Booking Holdings Inc (BKNG) — Q1 2021 Earnings Call Transcript

Thank you, and welcome to Booking Holdings first quarter conference call. I'm joined this afternoon by our CFO, David Goulden. I am pleased to start by reporting further improvement in our accommodations business, with first quarter room nights declining 54% versus Q1 2019, which was 6 percentage points better than our fourth quarter 2020 decline. This improvement was driven by solid signs of increasing travel demand in certain countries and by our team's strong execution. David will provide the details on our first quarter results in his remarks. As we have said before, we believe that the rate of recovery for travel will depend heavily on the rate and severity of new COVID-19 cases, the timing of effective and broad-based vaccine distribution, and hopefully, even more effective treatments in the future. While the pace of vaccine distribution remains frustratingly slow in most places around the world, Israel, the UK and the US are benefiting from successful vaccine distribution programs. In each of these countries, we have seen encouraging booking trends. We support our view that vaccine distribution is a key to unlocking pent-up travel demand. In our own survey work earlier in the year, we found that over 70% of Americans said that the early distribution stage of COVID-19 vaccines made them feel more hopeful and optimistic about traveling in 2021. As countries ramp up vaccine distribution, which we are now starting to see in more European countries, we believe that we will start to see booking strength expand to more parts of the world. While there are encouraging signs of recovery in some countries right now, the current situation in other countries such as India, where we are seeing staggering increases in COVID-19 cases and an enormous human tragedy happening reminds us that recovery is not underway everywhere. And unfortunately, in some countries, the situation is getting worse. Last week, the World Health Organization warned that the pace of the pandemic is accelerating. We're mindful that governments may continue to take actions such as general area lockdowns or reintroducing travel restrictions, including barring people from high-infection locations from entering the country. Any of these actions can have an impact on our performance, and it's difficult to predict when and to what extent such actions may be taken in the future. Furthermore, international travel must recover for there to be a complete global travel recovery, and many governments may be cautious in fully opening international travel for some time. Focusing on the US where the vaccination program is going well, I am very pleased with our first quarter results in the US and there's a strong rebound in US travel demand. For Q1 in the US, we had positive room night growth versus Q1 2019 and it was our strongest performing major country. These results were driven by domestic bookings as our international business is still very slow. We were pleased to see improvements in our US room night trends each month in Q1, and these improvements continued into April. The strength in the market benefited all of our travel products and helped drive the highest number of air tickets ever booked in a single quarter for our company. And we know that both Priceline and Booking.com had good US results during the first quarter. In this improving environment, we continue to press ahead with one of our most important strategies, strengthening the Booking.com brand in the US. You may have seen Booking.com US Back to Travel promotional campaign that we launched in April, which offered a $50 post-stay promotional travel credit for US travelers who activated the promotion in the Booking.com app and booked travel by the end of May. This is just one example of the marketing methods that we will be employing to increase awareness of the Booking.com brand in the US. And in this case, drive further consumer engagement with our app. We also remain focused on expanding the supply of Booking.com's alternative accommodation offering in the US and we targeted and signed new properties to the platform in the quarter. However, we recognize there's more work to be done to improve the breadth of this product in the US. During the first quarter, we continued to execute against other key strategic priorities, such as expanding Booking.com's payment platform and building out the Connected Trip vision.

