate fair value. Future events and changing market conditions may lead us to re-evaluate our current assumptions and may result in a need to recognize an additional goodwill or long-lived asset impairment charge that could have a material adverse effect on our results of operations.
Any significant increase in our provision for expected credit losses, or cash outlays to refund consumers for prepaid reservations, could have a corresponding adverse effect on our results of operations and related cash flows. In some instances, where we had agreed to provide free cancellations to consumers for non-refundable reservations, we did not estimate a recovery of prepayments already made to travel service providers. We may also offer cancellable room rates on behalf of a partner to provide flexibility to our consumers even if the partner has not provided a cancellable room rate, which could have a negative impact on our revenues if we are unable to facilitate booking from another consumer.
We face risks related to our operational and technological infrastructures.
Our financial results depend on the successful execution of our operating plans. We previously announced certain organizational changes, including the modernization of processes and systems, a reduction in workforce, procurement optimization, and initiatives to achieve real estate savings (the "Transformation Program"). There are no assurances that we will achieve the estimated cost savings goals, realize the expected benefits from the Transformation Program, or manage the Transformation Program effectively. Charges related to the Transformation Program could reduce our profitability in the periods such charges are incurred. Our inability to generate anticipated cost savings, successfully implement our strategies, or efficiently manage our operating plans for the Transformation Program could negatively affect our business and results of operations.
Historically, our brands operated on a largely independent basis and many of them focused on particular services or geographies. We continue to optimize collaboration among our brands. As we manage this shift, in addition to managing changes in our workforce we may find it difficult to maintain the beneficial aspects of our corporate culture at our brands and throughout the organization. Any future expansion or shift increases the complexity of our business and places additional strain on our management, operations, technical performance, financial resources, and administrative, legal, tax, internal controls, and financial reporting functions. Our employees and outsourced resources, systems, procedures, and controls may not be adequate to support and effectively manage such changes and increased complexity, or could result in disruption of our service or customer support, especially as we have employees and outsourced resources around the world and we increase the number and variety of our products and payment systems.
We are committed to the enhancement of our operational systems and we face risks deploying information technology, payment processing, enterprise resource planning, and other systems as such initiatives are resource-intensive, may cause operational disruption and could affect our results of operations. Inability to successfully implement or adapt these technologies in a timely manner could adversely affect our business or results of operations.
Investments in new business strategies and acquisitions could disrupt our ongoing business and present risks not originally contemplated.
We have invested and in the future may invest in new business strategies and acquisitions of complementary businesses. Such endeavors may not be successful and may involve significant risks and uncertainties including diversion of management's attention, greater than expected liabilities and expenses, increased regulatory scrutiny, failing to obtain required regulatory approvals on a timely basis or at all, the imposition of conditions that could delay or prevent us from completing a transaction or limit our ability to realize the anticipated benefits of a transaction, inadequate return on capital, legal and compliance obligations that previously did not apply to us, integration risks, and unidentified issues not discovered in our evaluations. We may issue shares of our common stock in these transactions, which could result in dilution to our stockholders. Entering new businesses involves risks and costs that could have an adverse effect on our business, reputation, results of operations, profit margins, cash flows or financial condition, as well as on our ability to achieve the expected benefits of any such investments or acquisitions. In addition, we may decide to make minority investments, including through joint ventures, in which we have limited or no management or operational control. The controlling person in such a case may have interests that are inconsistent with ours, and decisions of the company or venture in which we invested may result in harm to our reputation or business or adversely affect the value of our investment.
We may not be able to successfully integrate acquired businesses or manage the operation of our internal businesses.
The integration of acquired businesses requires significant time and resources, and we may not manage these processes successfully. In addition to acquired businesses, we may integrate or manage differently certain of our internal businesses, integrate certain functions across our businesses, and restructure or cease operating certain assets or businesses, and we may do so in the future, including through divestitures. These actions are complex, costly, and create a variety of risks, including:
• disruption or harm to the businesses involved, or to our other businesses, including the need for management to spend time and attention on them;
• difficulty managing different company cultures, systems, processes, and human resource policies and practices, or implementing and maintaining effective internal controls, procedures, and policies;
• challenges retaining key personnel; and
• loss of travel service providers, restaurants, or other partners.
We may not successfully integrate companies or achieve the strategic, financial, or operating objectives of an acquisition or integration, any of which could adversely affect our business, results of operations, or financial condition.
Information Security, Cybersecurity, and Data Privacy Risks
Our processing, storage, use, and disclosure of personal data exposes us to risks of data breaches and could give rise to liabilities and/or damage our reputation.
We depend on software and computing infrastructure (including open source software) for the operation of our business. If threat actors are able to circumvent, interrupt, or adversely affect our security measures, including as a result of our own acts or omissions, it could result in a compromise or breach of consumer, partner, or employee data. Data security is essential to maintaining consumer and partner confidence in our services and the uninterrupted availability of our web and mobile platforms is essential for our business. With cyberattacks evolving and increasing in frequency and sophistication, we may not be able to successfullydefendagainst determined adversaries. In addition, our security policies and controls may not keep pace with the innovation of our offerings and technological advances of threat actors. Threat actors may exploit AI-based technologies to breach systems and weaponize AI to target our employees to gainunauthorized access to systems and data. Furthermore, the emergence of quantum technologies may enablethreat actors to overcome traditional encryption protocols and launch more sophisticated AI-enabled attacks at scale. We have experienced and responded to cyberattacks, which we believe have not had a material impact on the integrity of our systems or the security of data we maintain.
Vulnerabilities in our consumer and partner systems could and have resulted in unauthorized access to personal and confidential data. These risks are likely to increase as we expand our offerings, integrate our products and services, continue to incorporate AI, and store and process more data. The disclosure of sensitive Company, consumer, or other information through our systems or by our workforce or other parties could lead to information loss, reputational harm, monetary damages, regulatory penalties, or worse competitive positioning. We expend significant resources to protect against security breaches and to maintain or increase our security capabilities. Security breaches could result in damage to our reputation, expose us to risk of litigation and liability, subject us to regulatory penalties and sanctions, or cause consumers to lose confidence in us, any of which could have an adverse effect on our brands, competitive positioning, results of operations, and financial condition. Our efforts to protect information from unauthorized access have and could in the future result in the rejection or delay of legitimate attempts to book reservations through our services, which could result in lost business. Additionally, our consumers' personal data has in the past and could in the future be affected by inadvertent disclosure to, or security breaches at, our partners or other third parties upon which we rely.
We receive and store a large volume of personally identifiable data and payment information. The handling and storage of such data, as well as privacy rights of consumers, are subject to complex and evolving laws and regulations. While we invest significant resources to comply with regulations such as the EU's General Data Protection Regulation ( "GDPR"), the California Consumer Privacy Act ("CCPA"), the Personal Information Protection Law in the People's Republic of China, the Digital Personal Data Protection Act in India, and the EU Digital Markets Act ("DMA"), they are complex, subject to uncertain interpretation, and impose significant compliance obligations and costs on us. For example, under the GDPR violations could result in fines of up to 20 million Euros or up to 4% of the annual global revenues of the infringer, whichever is greater. In many cases, these laws apply not only to third-party transactions, but also to transfers of information between us and our subsidiaries, including employee information. These laws and their interpretations continue to develop and may be inconsistent from jurisdiction to jurisdiction. Some of these regulations give consumers a private right of action against companies for certain allegedviolations of cybersecurity requirements. Non-compliance with these laws could result in damage to our reputation, significant penalties, or other liability. If laws or regulations are expanded to require changes in our business practices, or interpreted in ways that negatively affect our business, our results of operations, financial condition, or competitive position could be adversely affected.
Cyberattacks, system vulnerabilities, or inadequate system capacity could lead to sustained service outages, data loss, reduced revenue, increased costs, liability claims, or harm to our competitive position.
If our systems cannot cope with the level of demand required to service our consumers and partners, we could experience unanticipateddisruptions in service, slower response times, decreased customer service and customer satisfaction, and delays in the introduction of new services. While we maintain redundant systems and hosting services, they may not be sufficient to prevent interruptions. Moreover, while we maintain insurance policies to protect against potential losses caused by security breaches, our insurance policies may not be adequate to reimburse us for losses. We are dependent on connectivity and mobile systems throughout the world. Disruptions in connectivity could materially adversely affect our business and results of operations.
We have hardware for operating our services located in hosting facilities around the world. Although we have disaster recovery plans, these systems and operations are vulnerable to damage or interruption and such disaster recovery plans may not be fully effective or cover us in every region. If such events were to occur, we may not be able to recover our back-up systems in a timely manner and it could result in lengthy interruptions or delays in our services. Any system failure that causes an interruption or delay in service could damage our brands, increase customer service costs, or result in lost business for an extended period of time, any of which could adversely affect our business and results of operations. We seek to improve the reliability and redundancy of our systems, however, these steps are expensive, may reduce our margins, and may not be successful in reducing the frequency or duration of unscheduleddowntime.
