Booking Holdings is a durable travel aggregator with strong competitive advantages, and the risk that AI assistants disintermediate it is already partly discounted in a depressed valuation that offers a reasonable risk-adjusted return.

Mine is also a AI impacted name. I like booking. Booking.com. If you're in the States, you'll see any ads, right ads. Booking.com really sticks in the mind. It's a big company. It's much bigger than I usually pitch. And it's more expensive than I usually pitch. But I think it's interesting because it is so dominant and I think it's one of the unusual chances that you get to buy one of these companies cheaply, just so for folks who don't know, Booking is a business that allows you to book travel. They have Booking.com Priceline, which has been a great business forever. Agoda, I don't know particularly well, but Kayak is also a name that folks will recognize and OpenTable. Over time, there's secular growth in travel. As people become more wealthy, they tend to travel more. and they're able to control the experience. They're able to upsell and control various parts of the experience. They have a business model that doesn't. So through 2020, some of the other sites in an effort to compete with Booking, they buy rooms up front. They get caught when the rooms weren't taken. Booking.com doesn't do that. They don't buy their rooms up front, so they're very capital light. They don't own the underlying assets, they just hook people up. The big risk to booking is that folks think that they can somehow they will figure out how to get AI to control. You'll just type into your AI that you want to book a trip somewhere and the AI will do all of that for you without you having to interact with any of these sites and it will either do it directly and therefore cut out booking.com. So booking.com, their thesis though is that doesn't happen. So they're not disintermediated because there is a large database of all these sites and there are relationships that need to be maintained. It's not a simple matter of just calling them and paying them. They have these specialized relationships. And so in order for ChatGPT or Claude or one of the other LLMs to access these travel agents that'll need to go through booking.com in order to do it. I don't know what the likelihood of that actually happening is, but that's their thesis. They think that they won't be disintermediated, that they will continue to be part of that acquisition, that purchase journey. The rest of the business is, it's very well managed. Capital allocation is excellent. As a result, it tends to be very high return on invested capital. It's grown very steadily for years and years. and has all the things that make it a great business, very asset light, great sort of network. Once people get used to the site, there's high switching costs, lots of free cash flow. So the competitive advantages I think are durable. The risks to booking are travel is still sort of somewhat cyclical with if the economy goes through a weaker period, then folks just tend to travel less. And because of the way that booking is priced, really is priced, assuming some future growth or assuming that it continues to grow into the future somewhat like it has in the past, if that sort of revenue growth slows down, that's the sort of return we would likely expect. I think the most likely outcome is that travel just sort of generally grows as it has historically. I like companies that buy back stock at opportune times and I think that they're doing a good job buying back here. The bull case is that AI helps them and they become this sort of channel for all of these other LLMs and they just continue to grow. They interconnect with them easily seamlessly. You don't even know that it happens. And so they do a lot better than they have historically. you can handicap the bull and the bear and maybe they cancel out. And so the base case is the most likely, which is just that they keep on sort of muddling along. I think that booking is a reasonable risk adjusted bet at these levels because it's a little bit depressed with the fear around LLMs, but there's a reasonable chance that they are beneficiaries of that.

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