Thank you, Glenn, and good afternoon. I'll review our operating results for the first quarter and provide some color on the trends we've seen so far in the second quarter. To avoid the comparison to the initial spread of the pandemic in 2020, all growth rates are relative to the comparable period in 2019, unless otherwise indicated. Information regarding the reconciliation of non-GAAP results to GAAP results can be found in our earnings release. I also want to remind you that, during the period of bookings recovering, revenue will recover more slowly than bookings due to timing differences and this will impact our booking to revenue take rates. Now on to our results for the first quarter. On our February earnings call, we discussed the improvements in trends we saw starting in the middle of January and continuing into February, driven by domestic travel in most parts of the world. The improvement in trends continued into March, resulting in our Q1 reported room night declining 54% versus Q1 2019, which was a 6% improvement versus the decline we reported in Q4. As a reminder, reported room nights include the impact of cancellations. The improvements in the Q1 room night decline rate versus Q4 are driven by the US and Europe, while Asia and the rest of the world declines were about the same in Q1 as they were in Q4. The US was the strongest performing major country in Q1 and had positive room night growth versus 2019 for the full quarter. The trends in the US improved through Q1, with very strong room night growth versus 2019 for the month of March. Spring Break was a contributor to growth in March. US domestic room night growth was positive for each month of the quarter, with very strong growth for the full quarter. In Q1, other countries also experienced very strong domestic room night growth, including Russia and Australia. And we saw continued strengthening in domestic bookings in Israel. While Europe improved for the full quarter compared with Q4, we did see trends soften towards the end of March, driven by rising COVID case counts and new impositions of travel restrictions. Europe was the least recovered region in terms of room nights booked in Q4 and it remained the least recovered region in Q1. Mobile bookings, particularly through our apps, continue to represent over two-thirds of our total room nights. Our direct channel gained share both sequentially and year-on-year. Domestic room nights represented about 85% of our reported room nights in Q1, in line with our Q4 2020 mix of room nights and significantly up versus 2019. Our cancellation rates continue to be elevated versus 2019 in the quarter but improved from levels we saw in Q4.

Regarding our integrated payment platform at Booking.com, we've made recent progress primarily through increased adoption by our supply partners in the US. As I have mentioned previously, this platform provides payment options favored by both travelers and our supplier partners across hotels, alternative accommodations, cars, flights and attractions, and is foundational for enabling our Connected Trip strategy. The Connected Trip is our vision of a multi-product offering including combinations, flight, ground transportation, attractions and dining, connected by our payment network, and ultimately supported by personalized intelligence to provide a frictionless, seamless experience for our bookers, all the way from first thinking about the initial booking to experiencing their trip to arriving back home. Building out our full Connected Trips vision will be a multi-year endeavor. However, we expect that our business will benefit from the steps we are taking to achieve this vision long before reaching the ultimate end state.

For example, developing a robust flight product at Booking.com gives us the ability to engage with flight bookers early in their travel journey and allows us an opportunity to cross sell our accommodation and other services to these bookers. We have not had these opportunities historically at Booking.com, given its accommodation only focus in the past. As we think about the journey for building the Connected Trip, this year, we'll be focused on enabling travelers to book the major elements of their trip in one place on Booking.com. This means we will be working to build up our economic combination products like flights, ground transportation and attractions by increasing supply, as well as exposing more of our customers to these products. And Booking.com's flight offering, we are now live in 18 countries with the most recent launch in the UK. We can now expose a large segment of customers to flights as these 18 countries collectively represented more than half of Booking.com's room nights booked in 2019. Booking.com's flight offering is now fully native in the app. And while early, we are in the process of beginning to utilize marketing channels to bring potential customers to the product.

On attractions, we have continued to expand the breadth of supply available to our travelers through our recent partnership with Viator, along with our ongoing partnership with Musement that was announced last year. We see real benefits of a strong attractions offering given the potential bundling opportunities, as well as the ability to increase traveler engagement with the app while travelers are in destination. Of course, many of our key strategic priorities – I mentioned the app, which indicates the importance of the app for our business. We've been investing in the app platform for some time, and will continue to invest as the app becomes the center of our connected trip experience. In addition, we see better customer loyalty, lower customer acquisition costs, and more opportunities to engage directly with travelers through our app. Booking.com was the most downloaded travel app globally in the first quarter, according to a leading third-party research firm. We now see over two-thirds of our bookings come through mobile devices, a majority of which are on the app. One of Booking Holdings' goals is to do well in the area of sustainability. I was very pleased to recently make public our 2020 sustainability report. And one achievement that I am particularly proud of is Booking Holdings becoming operationally carbon neutral in 2020. This is a significant milestone for our business, and one we were working towards even prior to the pandemic. We intend to remain carbon neutral in our operations in the future and look forward to making progress on our sustainability strategy, including diversity and inclusion and sustainable travel. In conclusion, the exact shape and timing of the full recovery for travel remains uncertain. However, I am encouraged by the signs of recovery we are seeing in some countries, and I'm confident that we will eventually see a strong recovery in travel demand globally. That being said, we are likely to experience volatility between now and then, with some countries recovering well, others beginning to recover, and unfortunately, some getting worse. I'm proud of the actions that our teams across Booking Holdings continue to take to strengthen our company's position and execute against our strategic priorities. We are thinking about our business beyond just getting back to 2019 levels of demand. We are focused on building a larger and faster-growing business that generates more earnings into the recovery and for the long run.