We have experienced targeted and organized malware, phishing, and account takeover attacks, and may in the future experience these and other forms of attack such as ransomware, SQL injection (where a third party attempts to insert malicious input in order to gain control of the system), and attempts to use our websites as a platform to launch a denial-of-service attack on another party. Our existing security measures have not always been, and in the future may not be, successful in preventing attacks. For instance, we have incurred costs related to customer reimbursement and customer service, reputational harm, and lost revenue from fictitious listings and account takeovers. Our existing IT business continuity and disaster recovery practices are less effectiveagainst certain types of attacks, which could result in interruption of our services, data exposure, and extortion attempts. Reductions in the availability and response time of our services could cause loss of substantial business volumes and measures we may take to divertsuspect traffic could result in the diversion of bona fide customers. These issues are more difficult to manage during any expansion of the number of places where we operate and the variety of services we offer, and as the tools and techniques used in such attacks, such as Gen AI or agentic AI become more advanced. We use advanced technology to identify cybersecurity threats; however, cyberattacks may go undetected for a period of time resulting in harm to our computer systems and the loss of data. This could result in regulatory fines, loss of consumers or partners, and reputational harm, among other costs. Successful attacks could result in significant interruptions to our operations, severedamage to our information technology infrastructure, reputational harm, and prevent consumers from using our services, any of which could have a negative effect on the value of our brands, competitive positioning, business, and results of operations.
We use both internally-developed and third-party systems to operate our services, including transaction processing, order management, and financial and accounting systems. If the number of consumers using our services increases substantially, or if critical third-party systems stop operating as designed, we may need to repair, expand, replace, or upgrade our systems. If we are unable to meet demand in a timely manner, it could have a negative impact on our business. Many of our processes and systems are highly automated and involve multiple inputs, which can mitigate the risk of human error but can also make testing, troubleshooting, and auditing more difficult.
Our business relies on a global supply chain of third-party services providers and we are exposed to risks because we rely on the resilience, security, and legal compliance of their products and services.
We rely on third-party computer systems and third-party service providers, including GDSs and computerized central reservation systems of the accommodation, rental car, and airline industries in connection with providing some of our services. Any damage to, breach of, or interruption in these third-party services and systems or deterioration in their performance could prevent us from booking related reservations and have an adverse effect on our business, brands, and results of operations. Third-party business partners, service providers, and consultants may be given access to our computer networks. A cyberattackagainst one of these third parties that compromises their credentials may result in unauthorized access to our systems and data. Furthermore, our agreements with some third-party service providers do not provide recourse for service interruptions, and such service interruptions could have a negative impact on our business and results of operations.
Any publicized privacy and security problems could negatively affect consumers' or partners' willingness to use our services. Some of our business is conducted with third-party marketing affiliates, which may generate travel reservations through our infrastructure or through other systems. A security breach at any third party that we conduct business with could be perceived by consumers or partners as a security breach of our systems and could subject us to notification requirements and regulatory penalties, damage our reputation, and expose us to risk of loss or litigation, even if we had no direct involvement in the breach. In addition, such third parties may not comply with applicable disclosure requirements, or with parameters within which we permit them to process data, which could expose us to liability.
We depend upon third parties to process payments, including credit cards, or to provide credit card numbers for payment for our merchant transactions. If any such third party were compromised or ceased or suspended operations, our cash flows could be disrupted or we may not be able to generate merchant transactions (and related revenues) for a period of time and this could have a negative effect on our revenues, business, reputation, and results of operations and, in certain cases (such as insolvency of a partner), the loss of the total transaction value.
Tax Risks
We may have exposure to additional tax liabilities.
We are subject to various taxes around the world. Although we believe our tax filing positions are reasonable and comply with applicable law, we regularly review them and may change our positions or determine that previous positions should be amended, either of which could result in additional tax liabilities. The final determination of tax audits or disputes may be different from what is reflected in our historical tax provisions and accruals. We have been audited in many taxing jurisdictions. If audits find that additional taxes are due, we may be subject to incremental tax liabilities, possibly including interest and penalties, which could have a material adverse effect on our results of operations, financial condition, and cash flows. An unfavorable outcome or settlement of pending litigation or audit proceedings could encourage the commencement of additional litigation, audit proceedings, or other regulatory inquiries.
Governments have sought to increase tax revenues, which has contributed to an increase in audit activity, more aggressive positions taken by tax authorities, more time and difficulty to resolve audits or disputes, and an increase in new tax legislation. Additional taxes or other assessments may be in excess of our current tax provisions or may require us to modify our business practices in order to reduce our exposure to additional taxes going forward, any of which could have a material adverse effect on our business, results of operations, and financial condition.
The U.S. Tax Cuts and Jobs Act (the "Tax Act") introduced a tax on 50% of global intangible low-taxed income ("GILTI") and a base erosion and anti-abuse tax. The One Big Beautiful Bill Act (the "BBB Act") enacted in July 2025 made changes to certain international, foreign tax credit, and domestic tax provisions in the U.S. effective in 2025 and 2026. In addition, the U.S.'s Inflation Reduction Act includes a 15% corporate minimum tax on book income and a 1% excise tax on stock repurchases. The interpretation and implementation of the Tax Act, the BBB Act, the Inflation Reduction Act, and other tax legislation could have a negative impact on our results of operations and cash flows. Increases in the U.S. corporate income tax rate, increasing the percentage of GILTI subject to tax in the U.S., or other changes to U.S. federal tax laws could have a negative impact on our results of operations and cash flows.
Certain countries or regulatory authorities have introduced or are considering digital services taxes that may apply to us even if we have no physical presence and are generally not subject to income tax in those jurisdictions. These digital services taxes are calculated as a percentage of revenue rather than income or profits. The interpretation and implementation of the various, and at times inconsistent, digital services taxes could adversely impact our results of operations and cash flows, and if they do not apply to our competitors, could harm our business and competitive position.
There have been significant changes made and proposed to international tax laws that increase the complexity, burden, and cost of tax compliance. The Organisation for Economic Co-operation and Development ("OECD") is focused on tax reform to ensure international tax standards keep pace with changes in global business practices, which could result in tax changes. We continue to monitor the impact of the OECD's tax reform initiatives as countries implement legislation and the OECD provides additional guidance. The implementation of these rules could have a negative impact on our results of operations or cash flows.
Changes in U.S. or international taxation of our activities, such as new definitions of permanent establishment, new nexus and profit allocation rules, or the combined effect of tax laws in multiple jurisdictions, may increase our worldwide effective tax rate, increase the complexity and costs associated with tax compliance, and adversely affect our cash flows and results of operations.
We are also subject to other non-income-based taxes, such as value-added taxes ("VAT"), payroll, sales, use, excise, net worth, property, hotel occupancy, and goods and services. We refer generally to taxes on travel transactions (e.g., value-added taxes, sales taxes, excise taxes, hotel occupancy taxes, etc.) as "travel transaction taxes." Changing value-added tax regulation such as the VAT in the digital age proposal in the EU could increase complexity and costs associated with compliance. Additionally, from time to time, we are under audit or investigation by tax authorities or involved in legal proceedings related to these non-income-based taxes or we may revise our tax positions, which may result in additional non-income-based tax liabilities.
A number of jurisdictions have initiated lawsuits or other proceedings against OTCs, including us, related to, among other things, the payment of certain travel transaction taxes that could include historical taxes that are claimed to be owed, interest, penalties, punitivedamages, and/or attorney's fees and costs. Additional jurisdictions may assert that we are subject to travel transaction taxes and could seek to collect such taxes, either retroactively, prospectively, or both. We continue to defendagainst these lawsuits and, where appropriate, intend to continue to assert that we should not be subject to such taxes. Although we believe we do not owe the taxes claimed in these lawsuits, litigation is uncertain, and if there was an adverse outcome in
these lawsuits or similar litigation in other jurisdictions, it could result in liabilities for past and/or future bookings, and it could have an adverse effect on our business, reputation, profit margins, and results of operations. Jurisdictions could also seek to amend their tax statutes in order to collect travel transaction taxes from us on a prospective basis.
We may not be able to maintain our "Innovation Box Tax" benefit.
The Netherlands corporate income tax law provides that income generated from qualifying innovative activities is taxed at the rate of 9% ("Innovation Box Tax") rather than the Dutch statutory rate of 25.8%. A portion of Booking.com's earnings historically qualified for Innovation Box Tax treatment. Should this benefit be reduced or eliminated, it could substantially increase our effective tax rate and adversely impact our results of operations and cash flows.
Legal, Regulatory, Compliance, and Reputational Risks
Our business is subject to various competition, consumer protection, and online commerce laws and regulations around the world, and as the size of our business grows, scrutiny of our business in these areas may intensify.
We are subject to competition and consumer protection laws and regulations around the world. These laws and regulations evolve, and their interpretation, application, and enforcement can also change, be unpredictable, or be affected by changing political or social pressures. As we expand our business into new areas, including building the Connected Trip vision and integrating Gen AI into our offerings, we may become subject to additional laws and regulations. We have been the subject of investigations or inquiries by national competition authorities ("Competition Authorities") and other governmental authorities regarding competition law matters, consumer protection issues, and other areas. For example, we are involved in investigations related to whether certain of Booking.com's arrangements with accommodation providers are anti-competitive, including with respect to issues like contractual parity, pricing tools or programs offered to partners, or the ranking criteria used in displaying results to consumers. See Note 16 to our Consolidated Financial Statements for information regarding certain legal proceedings in which we are involved. To resolve certain of the proceedings or investigations we have been or are involved in, we have made commitments regarding future business practices or activities including related to our parity arrangements, the information we provide about our search results ranking, and how we display prices, discounts, and popularity and availability statements. Though we have taken steps to comply with such commitments, investigating authorities or third parties may assert that our measures are insufficient and may pursue further action or seek other remedies. We cooperate with regulators but are unable to predict what, if any, effect any investigations or their resolution, including the effect of any commitments we might make, will have on our business, industry practices, or online commerce more generally. An unfavorable outcome in an investigation could encourage additional regulatory inquiries that could become widespread over time, significantly increasing the potential financial and reputational impact on us. To the extent that investigations or inquiries result in additional commitments, changes to our business practices, negative publicity, fines, damages from private litigation, or other remedies, it could have a material adverse effect on our business, financial condition, and results of operations.
