Travel Through the Lens of AI with with Booking.com CEO Glenn Fogel

There is no such thing as a moat. There is no such thing as somewhere you're gonna be protected against innovation. Today, we have a competitive advantage on areas.

Absolutely. But those can go away tomorrow. The only one to win long term is to continue to develop new services, new ways to do things.

How can we do your business better? What do you need? Where you need more demand?

Where are you hurting? It's so much more complex. Complex.

If you think you're just gonna come in and do this business and knock away these very big players, I'd say you should really understand what the business is before you decide to commit your capital.

real short, I came out of work with Green Finance, and now I end up at the back office in MIS. My first job is putting tapes on a drive in a data center of IBM thirty eighty fours and the discs that went and and the tape drives and put the put the tapes on on the drive. That's where I started.

There's an operator. Actually, being an operator of a mainframe, very different. Nothing that you prepared for that in college for that.

And I then become you become a developer, and you but I basically learned that this is not a career for me. I should do something else. And all the people I knew, undergrad and were and were going off to investment bank and made all this money, and I thought, fuck.

Try to do that, but you can't go. I've now gone down one shoot, and you can't just jump out of that one to go become an investment banker. So I said, oh, I I agree to finance warrant, Harvard let me into law school, so I'll do that because that's another route.

I did that, and I end up getting a job on Wall Street as a banker. I did that for till '95 till 1995. And then the bank was bought by another bank, and they fired all the bankers almost, not every bank.

Fired most, including me, but not everybody because they fired everybody because they well, they fired everybody. But they didn't fire everybody. So you there was a there was actually some people were picked to stay.

That was not one of them. That that's pretty bad. So a real good lesson, though, having been fired and knowing what it's like, that is something that I've kept with me throughout my career about how to do it right and how to do it wrong and understand what goes through the other person when you tell them that I'm sorry, but there's no longer a room for you here and this is not the place for you to be.

And I I really learned that firsthand being on that side of the table. And so now I'm unemployed. And my father had just died, not that long before this happened.

My father's died, lost a job. My grandmother died, and he and the dog died, which was kind of sad. And I'm like, what do want to do with my life now?

My young thirties, I'm alone, I'm saying no, whatever. And I said, you know, I always wanted to write a book. So I start writing a book, I write a novel, I get it done, and now I'm going try and get it published.

And it's not really self publishing, man. You weren't doing it on your own. You're trying to get some agent to pick it up.

And I was introduced to a woman as a a blind date girlfriend. And I think she was a lawyer, but I'm sorry. I don't know.

They said, well, she used to work at Random House as an editor. I said, oh, I'm very interested in how you did the And so we have a date, and the book never gets published. But I do end up marrying her and have two great kids and has wonderful life.

But while I was trying to get the book, you know, an agent to be interested in it, eventually, she said, you know, if this relationship's gonna go forward, you should get a job. I said, damn. Boy, I should.

I didn't wanna go back to banking. And I said, I don't know. And a friend of mine from law school was a senior type person at Morgan Stanley.

And he I told him, look. Amy says I have to get a job. How do thought?

She said, well, we have this trading position here that you could do. I never traded anything in my life. He said, don't worry.

You'll be fine. It's like, okay. So I end up being head trader for a guy named Barton Bay.

He's kind of a Wall Street legend and stuff. I do that for a number of years, but I just don't like it. It's not that ex it's just not for me.

And that's when the Internet was really taking off that first real explosion. You know, the Internet boom. That's late nineties.

So 1999, I started trying to interview, I think, well, I got some skills. But when I was an IT person, I got that. And I know a little bit about corporate development because being a trusted banker, and I started interviewing the only real company on the East Coast at the time of Internet, you know, abilities was Priceline.

And they had a job for corporate development. It was perfect. So I get an offer from them, but I said, wanna wait.

I wanna wait till I get my bonus for 1999 when it gets paid at the February 2000. So I go and I get my bonus check out, ready to start, And that's when, of course, that's when the Nasdaq peaked. Thereby having gotten long Internet a week before when the Nasdaq peaked and stopped.