Thank you, Glenn. And good afternoon. I'll review our operating results for the first quarter and provide some color on the trends we've seen so far in the second quarter. To avoid the comparison to the initial spread of the pandemic in 2020, all growth rates are relative to the comparable period in 2019, unless otherwise indicated. Information regarding reconciliation of non-GAAP results to GAAP results can be found in our earnings release. I also want to remind you that, during the period of bookings recovering, revenue will recover more slowly than bookings due to timing differences and this will impact our booking to revenue take rates.

Now, on to our cash and liquidity position. Our Q1 ending cash and investment balance of $16.4 billion benefited from the $2 billion raised in our euro bond offering completed in March. In April, we used all the proceeds from the euro bond offering to redeem higher coupon senior notes that we issued earlier in the pandemic last year. These refinancing actions we took will result in approximately $70 million in annualized interest rate expense savings and were NPV positive transactions. Adjusting our Q1 ending cash investments for the redemption of the two senior notes that happened in April will result in a balance of $14.4 billion, which is down from our December ending balance of $14.8 billion. We had a $207 million operating cash outflow in the quarter, driven primarily by change in working capital, which represented the use of cash about $216 million in the quarter. We will continue to focus on maintaining a strong liquidity position, given the high level of uncertainty created by the COVID pandemic. And consistent with our clients over the last year, we halted our repurchases of our stock and will not initiate repurchases until we have better visibility into the shape and timing of a recovery.

Now on to our thoughts for the second quarter. There continues to be considerable uncertainty about the shape and timing of recovery for travel, which means that we're unable to provide detailed guidance at this time. April room nights declined about 43% versus 2019, which is better than the decline in March. Domestic room night growth was about flat versus 2019 for the month of April, the best monthly result for domestic room nights since last summer. On a regional basis, the US continued to have very strong room night growth in April and was above March levels. Europe room night declines were better in April than in March, recovering from a softening of trends we saw at the end of March and the first week of April. Room night declines in Europe were down over 50% in April. Asia room night declines worsened in April versus March as outbreaks in new cases increased, vaccination progress has been slow, and governments continued to impose restrictions on travel. Asia was the least recovered region in April. While difficult to predict with accuracy, if current trends continue, Q2 room night declines could be a few percentage points better than in April. To give you a snapshot of what we're seeing recently, room night declines over the last seven days of April were about 38%. As I noted earlier, in Western Europe, the booking window expanded in Q1. This expansion continues into April, and we continue to see positive summer booking trends in Western Europe. Across all of Western Europe, gross bookings for the summer period are now within 30% of where we were at the same time in 2019. And for the UK, they're now at about the same level as we were at the same time in 2019. We remind you that the significant majority of summer bookings are cancelable. Turning to the income statements, as I said, we expect Q2 room night declines could be a few percentage points better than the decline in April. We expect Q2 gross bookings decline slightly less than room nights, driven by the same trends we saw in the first quarter. We expect Q2 revenue to decline more than gross bookings due to timing factors we've discussed. As a result, we expect our Q2 revenue, as a percentage of gross bookings, will improve from Q1, but will be a few percentage points lower than in Q2 of 2019.

I think a couple of things would help. Can you give us any updates or your thoughts on the mix between US, Europe and Asia, just so we can think about the recovery? And then, can you remind us what happened in Europe last summer when cases came down? Did you see a rapid increase? And are you seeing bookings pick up as people are vaccinated right now in Europe?