Competition and consumer-law-related investigations, legislation, judgments, or issues have in the past resulted in and could in the future result in private litigation. We are currently involved in such litigation and aware of such potential litigation. For example, a Dutch consumer group has filed a claim against Booking.com relating to the historical use of contractual parity provisions, as well as allegations that Booking.com and Agoda employed misleading practices, and we are aware of similar efforts to pursue potential claims in other jurisdictions. See Note 16 to our Consolidated Financial Statements for more information regarding this and other such claims or potential claims. Class action litigation can be time-consuming, costly, and unpredictable, regardless of merit, and there may be evolving jurisprudence and less experience with such matters in certain of the geographies where we are or may be involved in such litigation, making outcomes less certain and harder to forecast. If we were to be found liable, it could result in, among other things, payment of damages, commitments to change certain business practices, or reputational damage, any of which could harm our business, results of operations, brands, or competitive position.
There is significant legislative and public focus on the technology industry, especially as technology companies become larger. In some instances, countries have passed legislation that goes further to restrict business activities than actions taken by Competition Authorities or other regulatory authorities. The EU's Platform to Business Regulation regulates the relationship between online platforms such as Booking.com and European business users of online platforms. The DMA and DSA give EU regulators more instruments to investigate and regulate digital businesses and impose additional rules and requirements on platforms designated as "gatekeepers" under the DMA and online platforms more generally, with separate rules for "Very Large Online Platforms" ("VLOPs") under the DSA. As a result of our designation as a gatekeeper under the DMA and Booking.com's designation as a VLOP under the DSA, we are subject to additional rules and regulations that may not be applicable to our competitors. For example, Booking.com has implemented changes to address the DMA prohibition on parity arrangements in the European Economic Area and the requirements regarding the usage of data across services, which could adversely impact our business. As a gatekeeper, we also established a compliance function to monitor compliance with the DMA. Under the DSA, as a VLOP, Booking.com is required to collect more information from partners, which could disincentivize certain partners from using our services. Booking.com is also subject to additional scrutiny, obligations, and costs, such as payment of an annual supervisory fee, annual risk assessments and independent audits, and maintaining a compliance function. The DMA and DSA each have significant penalties for non-compliance, and could lead to private litigation. Our compliance costs have increased in connection with becoming subject to the DMA and DSA, each of which remains subject to further interpretation and regulatory engagement, and could require additional changes to our products, business practices, and compliance activities. If future
legislation utilizes a "gatekeeper" or VLOP designation to extend its scope, we could be subject to further regulations, restrictions, or compliance or other obligations that are not applicable to our competitors.
The EC designates VLOPs based on a platform's number of EU "monthly active recipients" ("MARs"). The EC requires counting users who display and to whom information was displayed (e.g., partners and consumers), even if a user does not make a transaction on the platform. The assessment of MARs and any other similarly published information by our brands represents an estimate based on the data available to us and limited guidance, and is subject to limitations. Any such estimate is published solely as required by applicable rules or regulations, may be inaccurate, and should not be used for any other purpose.
New laws and regulations could impact our services, require us to change our business practices, and impose additional complexity and costs. As market conditions change as a result of investigations, litigation, legislation, changing public perception of the industry, or political or social pressure, we may decide to modify our business practices beyond what is required, the full effects of which may not be known when making the decision, but which could harm our competitive position and adversely affect our business and results of operations. One area of potential regulatory inquiry, for instance, involves contractual restrictions such as online search term bidding restrictions. If these or other restrictions are held to be illegal or otherwise unenforceable, or if we remove them from our contracts, it could negatively impact our business.
With additional attention on the size of travel or technology companies generally, our size and competitive position may negatively affect our ability to obtain regulatory approval of proposed acquisitions or other opportunities, our ability to expand into complementary businesses, or our latitude in dealing with travel service providers (such as by limiting our ability to provide discounts, rebates, or incentives or to exercise contractual rights), any of which could adversely affect our business, results of operations, or ability to grow and compete.
Regulatory and legal requirements and uncertainties could subject us to business constraints, increased compliance costs and complexities, or otherwise harm our business.
Legal requirements of governments and regulatory authorities, many of which are evolving and subject to revised interpretations, impact our ability to provide our services and can result in private litigation. For example, we offer optional rental car-related insurance products to customers protecting them againstaccidentaldamage to their rental vehicles, optional room and flight cancellation insurance products, and we intend to offer additional trip-related insurance products in the future, which subjects us to insurance distribution regulations and related increased compliance costs and complexities, any of which could negatively impact our business and results of operations. Increases in the number or complexity of the laws and regulations applicable to us and our businesses could increase our compliance costs and burdens and negatively affect our business and results of operations.
Laws in some countries relating to data localization, registration as a travel agent, and other local requirements could, if applicable to us, adversely affect our ability to conduct business in those countries. For example, in the EU and the United Kingdom, the Package Travel Directive and other local laws governing the sale of travel services (the "Package Directive") require local registration, certain mandatory financial guarantees and disclosure, and other rules regulating the provision of single travel sales, travel packages, and linked travel arrangements, and certain liability for performance of the services. Some parts of our business are already subject to the Package Directive, and as our offerings diversify and expand, we may become subject to additional requirements. Compliance with this directive could be costly and complex and, as a result of its requirements, we could choose to limit offerings that would otherwise be beneficial for the business. Further, the Package Directive is under legislative reform, and changes to its interpretation could be costly or complex, which may adversely affect our business, results of operations, and ability to grow and compete.
The implementation of unfavorable regulations or unfavorable interpretations of existing regulations by judicial or regulatory bodies could require us to incur significant compliance costs, cause the development of the affected markets to become impractical and otherwise have an adverse effect on our business and results of operations.
Compliance with requirements of multiple jurisdictions increases our cost of doing business. Global laws, regulations, and changing social, political and public policies, which sometimes conflict, impact a wide range of subjects, including the digital marketplace regulations, and laws prohibiting corrupt payments to governmental officials or third parties, data privacy requirements, emerging regulations governing the development, marketing, and use of AI, labor relations laws, non-discrimination, human rights or anti-human trafficking laws, tax laws, competition laws, export controls, sanctioned country or sanctioned persons mandates, sustainability, and consumer protection laws. Violations of these laws and regulations have resulted and in the future could result in fines, penalties, and criminal sanctions against us, our officers, or our employees and prohibitions on how or where we conduct business. In certain jurisdictions the basis of assessing damages is changing, which may make it difficult to estimate what such fines and penalties would amount to if successfully asserted against us. Violations could delay or prevent potential acquisitions and could materially damage our reputation, brands, global expansion efforts, ability to attract and retain employees and business partners, business, and operating results. Even if we comply with these laws and regulations, doing business in certain jurisdictions or violations of these laws and regulations by the parties with which we conduct business could harm our reputation and brands, which could adversely affect our results of operations. We could also face difficulties transferring funds from or converting currencies in certain countries. In addition, if these restrictions are not applicable to competitors, it may provide them a competitive advantage.
Additionally, our employees in certain countries are represented by works councils and/or trade unions. We are required to consult with works councils on certain matters (such as our Transformation Program), acquisitions and divestitures, and other matters that could impact our labor force. Consultation may not be completed on terms satisfactory to us and could result in increases in our cost of labor, diversion of management's attention away from operating our business, delays in certain initiatives, and expose us to claims and litigation.
We have made efforts and expect to make further efforts to integrate access to travel services across our various brands. These changes add complexity to legal and tax compliance and our internal controls, and our size and operating history may increase the likelihood that we will be subject to regulatory scrutiny or audits by tax authorities.
There are various risks associated with the facilitation of payments, including risks related to fraud, compliance with evolving rules and regulations, and reliance on third parties.
Our results have been and will likely continue to be negatively impacted by consumer purchases made using fraudulent payment cards, claims the consumer did not authorize the purchase, or consumers who have closed bank accounts or have insufficient funds in their bank accounts to satisfy payments. We may be held liable for fraudulent transactions on our platforms, as well as other payment disputes. Accordingly, we calculate and record an allowance for resulting chargebacks. If we are unable to successfully implement and evolve measures to detect and reduce the risk of fraud on our platforms, our business, profit margins, results of operations, and financial condition could be materially adversely affected.
We process the majority of our transactions on a merchant basis where we facilitate payments from travelers through payment cards and other payment methods. While processing transactions on a merchant basis allows us to offer a variety of payment methods and flexible transaction terms, we incur additional payment processing costs (which are typically higher for foreign currency transactions) and other costs related to these transactions, such as costs related to managing and detecting fraudulent payments and transactions. These costs may increase as we expand our payments services to consumers and partners, and our results of operations and profit margins could be materially adversely affected.
