亿客行

Shares of leading online travel agency companies Airbnb, Booking, and Expedia have declined about 10% during the last few trading sessions on fears that wide-moat Meta's AI agent, Muse, will disintermediate the platforms.

Why it matters: Our experience using Muse shows that the agent used Booking and Airbnb to search for travel accommodations. This supports our view that AI agents will depend on the supply, trust, and conversion that these platforms present. For example, when we asked Muse to find an accommodation during specific dates in a US city for three adults it immediately went to Booking's platform. When we then asked it to just search for vacation rentals in that city during those dates it shifted its search to Airbnb's network. We also found Muse's responses to be slow and circuitous, requiring additional prompts and time to narrow down the choices. We expect Google and other companies to have their own agents that should also use these leading online travel company platforms.

The bottom line: We are maintaining our fair value estimates of $185 per share for wide-moat Airbnb, $217 for wide-moat Booking, and $262 narrow-moat Expedia. We think investors have overestimated AI agents' impact on the relevance of these companies. We see Airbnb as best positioned. We believe Airbnb's alternative accommodation business is particularly protected from the AI threat, as most of its 5.5 million hosts are individuals with no websites for AI search engines to locate. We also see Booking as insulated, with about 10% of its accommodation room nights from brand chains that could see more direct bookings from AI use in the future. Meanwhile, we estimate Expedia's exposure to brand chains is about 20%-25% of its accommodation room nights.

After reviewing second-quarter results, we have increased our fair value estimate to $262 per share from $245 due to higher revenue and EBITDA. Our fair value estimate implies a 2026 enterprise value/adjusted EBITDA multiple of 7 times.

Expedia's second-quarter revenue increased 14%, ahead of its 9%-11% guidance. Adjusted EBITDA margin expanded 196 basis points, beating its 75-basis point outlook. The firm raised its 2026 sales growth target for 2026 to 9%-10% from 6%-9% with a 150- to 175-basis point margin increase.

Our long-held view that Expedia's 2021-24 platform investments would improve its competitive standing is playing out. In 2025, bookings growth was 8%, up from 7% in 2024, with EBITDA margins up 240 basis points to 23.8%. In 2026, we estimate revenue growth of 10%, up from 8% previously, with EBITDA margins expanding 190-basis points to 25.7%, up from 25.1% previously. We forecast an average annual revenue growth rate of 5% during 2026-35. This revenue growth will be supported by continued marketing investments in the AI landscape, offset by the lower cost of goods as AI replaces customer service expenses. We see EBITDA margins averaging in the low 20s for the next 10 years.

Specifically, we see the cost of goods sold over 2026-35 averaging 9.5% versus 9.9% in 2025. We expect total marketing expense to average 54.5% of total revenue over the next 10 years, versus 55.6% in 2025, as continued investment in agentic AI distribution channels and international and vacation rentals is mitigated by the sharing of data on its unified platform, which we believe will improve efficiency. Also, we expect Expedia to achieve cost savings with an efficient focus on investing behind brands that are resonating in specific geographies versus a prior strategy of investing in all brands in every region.

We believe Expedia has a network advantage, the source of its narrow moat. Over the past two decades, Expedia has built a strong network of properties (the supply side of the network effect equation), which has driven strong end-user traffic and bookings (demand side of the network effect equation). At year-end 2025, its global platform had 3.6 million properties, made up of 2.4 million alternative accommodation listings and more than 1 million hotel units. On the demand side, its $120 billion of bookings in 2025 was second to just wide-moat peer Booking Holdings' $186 billion that year in the online travel industry.

We think efforts to migrate technology, data, supply, and loyalty capabilities onto a unified platform, rather than managing the divisions in silos, will support the company's network advantage and drive operating margin expansion over the intermediate term. We believe this investment will give platform users more content choices, the ability to accrue and use loyalty points across brands, and more targeted offerings, thereby aiding sales. Also, the ability to share data across all brands, rather than keeping it confined to individual brands that previously competed for customers, should enable more targeted marketing and a higher return on marketing spending.

As a result of the strong network effect, Expedia and Booking control the majority of the global online travel agency booking market. Beneath these two, the share is highly fragmented, making it extremely challenging for smaller new entrants to gain customer traffic and supplier scale. A smaller new entrant would need substantial human capital to build relationships with hotels and gather crucial information/pictures from those hotel properties. It would also need to spend heavily on advertising to attract customers to the website, and any customers obtained would require IT, data center, and 24/7 customer support to retain. Expedia is able to advertise well in excess of its competitors, which helps drive its network advantage. In 2025, Expedia spent $7.3 billion on direct marketing (50% of total revenue); in comparison, number-three player Orbitz in 2014 spent $334 million on advertising before it was acquired by Expedia in 2015. As scale increases, understanding of consumer behavior improves, leading to better customer experience and conversion.

We don't believe the company has carved a wide moat, given potentially meaningful competition beyond the next 10 years from platforms that have the customer traffic and budgets to build network scale, including large language agentic AI models, wide-moat Alphabet's Google, wide-moat Meta, wide-moat Amazon, no-moat Tripadvisor, wide-moat Costco, and hotel consortia. Focused entry by these competitors would double the current handful of players with dominant scale, leading to commodification of the industry and a meaningful impact on margins. That said, we expect the market to support some level of increased competition over the next several years. The travel booking market remains large at $2 trillion, and we believe online penetration of the travel market can continue to expand the next 10 years from its current 70% level.

Expedia has a network effect that we think only a few enjoy, and recent investments to unify its platform and acquisitions stand to add to its platform advantage.

Expedia removed $700 million-$750 million in annualized fixed costs in the years following the pandemic. Further, it has removed $200 million in variable costs. Some of these savings were reinvested in its platform.

Expedia's broad supply stands to benefit from the increasing long-term demand for travel.

Google and agentic AI models continue to siphon free organic traffic in favor of their own platforms, causing incremental marketing costs for Expedia.

Demand for Expedia's travel content could be materially affected by lower economic growth or geopolitical events.

Competition from existing peers (Booking, Tripadvisor, Google, Costco, Alibaba, and Airbnb) and AI large language models could meaningfully affect Expedia's growth outlook.