Justin, let me take that. So, just to remind you of our historic mix, we have basically said that Europe is, of course, our largest region historically. If you think kind of roughly 50% or maybe a little bit more, you wouldn't be far off being correct. Asia, we said, historically, again pre-COVID, was about 20% with no single country being more than low-single digits. And that means that you've really got 30% left for US and rest of world combined. So, that is our pre-COVID mix. Obviously, that mix changed a little bit with the dynamic of what's happened recently. Obviously, the US has gone up as that's been the most recovered marketplace. So, that's the historic reference points. In terms of last summer, we saw a couple of things. We, of course, did see, after the first wave came down, we saw people getting more confident with traveling. Of course, vaccines were still not available at that point in time. So, people were kind of traveling quite carefully and traveling locally. What we have seen and we saw in several places, what we've seen so far is a very consistent trend, that when cases come down, when vaccination rates go up, when government restrictions start to lift, good things happen. We see that happening in the US right now. We see that happening in Israel. We mentioned a couple of other areas that are doing better than the average. So, our expectation is that we'll see those positive trends start to occur in other parts of the world, particularly in Europe as things are starting to improve. As we mentioned, we are seeing things improving on April versus March and Europe is now no longer the least recovered region.

Maybe one follow-up. You mentioned share gains. Maybe for Glenn, the opportunities. Maybe you can give us a little more color on that. And do you think your US bookings are trending above kind of industry averages right now?

As I said, I'm very pleased with the Q1 results in the US. I mentioned both Priceline.com and Booking.com doing well. So, we are very happy about that. I don't have – we're not done with the quarter yet. So, we don't have industrywide numbers to go against. So, I'm just going to say that I'm pleased with what we're producing and we'll see how everybody reported how we did.

I have a couple of follow-ups on the US growth. Can you give us any more of a sense of how much Q1 improved versus Q4? And obviously, the overall industry improved in the US in the first quarter quite a bit, but was Booking.com or bookings growth in the US also a product of any specific decisions you made in the first quarter along the lines of your new strategic – increasing strategic focus on US share gains, for example, changing the way you're doing marketing or anything like that?

Why don't I talk generally about strategy and then, David, if he wants – I'm not sure he wants to disclose anything more about specific numbers and gains. I will say this. I've said this in several calls in the past, actually many, about increasing our performance in the US is a strategic priority. And we have said that we under-index in the US. So, we are doing many, many things to try and improve that. And everything from the basics of making sure we have the right selections of properties that people want to making sure it's the right price, making sure we're competitive. I talked about how we had to have the US payments platform up and running for Booking.com, so we can do creative, new things such as our back to travel promo, which of course wasn't in Q1, but just another example of things that we're doing. And there's a lot of just blocking and tackling done by both teams, Priceline.com and the people at Booking.com, working with our suppliers, coming up with ways that we can help them get more customers. So, it's so many different things. There's no one thing to say that was the silver bullet. And I expect that we will be able to continue to do this. I hope to be able to continue to do this in the future. It will remain a priority for us. And, David, if you want to talk about numbers.

I will just, Kevin, reiterate what we said and give you a little flavor, make sure you understand where the emphasis was. So, things did improve significantly sequentially in the US during the quarter, and we have positive room night growth in the US year-on-year, which is great, because, obviously, international business was still down a fair amount. When we got into March, that room night growth in the US was very strong, which I characterize as above any of our normal growth rates. That strengthened further into April. So, very strong plus. And then if you just kind of double-click down and look at just the domestic, recognizing there is some substitution effect in there, the growth rates in the US were very strong for the entire quarter, positive for each month of the quarter and getting stronger, was again stronger in April than it was in March.

If I could, just one follow-up on, you did the $50 travel credit promo in April. You see that as kind of an ongoing tactic or strategy that you might use? How much would this shift be a shift in costs from marketing spend to contra-revenue?

Well, we just put it out. Still an opportunity still to book on that one. It goes till the end of May for US people. They can still do a book, but they had to do the – in April, they had to actually activate it. So, we don't have a lot of data to tell you what we think that's going to be. It certainly is something that – it's one different thing that I pointed out, not because a huge driver, but just an example of things that we haven't done in the past that we will do in the future. And in fact, you may have noticed it, we started a very similar, but not exactly the same program in the UK yesterday, or maybe it's two days ago. The point being that we're trying to be more creative and going forward coming up with different ways to bring those customers to us, show them what a great product we have, great service we have and make sure they come back to us in the future, albeit not with the promotion.

I've got two questions. I want to first start off, I think, Glenn, you made some comments about the mix of alternative accommodations, and being I think relatively similar in the March quarter versus a year ago. And I guess, I would have thought that it would have been kind of structurally higher, that somehow because of – during the COVID crisis. I know you talked about that mix increasing. Did you expect it to recover back? Would you expect it to revert back to where it was before? That is alternative accommodations as a percentage of your lodging mix. Or would you expect it to be somewhat elevated post-COVID just because of the greater exposure that a lot of consumers had to that during the crisis?