As a greater percentage of our transactions involve us processing payments, our global systems and processes must be managed on a larger scale, which adds complexity, administrative burdens and costs, and increases the demands on our systems and controls, which could adversely affect our results of operations. In addition, as our payment processing activities develop or expand into different geographies, we are subject to additional regulations, including financial services and export controls regulations, which would result in increased compliance costs and complexities, including those associated with the implementation of new or advanced internal controls. Compliance with and implementation of the EU's Payment Services Directive 2 and similar or successor legislation such as the EU's Payment Services Directive 3 and Payment Services Regulations may be difficult to adhere to in a timely manner or at all and may result in increased compliance costs, and be administratively burdensome, any of which could negatively impact our business and results of operations.
Regulators (or we) may determine, and in some cases are likely to determine, that certain aspects of our business are subject to laws that govern payments activities, such as money transmission and online payments processing, which could require us to obtain licenses to continue to operate in certain jurisdictions or result in modification or interruption of our business plans, which would materially adversely affect our business and results of operations. We have invested and will need to continue to invest substantial resources to comply with applicable laws and regulations, and failure to maintain compliance with applicable licensing requirements, payment services, customer fund safeguarding, or related regulations could lead to fines, which could be significant, or require us to modify or interrupt our business practices, plans, or operations, any of which could negatively impact our business, results of operations, and profit margins. Certain of our subsidiaries that provide payment services in support of our brands are subject to licensing and regulations that impose notice and approval obligations on investors that seek indirect or direct ownership, in the aggregate, of 10% or more of our outstanding shares. Regulations relating to operational resilience, including the EU's Digital Operations Resilience Act, consumer protection, privacy, and security of our processes also apply to us. Further, our payments systems are susceptible to illegal and improper uses, including money laundering, terrorist financing, fraudulent sales of goods or services, and transactions by or with sanctioned parties.
We are also subject to payment card association rules and obligations under our contracts with the card schemes and our payment card processors, and indirectly to the rules of payment systems in respect of credit (i.e., account to account) transfers. The rules of the card schemes and payment systems are often updated or interpreted in different ways, and we may need to adjust our systems and/or processes to comply with updated obligations. If we fail to comply with such obligations, we may be fined, required to pay additional processing fees, lose our ability to accept certain credit and debit card payments from our customers, or facilitate other types of online payments, any of which would negatively impact our business, operating results, and profit margins. Under card association rules, including the Payment Card Industry Data Security Standard (the "Standard"), if information is compromised, we could be liable to payment card issuers for associated expenses and penalties, and in some cases, we could be restricted in our ability to accept payment cards. Under certain circumstances in our agreements with the card schemes and in relation to the Standard, we are also subject to periodic audits, self-assessments, and other assessments of our compliance with the rules and obligations of the payment card associations and the Standard, which could result in additional expenses and administrative burdens. In addition, if we fail to follow the Standard, even if no consumer information is
compromised, we could incur significant fines or experience a significant increase in payment card transaction costs. Compliance with the Standard may not prevent all security incidents.
We rely on banks, card schemes, and other payment processors to execute certain components of the payments process. For inbound payments, we pay these third parties interchange and other processing and gateway fees to facilitate payments from consumers to travel service providers. If we are unable to maintain our relationships with these third parties on favorable terms, fees are increased, or if we provide security, our profit margin, business, and results of operations could be harmed. Additionally, if these third parties experience service disruptions or if they cease operations, consumers and travel service providers could have difficulty making or receiving payments, which could adversely impact our reputation, business, and results of operations.
In addition, in the event that one of our major travel service providers declares bankruptcy or otherwise ceases or limits operations, we could experience an increase in chargebacks from customers with travel reservations with such travel service provider and we could experience financial loss from certain prepayments made to such travel service provider if we are not able to recover the prepayments.
We face risks related to our intellectual property.
We rely on intellectual property such as trademarks, copyrights, patents, and trade secrets to support our business as well as domain names or other intangible rights or property secured through purchase, licensing or other agreements with our employees, travel service providers, partners, and other parties. We have filed applications for protection of certain aspects of our intellectual property, and we currently hold a number of issued patents in several jurisdictions. In the future we may acquire additional intellectual property portfolios, which could require significant cash expenditures. We have licensed and may in the future license certain of our proprietary rights to third parties, and these licensees may take actions that diminish the value of our proprietary rights or harm our reputation. Additionally, we periodically use open source software in connection with our software development, which use could subject us to claims of ownership from other parties of what we believe to be open source software or non-compliance with open source licensing terms, or require us to disclose our proprietary source code. Further, there is uncertainty about the validity and enforceability of intellectual property rights related to our use of Gen AI. Effective intellectual property protection may not be available in every country in which our services are made available, particularly in certain jurisdictions in which theft of intellectual property may be more prevalent. We may be required to expend significant time and resources to prevent infringement or to enforce our intellectual property rights.
We endeavor to defend our intellectual property rights diligently, but intellectual property litigation is expensive and time-consuming and may divert management from business objectives. We may not be able to successfullydefend our intellectual property rights or our intellectual property rights may not be sufficient, which could adversely affect our business, brands, and results of operations.
From time to time, in the ordinary course of our business, we may be subject to legal proceedings and claims relating to the intellectual property rights of others. Successfulinfringementclaimsagainst us could result in a significant monetary liability, halt our operations, or necessitate costly business practices changes or the development of non-infringing alternatives. In addition, resolution of claims may require us to obtain licenses to intellectual property rights belonging to third parties, which may be expensive to procure, or require us to cease using those rights altogether. Any of these events could have an adverse effect on our business, results of operations, and financial condition.
We face risks relating to our environmental and social objectives, including climate-related commitments we have made that require us to invest effort, resources, and management time, and failing to meet those objectives may adversely impact our reputation, employee retention, and willingness of customers and partners to do business with us.
Environmental and social matters are an area of evolving focus among our stockholders and other stakeholders, including customers, partners, employees, governments, regulators, and non-governmental organizations, and business partners and vendors. We have invested in various initiatives regarding matters such as environmental sustainability, inclusion, and human rights, but such initiatives are costly and may not have the desired effect. For example, we have made climate-related commitments through our Climate Action Plan and continue to evaluate whether we, our partners, and our vendors are able to meet evolving sustainability and other standards, particularly as AI-related energy consumption increases. We may need to invest significant effort and resources relating to required environmental and social disclosures, and inconsistent and uncertain regulations may lead us to revise or discontinue our commitments or how we measure and report data. In addition, regulatory developments regarding sustainability labeling have resulted and could result in further changes to, or the discontinuation of, environmental and social programs or objectives.
If our environmental and social practices and disclosures do not meet evolving investor or other stakeholder expectations or regulatory requirements, then our reputation, ability to attract or retain employees, and our attractiveness as an investment or business partner could be negatively impacted. Similarly, our failure or perceived failure to pursue or fulfill environmental and social related objectives, comply with divergent expectations or requirements across geographies, or satisfy complex and potentially contradictory reporting obligations could expose us to government enforcement actions, private litigation, and actions by stockholders or stakeholders, and adversely impact our business, brands, or reputation.
Regulations and policies impacting the way corporations use cookies and other online tracking technologies could negatively impact the way we do business.
There are several privacy-driven initiatives that are changing the collection and use of consumer data in the digital marketing ecosystem. These include: requirements by browsers such as Safari and Google Chrome to require opt-in consent for third-party cookies; restrictions on the use of the identifier for advertisers (such as the Apple "IDFA") by mobile device manufacturers; Apple's iCloud+ Private Relay (which hides a user's IP address from websites that the user accesses in favor of other IP addresses provided by Apple's partners); and the adoption of regulations that govern the use of cookies. For example, in the EU, the ePrivacy Directive regulates the use of cookies and similar technologies, including limitations on the use of data and guidelines for enabling users to accept or reject cookies. Authorities may assert, and in some cases are likely to determine, that our collection, use, or management of customer and other data is inconsistent with laws and regulations, including laws that apply to cookies or similar technology, and there may be significant penalties for non-compliance. In the EU, the ePrivacy Directive is implemented in national laws as a result of which different interpretations and requirements apply on a country by country basis. EU regulators continue to issue guidance concerning the ePrivacy Directive's requirements regarding the use of cookies and similar technologies and may impose specific measures which could impact our use of such technologies. In addition, the ePrivacy Directive and national implementation laws impose additional limitations on the use of data across messaging products and include significant penalties for non-compliance. In the U.S., disclosure requirements and limitations may apply to the use of certain cookies and other online tracking technologies deemed to be sales of personal information under the CCPA or other state laws. If these initiatives or regulations impair our ability to serve customers or if we are less effective than our competitors in addressing these issues, our ability to improve performance on our platforms, business, competitive position, and results of operations could be adversely affected. Further, failure or perceived failure to comply with evolving privacy regulations, guidance, and interpretations could result in significant fines, government enforcement actions, private litigation, and harm to our business, results of operations, or reputation.
Financial Risks
Our liquidity, credit ratings, and ongoing access to capital could be materially and negatively affected by global financial conditions and events.