And it it proved that I shouldn't be a trader having just Yeah. The wrong way. And, know, Priceline has its difficulties after that.

Our stock went from where we were when we went public, we in a week or so, we were 30,000,000,000, which back then was real money and that meant something back then. And by the time I joined I joined after the I you know, few months after the IPO, when I joined, we're probably down about 15,000,000,000. That's now, you know, February, March of 2,000.

In nine months, our market cap is now down to just a couple of 100,000,000. Wow. And our stock is now trading at a dollar a share.

We're gonna get delisted because it's dropping below a dollar a share. But stick with it. We do a reverse split to make sure we don't get delisted.

So it goes to $6 a share. I stay, and I've been there twenty seven on my twenty seventh year. Wow.

And we went from that that now reverse split $6. And in last summer, we came very close to $6,000 So over that Yeah. You know, a little more than a quarter of a century, up a thousand times.

And, you know, market cap was peaking around 180,000,000,000. Remember, it's a few 100,000,000. Yeah.

It's amazing. It's been a good ride so far, but, of course, you never stop. Every day is a new adventure.

Every day is you gotta a big headline in the Feet when I had an interview with them, I said, gotta fight for a customer every day.

You think like this is a an explosion of new things, so all these would cover everything just like in the late nineties. The optimism of technologies. I thought everything was gonna be wonderful.

But then you get a little bit of the backlash coming backlash then too. Now you I guess it's just it's just bigger than it was then. The numbers are much bigger.

The issues at hand are much bigger, the pluses and the minuses.

And, you know, if we go over the last hundred and fifty years, there always been these kind of springing further back. Yeah. Speculative booms that create tremendous innovation, people coming in just both money and people.

I mean, California, you know, the forty niners, I mean, everybody's running off to the hills to gold, and it was gonna rain. I'm sure there were a lot of companies selling axes and hammers. Yeah.

Auto boom, same thing. We've seen this Exactly. And how many of So I don't know, but this is not new.

And there'll be a great deal of disappointment. There'll be a lot of people who gonna lose a lot of money, of course. That's just the nature of how our economy is working.

general rule without knowing what the facts of that specific situation are. By the way, there were times early in the day where price would have been happy if somebody has made an offer. I mean, look.

Yeah. Yeah. Offer.

It really depends a lot on what the situation is, how confident is management and people who have put the money in that which there is going to be a vulture, and how concerned are you? What are you really trying to do? Are trying to accomplish something?

The goal is to actually make something that matters, or are you just here to make money? And nothing wrong with that. I'm not against that.

So you gotta understand what is your motivation? What are you trying to achieve? We have on average I don't know if you're American male, for the hell of a because I think that's what I've looked at.

I have a seventy eight year expected lifespan when you're born. Of course, the longer you live, the higher you expect. Whatever it is, and how are you gonna spend those years?

What is important to you? What do you wanna do? What's the meaning to it?

And I'll let the people who are actually involved in those situations. I would not I would not give them any general advice. Makes sense.

So, I mean, back to booking.

any type of situation, you'll have people who are not that knowledgeable about the industry or about how, things actually happen in the business. And so from the outside, it looked rather easy to, oh, this will be easy. AI will take care of travel, and all the travel companies won't be worthwhile, won't be worth anything.

And so and that was why companies like ourselves took a big hit as some of the new models were dropped that had a much better way of doing agent in commerce as it was perceived at the time. And then when the when people make analysis, oh, we're not gonna do that, like when OpenAI said, we're not planning to be a merchant of record trying to or we're not even gonna keep in this app type of way of doing commerce. We're not doing it.

Then people say, oh, well, I was wrong. I'm not gonna worry about it as much. It flips the other side.

The truth is the way we look at AI is an incredible beneficial tool and a way for us to be able to do our mission easier, hopefully cheaper, and better for our customers. All business. What is the purpose of a business?

A business is to do something of value to its customers. We have two kinds of customers. We've got travelers and we've got partners.