Our continued access to sources of liquidity depends on multiple factors, including global economic and financial market conditions, the availability of sufficient amounts of financing, our ability to meet debt covenant requirements, our operating performance, and our credit ratings. Increased volatility in financial and securities markets will generally make access to capital less certain. Further, if our credit ratings were to be downgraded or if financing sources were to ascribe higher risk to our rating levels, our industry or us, our access to capital and the cost of any financing would be negatively impacted. We currently have $2 billion available under our revolving credit facility, which contains certain financial covenants that we need to comply with in order to access such liquidity. There can be no assurance that we will be able to meet the covenant requirements at any particular time. The lenders have the right to require repayment of any amounts borrowed under the facility if we are not in compliance.
There is no guarantee that additional debt financing will be available in the future on commercially reasonable terms or at all, in which case we may need to seek other sources of funding. In addition, the terms of future debt agreements could include more restrictive covenants, which could restrict our business operations.
We are exposed to fluctuations in foreign currency exchange rates.
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 (principally related to Euros and British Pounds Sterling). When the U.S. Dollar strengthensagainst other currencies in which we transact, our foreign-currency-denominated net assets, gross bookings, revenues, operating expenses, and net income are lower as expressed in U.S. Dollars. When the U.S. Dollar weakensagainst other currencies in which we transact, our foreign-currency-denominated net assets, gross bookings, revenues, operating expenses, and net income are higher as expressed in U.S. Dollars. Foreign currency exchange rate fluctuations on transactions denominated in currencies other than the functional currency result in gains and losses that are reflected in our financial results.
Significant fluctuations in foreign currency exchange rates can affect consumer travel behavior. Consumers traveling from a country whose currency has weakenedagainst other currencies may book lower ADR accommodations, choose to shorten or cancel their international travel plans, or choose to travel domestically rather than internationally, any of which could adversely affect our gross bookings, revenues, and results of operations.
Our stock price is highly volatile.
The market price of our common stock is highly volatile and subject to fluctuations in response to factors such as:
• financial or operating results that vary from expectations, changes in expectations as to our future financial or operating performance, or changes in our capital structure;
• worldwide political and economic conditions, including the effects of inflation, changes in interest rates, market volatility, or fluctuations in foreign currency exchange rates, particularly between the U.S. Dollar and the Euro;
• occurrence of a significant security breach or business interruption;
• impact of our share repurchase and dividend programs;
• changes in market valuations of other technology, e-commerce, or travel companies, or announcements of significant business or operational changes by us or our competitors;
• announcements of Gen AI developments or related product launches, particularly relating to agentic capabilities;
• initiation of significant litigation or regulatory proceedings against us or adverse developments in pending proceedings;
• lack of success in expanding our business; and
• additions or departures of key personnel.
Sales of a substantial number of shares of our common stock could adversely affect the market price of our common stock by introducing a large number of sellers or short sellers to the market. In addition, fluctuations in our stock price and our price-to-earnings multiple may have made or may make our stock attractive to momentum, hedge, or day-trading investors, which could exacerbate price fluctuations.
The market for technology stocks or the stock market in general has experienced extreme price and volume fluctuations, which has caused, and may cause in the future, a decrease in the market price of our common stock due to a number of factors, many of which are out of our control. To the extent that the public's perception of the prospects of technology, e-commerce, or travel companies is negative, our stock price could decline, regardless of our operating results or financial performance.
In the past, we have been a defendant in securities class action litigation. If our stock price declines or is volatile, it could increase the chances that we become the target of securities class action litigation, which could result in substantial costs and divert management's attention and resources, either of which could adversely affect our business, financial condition, and results of operations.
We face increased risks if the level of our debt increases.
We have a substantial amount of outstanding indebtedness and we may incur substantial additional indebtedness in the future. Our indebtedness may have significant consequences, which may be amplified if our cash flow and earnings decrease, and could include:
• requiring the dedication of a portion of our cash flow from operations to service our indebtedness, thereby reducing the amount of cash flow available for other purposes;
• increased vulnerability to downturns in our business, competitive pressures, and adverse changes in general economic and industry conditions, and less flexibility when planning for or reacting to changes in our business and industry; and
• decreased or lost ability to obtain additional financing on terms acceptable to us.
Our ability to make payments of principal and interest on our indebtedness depends upon our future performance, which is subject to many factors beyond our control. Further, we may not have access to equity or debt markets or other sources of financing, or such financing may not be available to us on commercially reasonable terms, to repay or refinance our debt as it comes due. Our ability to make share repurchases and the payment of dividends rely on our access to capital, which depends on cash flow generated by our business and the availability of financing.
The value of our investments could decline, which could adversely affect our financial condition and results of operations.
We maintain an investment portfolio, which typically includes marketable debt securities and equity securities of publicly-traded companies, the values of which are subject to market price volatility, and investments in private entities. Credit losses, impairments, and changes in the fair values of our investments could be volatile and they have had, and are likely to continue to have, a significant impact on our quarterly net income (or loss).
Our investments in private entities are inherently risky in that such companies are typically at an early stage of development, may have no or limited revenues, may not be or ever become profitable, may not be able to secure additional funding, or their technologies, services, or products may not be successfully developed or introduced to the market. Further, our ability to liquidate any such investments is typically dependent on a liquidity event as no public market exists for such securities. Valuations of privately-held entities are inherently complex and uncertain due to the lack of a liquid market for such securities. We could lose the full amount of any of our investments, and impairment of our investments could have a material adverse effect on our financial condition and results of operations.
benefited
In the fourth quarter of 2025, global room nights increased 9% year-over-year. We saw healthy travel demand across all our major regions in the fourth quarter of 2025.
While the geopolitical and macroeconomic environment can impact global travel demand, we believe our diversified global portfolio of leading travel brands, flexible platforms, and strong financial position helps us to navigate a range of scenarios. We continue to take a long-term view, staying focused on delivering value to our travelers and partners, maintaining disciplined cost management, and making strategic investments as appropriate.
Quarterly Room Nights and Change versus the prior year (1)
Full Year Room Nights and Change versus the prior year (1)
(1) Room night growth rates are rounded for presentation purposes.
The cancellation rate in 2025 was lower than the prior year. 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.
In 2025, our global average daily rates ("ADRs") on a constant currency basis were about in line with the prior year. Our global ADRs were slightly negatively impacted by a higher mix of room nights in Asia, which is a lower ADR region. Excluding the changes in regional mix, our global ADRs on a constant currency basis were up approximately 1% year-over-year, driven primarily by higher ADRs in Europe.
We focus on relentless innovation to grow our business by providing a best-in-class user experience with intuitive, easy-to-use platforms that aim to exceed the expectations of consumers. We are executing against our long-term strategy to create an ideal AI-powered traveler experience, offering our customers relevant options and suggestions 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 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.
Our mobile apps are an important platform for experiencing the Connected Trip since the app travels with the traveler. The mix of our room nights booked on our mobile apps in 2025 was a mid-fifties percentage, up from a low-fifties percentage in 2024. 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 them. 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.
We continue to expand our merchant service offerings as part of a broader strategy to provide more payment options to travelers and travel service providers, increase the variety of our accommodations, and enable our long-term Connected Trip strategy. These merchant services allow us to facilitate payments from travelers and offer secure, flexible transaction terms, such as varied payment forms, currencies, and timing. The mix of our total gross bookings generated on a merchant basis across the company was 70% in 2025, an increase from 63% in 2024 due to the ongoing shift from agency to merchant bookings at Booking.com. 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. In 2025, the incremental revenues from facilitating payments were greater than the associated incremental variable expenses.
We have established widely-used and recognized brands through marketing and promotional campaigns. Our total performance and brand marketing expenses, which are substantially variable in nature, were $8.2 billion in 2025, up 12.5% versus 2024 as a result of the year-over-year growth in travel demand and due to changes in foreign currency exchange rates. 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, meta-search, and social media channels to generate bookings through our platforms. Our brand marketing expenses are primarily related to costs associated with producing and airing digital branding and television advertising.
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 in some cases outside of our control. Such factors include ADRs, costs per click, cancellation rates, foreign currency exchange rates, search engine bidding algorithms, channel mix, our ability to convert paid traffic to booking customers, and the timing and effectiveness of our brand marketing and social media marketing campaigns. In 2025, our average ROI was down slightly year-over-year driven by changes in paid traffic mix and increased social media spend. 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 bookings we receive, and anticipated repeat rates. Marketing efficiency is also impacted by the extent to which consumers book directly with us. The mix of our total room nights booked by consumers coming directly to our platforms was a mid-fifties percentage in 2025, and was higher if we exclude the room nights booked through affiliate programs (i.e., business-to-business). The mix of total room nights booked by consumers coming directly to our platforms increased year-over-year, which benefited our marketing efficiency for 2025. 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. "
Booking.com had approximately 4.4 million total properties on its website at December 31, 2025, representing an increase from approximately 4.0 million total properties at December 31, 2024. At December 31, 2025, the total properties on Booking.com's website consisted of approximately 3.9 million alternative accommodation properties (including homes, apartments, and other unique places to stay) and approximately 500,000 hotels, motels, and resorts.
The mix of Booking.com's room nights booked for alternative accommodation properties in 2025 was approximately 36%, up versus approximately 35% in 2024. 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 these properties on Booking.com. We may experience lower profit margins due to additional costs from offering alternative accommodations, such as increased customer service or certain partner related costs. As our alternative accommodation business grows, these different characteristics may negatively impact our profit margins.