Are in the middle of that for a marketplace. How can we do it better? AI, particularly AI using, large language models and other things like that can help make it a much more valuable method for people, travelers to get information they need to do what they wanna do and beneficial to our partners.

That's the thing. Now the idea of chat TV, you know, telling me no longer having one method.

what does the customer want. Many people with travel find it very frustrating. I know that.

People that will travel find very frustrating. Trying to put together a complicated trip with family, let's say, multiple destinations, different things you wanna do. It's complex.

It's pain. You start planning it, then you stop because it's just too much of a pain. And everybody would like something else.

Many people would like something else to do it for them. In fact, that's why you'll find very wealthy people have travel concierge people who are actual human beings who really understand the needs of that customer, what they really like and not, and they will do a lot of the hard work for them. People aren't quite in that wealth zone.

They'll have there's a partner or their spouse trying to it for them. I'll be perfectly honest. I'm exposing myself here, but I'll say it.

Okay? My wife and I sometimes argue about, okay. Who's gonna have to do all the travel planning for this trip?

Because it can be frustrating, etcetera. Now with AI, the beauty is it's gonna make it so much easier, and it's doing it right now. We are doing it right now.

And let's use that generic term. Let's call it an agent. So I can't wait until we, Booking Holdings in our companies, are offering up these personalized agents that are they know everything about you, everything you want, and able to do so much more for you than any human travel agent could ever do because the machine never forgets anything.

The machine has an infinite amount of permutation. It rapidly look through and choose what is the best thing, and it can go down and then back up. That doesn't work.

Why? This doesn't fit that well. Can come back with it.

Now, people always want some agency, so they make the decision themselves or at least confirm they want it. Most people aren't, for the most part, a complicated thing. They're going to want it to double check them, check them, whatever, which is different than say a business person says, gotta go from New York to Chicago.

And, you know, your assistant, your human assistant, right now, is doing it for you. That's like an agent doing it for you. He knows what flight you need and all that.

That's great. Yeah. But when it's complicated, you want that agency.

So we at Booking Holdings, all our companies, we are doing that right now. In fact, if you go to Penny, which is Priceline's agentic AI system, and I just did it the other night. I put in a very complex need for a travel with the family where it was my wife and I, we wanna go up in front of the bus.

I want the young adults who are adults, but don't think so. I want them in the back of the bus. They're starting.

So I got two cabins now. There are one person has to go back to a different city. We're going to Europe.

We're going to a city. We're not we're not actually doing the trip from that city where we're gonna land. How are gonna get from where we go?

Should we have the hotel where we land and then travel the next day to the other city, or should we go that night? How are gonna do it? What restaurant?

All the thing. And I didn't on Priceline, Penny, and it was incredible. I also added another things.

I told it that, by the way, I got a lot of frequent flyer miles. So should I be using my miles or should I use it cash and for which ones? And it was just beautiful how it went back and forth and asked me questions like, how many miles do you have with each airline that I'm giving it?

And then we're going through the flight part and how much of the cost. By the way, ended up, as I suspected, I'm using my miles for the upfront part for my wife and I. We're paying cash for the kids on our flights.

We're going go to the hotel in the city that we landed. The next day, we're going to get a shelf. Was wonderful.

It was wonderful. And that's what we want even more so. Here's the real important thing is when things go wrong and things go wrong in travel, nobody's fault.

Many times, weather, mechanics, it happens. Okay? You wanna have that one point of contact that can everything because travel is like dominoes.

One thing falls over, and it all starts falling over. And that's the beauty with AI being able to figure out being able to look ahead. What can we do?

you know, specific things that it doesn't do well that you just need the underlying models to get better for? I'm a little bit curious though. Well, the actual we just have some areas where we're we're coming out with some new things on it, but here's something really important.

So when you ask me the questions, when you say it's so great, but you tell me it's not really doing much to, you know, the numbers. It doesn't really show up much in the numbers yet because it's still really, really small in terms of the absolute number. We ain't gotta talk scale here.

You know, last year, we did a $186,000,000,000 worth of travel. That that's a lot of travel. You don't get over a billion room nights.