Although we believe that providing an extensive collection of properties, excellent customer service, and an intuitive, easy-to-use platform 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 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 important to offer travel services at a competitive price, whether through discounts, coupons, closed-user group rates or loyalty programs, increased flexibility in cancellation policies, or otherwise. Some of these initiatives, such as discounts, may result in lower ADRs and lower revenues as a percentage of gross bookings as they can reduce the daily room rate and are recognized as contra-revenue.
Over the long term, we intend to continue to invest in marketing and promotion, technology, and personnel, as well as exploring strategic alternatives such as acquisitions, within parameters consistent with efforts to improve long-term operating results. To create room for these investments, we intend to continue to look for ways to optimize our expenses.
In the fourth quarter of 2024, we began the implementation of organizational changes to improve operating expense efficiency, increase organizational agility, free up resources that can be reinvested into further improving our offering to travelers and partners, and better position our business for the long term (the "Transformation Program"). The Transformation Program resulted in approximately $250 million in savings in 2025. Given the stronger-than-expected early results of the Transformation Program, in the third quarter of 2025, we raised our expectation for the ultimate annual run-rate savings to a range of $500 to $550 million from our previous guidance of $400 to $450 million, as compared to our 2024 expense base. As of the end of 2025, we have enabled approximately $550 million in annual run-rate savings and we expect to realize these run-rate savings by the end of 2026. We expect that the restructuring costs and accelerated investments related to the Transformation Program will largely be incurred by the end of 2026 and are estimated to be, in the aggregate, less than one times the expected annual run-rate savings.
Many taxing authorities seek to increase tax revenues and have targeted large multinational technology companies. Many jurisdictions, particularly in the EU, 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. Rates for these taxes range from 1.5% to 10% of revenues deemed generated in the jurisdiction. We record the applicable digital services taxes in "Sales and other expenses" in the Consolidated Statements of Operations. The recent One Big Beautiful Bill Act (the "BBB Act") changes certain international, foreign tax credit, and domestic tax provisions in the United States effective in 2025 and 2026. While the BBB Act did not result in a significant impact to our income tax expense or effective tax rate for 2025, we are evaluating the impact of the BBB Act and it could have a negative impact on our results of operations and cash flows as it relates to provisions that are not yet effective. See Part I, Item 1A, Risk Factors - " We may have exposure to additional tax liabilities. "
Increased regulatory focus on large technology companies could result in increased compliance costs or otherwise adversely affect our business. For example, we are subject to rules and regulations that may not apply to our competitors because the European Commission designated the Company as a "gatekeeper" and Booking.com as a "Very Large Online Platform" under the Digital Markets Act and the Digital Services Act, respectively. See Part I, Item 1A, Risk Factors - " Our business is subject to various competition, consumer protection, and online commerce laws and regulations around the world, and as the size of our business grows, scrutiny of our business in these areas may intensify " and Note 16 to our Consolidated Financial Statements.
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 (principally related to Euros and British Pounds Sterling). See Note 17 to our Consolidated Financial Statements for information related to revenues by geographic area. As a result of these movements, 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 approximately 13% in 2025 as compared to 2024, including a benefit of about 3% from changes in foreign currency exchange rates. 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. In addition, we may 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 Consolidated Statements of Operations. 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. See Notes 6, 12, and 18 to our Consolidated Financial Statements and Part I, Item 1A, Risk Factors - " We are exposed to fluctuations in foreign currency exchange rates. "
Critical Accounting Estimates
Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. See Note 2 to our Consolidated Financial Statements for our significant accounting policies. Certain of our accounting estimates are 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 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 goodwill and other long-lived assets, income taxes, and contingencies.
Valuation of Goodwill and other Long-lived Assets
We review long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The assessment of possible impairment is based upon the ability to recover the carrying value of the assets from the estimated undiscounted future net cash flows, before interest and taxes, of the related asset group. In the accounting for business combinations, the excess of the consideration transferred over the net of the amounts allocated to the identifiable assets acquired and liabilities assumed is recognized as goodwill. Goodwill is assigned to reporting units that are expected to benefit from the synergies of the business combination. When the composition of one or more reporting units is changed, goodwill is reassigned to the affected reporting units using a relative fair value approach. A substantial portion of our intangible assets and goodwill as of December 31, 2025 relates to the acquisitions of OpenTable and Getaroom.
We test goodwill for impairment on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. We test goodwill at a reporting unit level and our annual goodwill impairment tests are performed as of September 30.
The estimation of the recoverable values of asset groups and the fair values of our reporting units reflects numerous assumptions that are subject to various risks and uncertainties, including key assumptions regarding each reporting unit's expected growth rates and operating margin and with respect to matters outside of our control, such as discount rates and market comparables. Actual results could be materially different than the judgments and estimates used. Generally, changes in the assumptions used for comparable company multiples would result in directionally similar changes in the fair value and changes in the assumptions used for discount rates would result in directionally opposite changes in the fair value. Future events and changing market conditions may lead us to re-evaluate the assumptions used to estimate the fair values of our reporting units. Such changes may include travel service providers reducing or withdrawing from our services, generative AI betterenabling or offering alternatives for travel service providers to reach consumers, or competitors affecting our ability to market to and reach consumers in a cost-efficient way.
Impairment of Goodwill and Intangible Assets
As of September 30, 2025, we performed our annual goodwill impairment test. Except for the KAYAK reporting unit, the fair values of our reporting units exceeded their respective carrying values.
For the KAYAK reporting unit's goodwill, we recognized an impairment charge of $180 million for the three months ended September 30, 2025, resulting in an adjusted carrying value of $203 million at September 30, 2025. In addition, for the KAYAK asset group's intangible assets (trade names and supply and distribution agreements), we recognized an impairment charge of $277 million for the three months ended September 30, 2025. The impairments were primarily driven by a reduction in the forecasted cash flows for KAYAK, reflecting its meta-search business being impacted by expected increases in customer acquisition costs.
The estimated fair value of KAYAK was determined using a combination of standard valuation techniques, including an income approach (discounted cash flow) and a market approach (applying comparable company multiples). The income approach estimates fair value utilizing long-term growth rates and discount rates applied to the cash flow projections. An increase or decrease of one percentage point to the earnings before interest, taxes, depreciation and amortization ("EBITDA") growth rates used in the cash flow projections would result in an increase of approximately $45 million and a decrease of approximately $40 million, respectively, to the estimated fair value of KAYAK as of September 30, 2025. The discount rate is determined based on the reporting unit's estimated weighted-average cost of capital and adjusted to reflect the risks inherent in its cash flows, which require significant judgments. If the discount rate used in the income approach increases or decreases by 0.5%, the impact to the estimated fair value of KAYAK at September 30, 2025 ranges from a decrease of approximately $20 million to an increase of approximately $25 million. The market approach estimates value using prices and other relevant information generated by market transactions involving comparable publicly-traded companies, including the use of the EBITDA multiple. A change in the assumption used for the EBITDA multiple would result in a directionally similar change in the fair value.
At September 30, 2025, the fair values of KAYAK's trade names and supply and distribution agreements were $103 million and $76 million, respectively, estimated using an income approach. The key unobservable inputs used for these intangible assets include royalty rates, distributor margins, and supplier attrition rates (in the range of 2% to 5%, as applicable) and the useful lives of the trade names (20 years). Significant changes in any of these inputs in isolation would result in significantly different fair value measurements. Generally, a change in the assumption used for the royalty rate, distributor margin, and expected useful life would result in a directionally similar change in the fair value and a change in the assumption used for the attrition rate would result in a directionally opposite change in the fair value.
See Note 11 to our Consolidated Financial Statements for additional information.
Income Taxes
We determine our tax expense based on income and statutory tax rates applicable in the jurisdictions in which we operate. Due to the complex and dynamic nature of tax legislation, significant judgment is required in computing our tax expense and determining our tax positions. The U.S. Tax Cuts and Jobs Act (the "Tax Act") enacted in December 2017 made significant changes to U.S. federal tax law, including a one-time deemed repatriation tax imposed on accumulated unremitted international earnings. We do not intend to indefinitely reinvest our international earnings that were subject to U.S. taxation pursuant to the mandatory deemed repatriation or subject to U.S. taxation as global intangible low-taxed income (" GILTI ") .
We regularly review our deferred tax assets for recoverability considering historical profitability, projected future taxable income, the expected timing of the reversals of temporary differences, and tax planning strategies and record valuation allowances as required.
We are subject to ongoing tax examinations and assessments, and face challenges regarding the amount of taxes due from time to time. Although we believe that our tax filing positions are reasonable and comply with applicable law, we regularly review our tax filing positions, especially in light of tax law or business practice changes, and we may change our positions or determine that previous positions should be amended, either of which could result in changes to our tax liabilities. The final determination of tax audits or tax disputes may be different from what is reflected in our historical income tax provisions and accruals.
The evaluation of tax positions and recognition of income tax benefits require significant judgment and we consult with external tax and legal counsel as appropriate. We consider the technical merits of our tax positions along with the applicable tax statutes, related interpretations and precedents, and our expectation of the outcome of proceedings (or negotiations) with tax authorities. We recognize liabilities when we believe that uncertain positions may not be fully sustained upon audit by the tax authorities, including any related appeals or litigation processes. Liabilities recognized for uncertain tax positions are based on a two-step approach for recognition and measurement. First, we evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained based on its technical merits. Second, we measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. Interest and penalties attributable to uncertain tax positions, if any, are recognized as a component of income tax expense. The tax benefits ultimately realized by us may be different than what is recorded in the financial statements due to future events such as our settling a matter with tax authorities or our success in sustaining our tax positions.