So the actual numbers, so why? Well, part of it is we're not pushing it really fully. There's one of the issues that I always wanna think about is what's the cost of this?

And that's not so easy to understand. What is the cost? That's what's developing of running it.

How many tokens are we consuming? Where? Where?

Where? How many times are they coming back and forth or doing? Tell me how much was the cost of us getting that trip for that person, and what is our ROI going to be?

Then the next thing is, well, what's the return long term? Did it mean lifetime value? Did they come back?

Are the loyalties up or what? How much? And will it change?

These are things that we don't know yet that we're gonna have to do. We need to work on develop till we know. And by the way, the whole thing of token economics now, which model should we be using?

For which purpose? And when? And stuff.

You know, obviously, you can get tokens a lot cheaper and certain parts to different models, and they're a lot cheaper. And that's something that we have to look at very closely too. So it is fascinating that we can do things that I I'm so thrilled that we do.

Like, for example, things like using customer service right now. Customer service where we're using AI, it's it's great. It happens much faster.

You you know, instead of having to staff your humans and at peak time, somebody's got to wait for somebody to pick up. We've all been in that line. In that queue, waiting for someone to pick up, and we hate it.

But now with AI, the computer can pick it up. It's not a problem. And solve the problem even better and faster, than you never will have in the future.

When you finally talk to a human, the human says, I'm sorry, you'll have to be on hold again while I get somebody else who can solve that problem, which you by then you wanna throttle somebody, AI will solve that problem. But here's the question again about that is sometimes though, you want to figure out because people want to talk to humans sometimes. You got to balance that because what you don't want to do is end up, yeah, you can do it all AI, but actually that's not what the customer wants.

And in the end, it's always what's best for the customer.

just go let's go this just this Our costs per customer service per contact are down. Mhmm. Mhmm.

That's great. Customer satisfaction is up. That's even better.

But we have to make sure that we are able to always recognize some customers want a human being and some customers are, you know, you're happy as could be just through AI.

talked about 700,000,000 approximately this year is being invested, but it's in many, many different areas, just, you know, developing more AI. Though AI, there's definitely money going to, call it tech enablement, but there are different projects, different areas. I would not put that all into and say, oh, you're investing in techno old and and AI.

That's not correct. There are lots of areas of investment. We talked to them on the call.

That's not what's important is the idea that but you've got savings. You've got money. You've got cash flow.

How much should you be putting in reinvesting in the company? How much should you be looking perhaps acquisitions? And how much should we handing back to shareholders?

And that's always a balance, trying to figure out what's the right ratio, what is it. It really is the first thing is, do we believe investing in the company is gonna give a positive ROI that's sufficient to justify doing that? Or after that, are there acquisitions?

And if you can't do either of those, then get the money back to the shareholders because they can then invest it better than you can. And that's what I've always believed in. Mhmm.

Makes a lot of sense.

really am very proud of the fact that over the last, let's say, dozen years or so, we've bought back approximately 40% of the outstanding share. That's good. And we offer a dividend.

We have a nice dividend. So in the fourth quarter, it was we bought back $3,600,000,000 worth of stock. We gave out approximately, you over 300,000,000 in a a dividend.

And in addition, we also were paying for the taxes for the equity grants that vested in the know, paying the taxes to do it by withholding shares that part of the vest. That's another 300,000,000 or A lot of money making sure it's going back to the shareholders if we don't think that we can use it properly ourselves. That's I've I've been really and this got me from an investment banking background, maybe back then or maybe trading, where companies that just build up huge amounts of cash and they're not doing anything with it and they're not giving it back to their shareholders.

I'm like, that doesn't seem like the right thing. I think one last thing that you mentioned earlier, one thing that you mentioned earlier that I thought was really important is just the scale of your business.

Probably, I'd say Americans. Because in the alternative accommodations area, obviously, a big player is someone who invested in very early Airbnb. Congratulations your part.