See Notes 15 and 16 to our Consolidated Financial Statements for additional information.
Contingencies
Loss contingencies (other than income tax-related contingencies disclosed above) arise from actual or possible claims and assessments and pending or threatenedlitigation that may be brought against us. Based on our assessment of loss contingencies at each balance sheet date, a loss is recorded in the financial statements if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. If the amount of the loss cannot be reasonably estimated, we disclose information about the contingency in the financial statements. We also disclose information in our financial statements about reasonably possible loss contingencies.
The determination of whether a loss is probable and whether the amount of the loss can be reasonably estimated requires significant judgment and evaluation of all the underlying facts and circumstances including judgments about the potential actions of third-party claimants, regulatory authorities, and courts. Claims, assessments, and litigations involve significant uncertainties such as the complexity of the facts, the legal theories involved, the nature of the claims, the judgment of the courts, the applicable methodology for determining potential damages, and, in the case of class actions, whether a class action can be certified and members of the class choose to participate in the litigation.
For a contingency that might result in a gain, substantially all uncertainties about its realization should be resolved before it is recognized in the financial statements. Recoveries of costs and losses incurred in the past and recorded in the financial statements are recognized when the recovery is probable, reasonably estimable, and there is direct linkage to the loss event. Establishing direct linkage requires judgment and evaluation of all the underlying facts and circumstances, including the relationship between the recovery, the loss event, and the costs and losses incurred.
On a quarterly basis, we update our analysis and estimates considering available information, including the impact of negotiations, settlements, rulings, and advice of legal counsel. Changes in our assessment of whether a loss is probable, our estimate of the loss, or our determination of whether the amount of loss can be reasonably estimated could have a material impact on our results of operations and financial position. Changes in our assumptions regarding a particular matter or the effectiveness of our strategies related to legal and other proceedings could also have a material impact on our results of operations and financial position. For all loss contingencies, until a matter is finally resolved, there may be an exposure to loss in excess of the liability accrued for the matter and such amounts could be material. In a similar manner, gain contingencies and recoveries of costs and losses are also assessed on a quarterly basis.
See Note 16 to our Consolidated Financial Statements for additional information regarding certain contingencies.
Recent Accounting Pronouncements
See Note 2 to our Consolidated Financial Statements, which is incorporated into this Item 7 by reference.
Results of Operations
Year Ended December 31, 2025 compared to Year Ended December 31, 2024
Operating and Statistical Metrics
Our financial results are driven by certain operating metrics that encompass the booking and other business activity generated by our travel and travel-related services. Reservations of room nights, rental car days, and airline tickets capture the volume of units booked through our online travel companies' ("OTC") brands by our customers. Gross bookings is an operating and statistical metric that captures the total dollar value, generally inclusive of taxes and fees, of all travel services booked through our OTC brands by our customers, net of cancellations. Our non-OTC brands (KAYAK and OpenTable) have different business metrics from those of our OTC brands, so search queries through KAYAK and restaurant reservations through OpenTable do not contribute to our gross bookings.
Room nights, rental car days, and airline tickets reserved through our services were as follows:
Year Ended December 31,
Increase (Decrease)
(In millions)
Room nights
Rental car days
Airline tickets
Room nights reserved through our services increased year-over-year in 2025, driven primarily by increased travel demand in Europe and Asia. Rental car days reserved through our services increased year-over-year in 2025 driven primarily by growth in rental car days reserved on Booking.com. Airline tickets reserved through our services increased year-over-year in 2025 driven by the expansion of flight offerings at Booking.com and Agoda.
Gross bookings resulting from reservations of room nights, rental car days, and airline tickets made through our merchant and agency categories were as follows (numbers may not total due to rounding):
Year Ended December 31,
Increase (Decrease)
(In millions)
Merchant gross bookings
Agency gross bookings
Total gross bookings
The year-over-year increase in merchant gross bookings in 2025 was due primarily to growth in accommodation reservation services and flight reservation services at Booking.com and Agoda. Merchant gross bookings also increased year-over-year and agency gross bookings decreased year-over-year in 2025 due to the ongoing shift from agency to merchant bookings at Booking.com.
The year-over-year increase in total gross bookings in 2025 was due primarily to the increase in room nights, a positive impact of foreign currency exchange rate fluctuations, and a positive impact from growth in flight gross bookings.
Flight gross bookings increased 29% year-over-year in 2025 due to airline ticket growth, partially offset by lower average airline ticket prices. Rental car gross bookings increased 9% year-over-year in 2025 due to rental car days growth and higher average daily car rental prices.
Revenues
See Note 2 to our Consolidated Financial Statements for additional information on our revenues, including merchant, agency, and advertising and other revenues. Substantially all of our revenues are generated by providing online travel reservation services, which facilitate online travel purchases by travelers from travel service providers.
Year Ended December 31,
Increase (Decrease)
(In millions)
Merchant revenues
Agency revenues
Advertising and other revenues
Total revenues
% of Total gross bookings
The year-over-year increase in merchant revenues in 2025 was due primarily to growth in accommodation reservation services at Booking.com. Merchant revenues also increased year-over-year while agency revenues decreased year-over-year in 2025 due to the ongoing shift from agency to merchant revenues at Booking.com. Advertising and other revenues increased year-over-year in 2025 due to growth at OpenTable and growth in advertising revenues at Booking.com.
Total revenues as a percentage of gross bookings increased year-over-year in 2025 due to an increase in revenues related to facilitating payments, as well as a more positive impact from changes in foreign currency exchange rates on revenue compared to gross bookings, partly offset by an increase in the mix of flight gross bookings, which have lower revenues as a percentage of gross bookings.
Operating Expenses
See Note 2 to our Consolidated Financial Statements for additional information about the components of our operating expenses and the related accounting policies. The year-over-year growth in our total operating expenses for 2025 was increased in part by changes in foreign currency exchange rates.
Marketing Expenses
Year Ended December 31,
Increase (Decrease)
(In millions)
Marketing expenses
% of Total gross bookings
% of Total revenues
Our marketing expenses, which are substantially variable in nature, increased year-over-year in 2025 to help drive additional gross bookings and revenues, and were increased by changes in foreign currency exchange rates. Marketing expenses as a percentage of total gross bookings in 2025 were in line with 2024, as the benefit from an increase in the share of room nights booked by consumers coming directly to our platforms was partially offset by lower performance marketing ROIs driven by changes in paid traffic mix and increased spend in social media channels.
Sales and Other Expenses
Year Ended December 31,
Increase (Decrease)
(In millions)
Sales and other expenses
% of Total gross bookings
% of Total revenues
Sales and other expenses, which are substantially variable in nature, increased year-over-year in 2025 due primarily to an increase in merchant transaction costs of $381 million related to the ongoing shift from agency to merchant transactions at Booking.com, as well as due to changes in foreign currency exchange rates. Sales and other expenses as a percentage of total revenues decreased year-over-year in 2025 due to efficiencies in third-party customer service costs, as well as lower provisions for expected credit losses, partially offset by the impact of increased merchant transactions, which grew faster than total revenue.
Personnel
Year Ended December 31,
Increase (Decrease)
(In millions)
Personnel
% of Total revenues
Personnel expenses increased year-over-year in 2025 primarily due to increases in salary expenses and bonus expense accruals, both of which were increased by changes in foreign currency exchange rates. The year-over-year increase in personnel expenses in 2025 was partially offset by a $176 million reduction in the accrual related to the Netherlands pension fund matter. Employee headcount of approximately 24,300 as of December 31, 2025 was in line with December 31, 2024.
General and Administrative
Year Ended December 31,
Increase (Decrease)
(In millions)
General and administrative
% of Total revenues
General and administrative expenses decreased year-over-year in 2025 due to the impact of the $337 million accrual in 2024 related to the settlement of certain Italian indirect tax matters, partially offset by $89 million in expense in 2025 related to certain other indirect tax matters. In addition, the year-over-year decrease in general and administrative expenses in 2025 was impacted by a $78 million reduction in 2024 in the accrual related to the fine imposed by the Spanish competition authority.
Information Technology
Year Ended December 31,
Increase (Decrease)
(In millions)
Information technology
% of Total revenues
Information technology expenses increased year-over-year in 2025 due primarily to an increase in cloud computing costs, as well as changes in foreign currency exchange rates.
Depreciation and Amortization
Year Ended December 31,
Increase (Decrease)
(In millions)
Depreciation and amortization
% of Total revenues
Depreciation and amortization expenses increased year-over-year in 2025 due primarily to increased depreciation of computer equipment, as well as amortization expense related to internally-developed software.
Impairment
Year Ended December 31,
(In millions)
Impairment
See Note 11 to our Consolidated Financial Statements for additional information.
Transformation Costs
Year Ended December 31,
(In millions)
Transformation costs
See "Trends" above for additional information on the Transformation Program. For the year ended December 31, 2025, Program related costs primarily consist of employee termination benefits and professional fees. See Note 20 to our Consolidated Financial Statements.