But a lot of people don't recognize that globally, when you look at our amount of listings and you look at Airbnb, it's not that different. And even more so is when you look at our total amount of transactions, our room night for an alternative company, you look at what, you see that we are approximately three quarters the size of Airbnb, and that's just our alternative accommodation. We're the whole much bigger hotel business on top of that.

And and, you know, over the last five years, we've been growing for the last five years, we've grown faster than Airbnb in the alternative accommodation area. We do like to like. We've growing faster for the last five years.

So it's a great product, great thing. It's going very well. Your question though, does that give us an advantage, so to speak, against somebody who comes in, all they're doing is creating a nice AI intensive type system and how are gonna get the connectivity to these players or not?

And I'll say, there is no such thing as a moat. There is no such thing as somewhere you're gonna be protected against innovation. And that's what I try and get across to the team.

I've got 25,000 employees. I try and get this across to everybody that every day we've gotta be fighting. And, yeah, today, we have a competitive advantage on areas.

Absolutely. But those can go away tomorrow. The only way to wait the only window in the long term is to continue to develop new services, new ways to do things, come up with this agentic travel assistant that I want this university that will make it so much better.

That's the only way. Working on the other side, by the way, also very important with the partner to ways that we're helping them a lot. Again, a lot of people understand the complexity involved.

It's not just getting the inventory loaded into some database. Anybody can do that. That's nothing.

We got thousands of people who are dealing with hotels and other property managers. How can we do your business better? What do you need?

Where you need more demand? Where are you hurting? What can we do in terms your systems better?

It's so much more complex than I believe many other people who look at this industry from afar and work secondly. This is something really people don't understand. This is the regulatory framework around the world.

Dealing with travel is a very highly regulated now it's not a bank. Okay. Got it.

And it's not an air claim, you know, airlines such that, or it's, you know, not drug discount, but it is very regulated. And it's complex and you've gotta meet it. And if you wanna be murky of record in travel, you gotta adhere to a whole bunch of rules, etcetera.

And by the way, around the world, much more than The US, around the world, those regulations are increasing. Or not saying so exponentially, but let's say they're increasing. That too is something that if you're big at scale, you can afford to deal with that.

And if you think you're just gonna come in and do this business and knock away these very big players, I'd say you should really understand what the business is before you decide to commit your capital.

I'm very blessed. I've been very lucky in my life that I'm in a business where I could pretty much do what I'd like to do. And sometimes people ask me, why do you continue to do what you're doing?

And I said, because I think part of this is doing something good. And, yeah, we're not curing cancer. I know that.

But I think that travel is a very important thing for a lot of people. It really adds to their their lives. You know, we can do it better.

Look. Our mission is to make it easier for everybody to experience the world, and I believe that does improve everybody. It improves the world by getting people to travel more, experience other cultures, other people, etcetera.

And we can do it right and make it easier. That's great. I wanna be part.

I wanna help do that. I do believe that's adding something. And, that's part of the everybody needs to understand, I believe.

Why are you doing what you're doing? You only get one life. You get one life now.

Sometimes people don't have choices at all. That's the only job they have. They need to afford to be able to support their family.

I got that. Believe that. I know that.

But for people who have a little bit of ability to choose, I'd say choose wisely. Choose wisely because you will not get that time back. And some people have different ideas on what will they believe their life should be and that whatever it is, it's long term for going that path.

That's great. My biggest fear too much is people who've taken paths that in the end, they're middle aged or later, and they're a little bit wistful about, gee, I wonder if I had done it next. And I'll be perfectly honest and well, hope not to many of my law school classmates, I hope, but I fear that too many of them, they chose going to law school because that was just kind of like a path.

Then they became lawyers just because, you know, that's normally what you do when you come out of law school, couple of lawyers. I didn't, but many people did. And then it paid really well and it was easy in their comfort zone.

And then later in life, it was kind of like, gee, what did I do? And that's when I think everybody should really think hard about making sure you choose wisely.

Would love to hear your views on that and how you think about that. So it is really interesting. I mean, we take it in terms of the general sense of technology being job replacement.