Interest Expense and Interest and Dividend Income
Year Ended December 31,
Increase (Decrease)
(In millions)
Interest expense
Interest and dividend income
Interest expense increased year-over-year in 2025 primarily due to the amortization of debt discount related to the convertible senior notes (see Note 12 to our Consolidated Financial Statements) and the issuance of senior notes in November 2024. Interest and dividend income decreased year-over-year in 2025 primarily due to lower interest rates, partially offset by higher money market fund investment balances. In addition, we have certain cash management activities with related interest expense and interest income.
Other Income (Expense), Net
Year Ended December 31,
(In millions)
Other income (expense), net
See Note 18 to our Consolidated Financial Statements for additional information.
Income Taxes
Year Ended December 31,
Increase (Decrease)
(In millions)
Income tax expense
% of Income before income taxes
Our 2025 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 (as defined below) and U.S. federal tax credits, partially offset by higher international tax rates, certain non-deductible expenses, and U.S. federal tax associated with our international earnings. 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 and a reduction to our 2018 federal one-time deemed repatriation liability under the Tax Act, resulting from a 2024 U.S. Tax Court decision in Varian Medical Systems, Inc. vs. Commissioner (the "Varian Decision"), partially offset by higher international tax rates, non-deductible expenses related to the convertible senior notes and certain other non-deductible expenses, unrecognized tax benefits, and U.S. federal tax associated with our international earnings.
Our effective tax rate was higher for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to the reduction to our 2018 federal one-time deemed repatriation liability under the Tax Act, that was recorded during 2024, resulting from the Varian Decision, and higher international tax rates, partially offset by an increase in the benefit of the Netherlands Innovation Box Tax and lower unrecognized tax benefits.
Under Dutch corporate income tax law, income generated from qualifying innovative activities is taxed at a rate of 9% ("Innovation Box Tax") rather than the Dutch statutory rate of 25.8%. A portion of Booking.com's earnings during the years ended December 31, 2025 and 2024 qualified for Innovation Box Tax treatment, which had a significant beneficial impact on our effective tax rates for these periods. For more information, see Part I, Item 1, Risk Factors - " We may not be able to maintain our "Innovation Box Tax" benefit ."
Results of Operations
Year Ended December 31, 2024 compared to Year Ended December 31, 2023
For a comparison of our results of operations for the fiscal years ended December 31, 2024 and 2023, see Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 20, 2025.
Liquidity and Capital Resources
Our primary source of funds for operations is the cash flow that we generate from operations. We have a variety of uses for our cash, including ongoing investments in our business, share repurchases, dividends, repayment of debt, and capital expenditures. Our continued access to sources of liquidity depends on multiple factors. See Part I, Item 1A, Risk Factors - " Our liquidity, credit ratings, and ongoing access to capital could be materially and negatively affected by global financial conditions and events. " Our financial results and prospects are almost entirely dependent on facilitating the sale of travel-related services. Marketing expenses, sales and other expenses, and personnel expenses are our most significant operating expenses. See our Consolidated Statements of Operations and "Trends" and "Results of Operations" above for additional information.
We believe that our existing cash balances, liquid resources, and access to capital markets will be sufficient to fund our operating activities and other obligations in the short term and into the foreseeable future.
Cash, cash equivalents, and investments
At December 31, 2025, we had $17.8 billion in cash, cash equivalents, and investments, of which approximately $12.2 billion is held by our international subsidiaries. Cash, cash equivalents, and long-term investments held by our international subsidiaries are denominated primarily in Euros, U.S. Dollars, and British Pounds Sterling. Our investment policy seeks to preserve capital and maintain sufficient liquidity to meet operational and other needs of the business. See Notes 5 and 6 to our Consolidated Financial Statements.
Deferred merchant bookings
Deferred merchant bookings of $5.3 billion at December 31, 2025 includes cash payments received from travelers in advance of us completing our performance obligations and are comprised principally of amounts estimated to be payable to travel service providers as well as our estimated future revenues for our commission or margin and fees. The amounts are mostly subject to refunds for cancellations.
Debt
Our revolving credit facility extends a revolving line of credit up to $2 billion to us. As of December 31, 2025, we are in compliance with the maximum leverage ratio covenant under the facility, which is a condition to our ability to borrow.
Our outstanding senior notes at December 31, 2025 had cumulative interest to maturity (based on coupon interest rates) of $5.7 billion, with $662 million payable within the next twelve months.
See Note 12 to our Consolidated Financial Statements for additional information.
Share repurchases and dividends
In the first quarter of 2025, our Board of Directors (the "Board") authorized a program to repurchase up to $20 billion of our common stock. At December 31, 2025, we had a total remaining authorization of $21.8 billion related to share repurchase programs authorized by the Board.
In February 2026, the Board declared a cash dividend of $10.50 per share of common stock, payable on March 31, 2026 to stockholders of record as of the close of business on March 6, 2026.
See Note 13 to our Consolidated Financial Statements for additional information.
Commitments, contingencies, and other
At December 31, 2025, we had, in the aggregate, $1.1 billion of non-cancellable purchase obligations individually greater than $10 million, of which $361 million is payable within the next twelve months. Such purchase obligations relate to agreements to purchase goods and services that are enforceable and legally binding and that specify significant terms, including the quantities to be purchased, price provisions, and the approximate timing of the transaction. At December 31, 2025, we had lease obligations of $798 million, of which $143 million is payable within the next twelve months. See Note 10 to our Consolidated Financial Statements for additional information.
At December 31, 2025, we had a remaining transition tax liability of $257 million as a result of the Tax Act, which is included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheet. Due to the Varian Decision, a portion of our total transition tax liability may be refunded. In accordance with the Tax Act, generally, future repatriation of our international cash will not be subject to a U.S. federal income tax liability as a dividend, but will be subject to U.S. state income taxes and international withholding taxes, which have been accrued by us.
See Note 16 to our Consolidated Financial Statements for information related to the standby letters of credit and bank guarantees issued on our behalf.
See Note 16 to our Consolidated Financial Statements and Part I, Item IA, Risk Factors - "Our business is subject to various competition, consumer protection, and online commerce laws and regulations around the world, and as the size of our business grows, scrutiny of our business in these areas may intensify" for information related to certain regulatory matters and our other contingent liabilities.
Note 16 to our Consolidated Financial Statements and Part I, Item IA, Risk Factors - " We may have exposure to additional tax liabilities " for information related to certain tax assessments and other tax matters.
See "Trends" above for information on the Transformation Program, including the estimated annual run rate savings and restructuring costs and accelerated investments required for the program.
Cash Flow Analysis
Year Ended December 31, 2025 compared to Year Ended December 31, 2024
See our Consolidated Statements of Cash Flows for additional information related to our cash flows.
Year Ended December 31,
(In millions)
Net cash provided by operating activities
Net cash (used in) provided by investing activities
Net cash used in financing activities
Net cash provided by operating activities for the year ended December 31, 2025 resulted from net income of $5.4 billion, a favorable net impact from adjustments for non-cash and other items of $3.5 billion, and a favorable net change in working capital and other assets and liabilities of $535 million. Non-cash and other items were principally associated with the unrealized foreign currency transaction losses related to Euro-denominated debt, depreciation and amortization, stock-based compensation expense, deferred income taxes, impairment, provision for expected credit losses and chargebacks, and adjustments related to the convertible senior notes. For the year ended December 31, 2025, deferred merchant bookings and other current liabilities increased by $796 million and accounts receivable increased by $730 million, primarily due to higher business volumes. Merchant revenues increased while agency revenues decreased year-over-year in 2025 due to the ongoing shift from agency to merchant revenues at Booking.com.
Net cash provided by operating activities for the year ended December 31, 2024 resulted from net income of $5.9 billion, a favorable net impact from adjustments for non-cash and other items of $2.1 billion, and a favorable net change in working capital and other assets and liabilities of $367 million. Non-cash and other items were principally associated with the loss related to the convertible senior notes, stock-based compensation expense, depreciation and amortization, unrealized foreign currency transaction gains related to Euro-denominated debt, provision for expected credit losses and chargebacks, and operating lease amortization. For the year ended December 31, 2024, deferred merchant bookings and other current liabilities increased by $1.4 billion and accounts receivable increased by $506 million, primarily due to higher business volumes, partially offset by faster accounts receivable collections in 2024.
Net cash used in investing activities for the year ended December 31, 2025 resulted principally from payments for property and equipment. Net cash provided by investing activities for the year ended December 31, 2024 principally resulted from proceeds from the maturity of investments of $590 million, partially offset by payments for property and equipment of $429 million.
Net cash used in financing activities for the year ended December 31, 2025 resulted principally from payments for the repurchase of common stock of $6.4 billion, including share repurchases of our common stock withheld to satisfy employee withholding tax obligations related to stock-based compensation, payments on the maturity and redemption of debt of $5.0 billion, and dividends of $1.2 billion, partially offset with proceeds from the issuance of long-term debt of $3.7 billion. Net cash used in financing activities for the year ended December 31, 2024 principally resulted from payments for the repurchase of common stock of $6.5 billion, including share repurchases of our common stock withheld to satisfy employee withholding tax obligations related to stock-based compensation, payments on the maturity and conversion of debt of $1.3 billion, and dividends of $1.2 billion, partially offset with proceeds from the issuance of long-term debt of $4.8 billion.
Year Ended December 31, 2024 compared to Year Ended December 31, 2023
For a comparison of our cash flow activities for the fiscal years ended December 31, 2024 and 2023, see Cash Flow Analysis in Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 20, 2025.