That's something that happened forever. We well, look at the way the agrarian societies went more towards urbanization as technology passed, industrial revolution. We can go through anything like that.

And so we know that happened. The issue that's really interesting though is the speed of the change. So if you look right now where we are, I've seen it happen over my time just this company.

So at the beginning of the company, we were dealing at booking.com or we acquired booking.com.

They were doing hotel reservations in over 40 languages, which meant all the content, All the scripts, everything was in 40 languages, and this customer service, 40 languages, all that. It's wonderful. And there were a lot of people involved with that because all the translation is now in the oh, it's it's, like, 2005.

All the translations are being done by human beings. There's no machine translation at all at the time. And all those customer service human beings, we had to have people in all these 40 different languages and that.

That was a big deal. Now now we have machine translations. All those jobs are gone.

There's nobody doing anything. That's those all those jobs disappear. So what happened to those people?

Where did they go? What are the tops are they now taking? What are they doing in sec?

So that's an example where we see that happen in real time. And now we have the issue not only of Apple, now the fear of, well, will I get a job coming out of university because all the jobs seem to be gone because what was necessary was an analyst at a financial department, a bank, or a corporation's job was not being done through basically AI. So the job started, what's going on, how's it going affect?

Now we know also the other side, that new jobs aren't gonna be created. We all know that also by history. We're looking at the problem of this, the speed of job, well, disappearance and new job creation.

Those rates are not happening probably the same rate. And the second thing is, what about the people who are not able to make that change? So I think well, I always think about the typical person I think about is a 50 year old truck driver.

And when the person who was making a very nice living and felt very good about himself because he or she is driving an 18 wheeler across The US and very responsible, helping contribute to a good job there. And now all of sudden, that's completely automated. Mhmm.

You're out of a job. What are we gonna how are we gonna retrain that pro? What's that person?

That person's gonna feel really bad. And we've seen in society how these type of forced dislocations have caused problems in the past when you look at that. And I'm concerned that there's not enough thought being done about how are we going to deal with these changes if they happen too quickly or not.

Society is whole, absolutely. It's always benefit from technology and creating and being able to do more things. But we have to how are we gonna deal with the flip side, the cost that come with it.

Do have a do have a specific viewpoint or proposal in terms of what we should be doing there? Well, I'll tell you one thing that we do here at our company. One thing that we're always doing is trying to upskill people.

I'd say every day, I'm talking with my head of the my CHR overhead of, you know, how can we do the best training? How can we get people so they are ready for the future? How do we get them so they are becoming AI literate?

It's quite a word that these AI be able to do AI. And that's really important because even if we end up that we can't replace or retrain or put someone else, at least they are better skilled for a job somewhere else. And I feel a real obligation for that.

Now that's that's our point. I think everybody should be thinking that way too. It's good for our company.

It's a positive for our life for somebody to be able to use new tools in a better way. They're more productive. That's great.

It's good. But it also helps them for their career. Now, sometimes I could see somebody in short term saying, I don't wanna spend the money for that.

And it's not the right way to think about it. Now, we could have governments coming in with certain types of programs trying to come up with ways, but retraining by governments over the last fifty years really hasn't worked out so well. So I'm not sure that's the right way to go either.

But I do believe this is something that I really would like to have more conversation about how to do it because I do I am concerned if we end up in a situation where people will start rejecting technology because of fear, that would end up being bad for us as a society, and by the way, other parts of world are not gonna have that problem, and they will be disadvantaged, I assure you, in China. They not having that same thing about, oh, is bad, and we shouldn't do it. That is not what's happening there.

So I really think we got to talk honesty and openly so we have the right conversation and do not end up on the bad side of people coming out and rejecting what actually are going to be good for society. That makes sense. Yeah.

which we have, which I'm in favor of, you'll have people who are saying certain things because they're not missing what they believe, but people will give them a vote. And that's also problematic in any or in favor of democracy, but I'll be in favor of people to be a little bit more honest on what they're saying. Yeah.

Yeah. Yeah. What's their real purpose?

Yeah. 100%. Yeah.

Thank you so much for joining today.