Mark, I'll address your question about future expectations first. Dave mentioned the geographic mix, so I'll let him elaborate on that. Over the years, there's been a noticeable shift in consumer interest towards alternative accommodations, a trend that has been steadily increasing. The COVID pandemic accelerated this shift, as many individuals who may not have considered alternative options began to seek homes that are away from crowded areas, like those near the beach or in the mountains, for a sense of safety. Now, the key question for the future is whether people will revert to their previous habits of using hotels or continue to prefer homes. It’s uncertain, but I believe that those who experienced alternative accommodations during the pandemic will keep them as a viable option. While their choice of property will vary based on personal needs, the inclusion of these options in their considerations indicates a lasting change in preferences. We have a vast selection of both hotels and non-hotel accommodations, positioning us well in the global market. However, I previously mentioned that in some regions, we do need to build up our supply. David, could you clarify the issues related to geographic mix and property types?

Mark, let me just explain that maybe in a slightly different way. So, starting with Europe, if you just look at our business within Europe, you only looked at it with that lens, you would see alternative accommodation mix in Q1 last year up a fair amount compared to Q1 2020 and also versus Q1 of 2019. So within Europe, where we have our largest mix of alternative accommodation, we see an increase in mix. But you also remember, I said that Europe in Q1 was our lowest performing region. And of course, the highest performing region was the US where we have a much larger mix of alternative accommodation. So, that mix effect means that, in total, our alternative accommodation mix did not increase. But in Europe, for example, where it's the largest, it did increase a fair amount. So mix effect is really the biggest region. In total, in Q1, the mix of alternative accommodations was very similar to the 30% number we gave out for all of FY 2020. But again, within different regions, there are shifts occurring.

If I can ask one follow-on question, I think you talked about a better ROI in paid marketing channels. And just your guess as to whether that's sustainable or not. Thanks a lot.

That's a good question. There are many things going on in ROI. So, yes, we did see slightly improved ROI on the paid channels. We also saw an increase in direct mix. And those two together let us have marketing grow less than bookings in the quarter. But there are many factors that go into accounting ROI, including your cost per click, conversion rate, cancellation rates, and we're still in a period of, I'd say, high volatility across all of those. So, it's not reasonable to point to any one factor as to why ROIs were up, but they were up slightly. And it's only just one quarter. So, given the volatility of things happening, we wanted to point it out, but too early to call a trend.

Can you just talk a little bit about, I guess, booking frequency associated. It sounds like there has been meaningful pickup in share with you guys' app. Just kind of talk to us a little bit about booking frequency on app and how that compares to non-app users. Thanks.

David, I don't know if you ever disclosed anything in terms of frequency on the app?

No. Chris, let me tell you about what we have talked about and see if that answers the question and then maybe we haven't got your question completely right. But just to kind of remind us where we are right now, over two thirds of our bookings are mobile, majority of those are on app. Our app booking customers are our most frequent bookers relative to other direct channels. Because always we can have a direct booking through a mobile web direct booking or through a desktop booking. And the app bookers are the most loyal and the most returning. But we really haven't gone into frequency. And also, I'd say right now, in the current environment where we're still very much recovering, frequency metrics are not the most critical ones that we focus on right now. It's more the overall top line growth rates. But we are pleased what we're seeing with a trend towards app usage, the increase in the mix and the repeat behavior of app users. Those are all positive things for us. No, that was related to employee stock purchases. That was not buyback related.

This is Alax Wang on for Brian. Thanks for taking our question. First, just on flights, I appreciate the update on the rollout to 18 countries. Maybe any early learnings you could share with us, particularly in the US and potentially attach rates that you could share and sort of what do you foresee as the key two or three incremental investments to sort of execute on flights as we progress through the year?

We don't give away – I don't believe we ever talked about the actual attach rates. But I will say that that is an important reason we do flights and that getting that booker upfront is important, so that we can then get them to buy something that will have a higher margin. The 18 countries in the Booking.com is now working in, we are getting initial – and we've been doing it for some time now, obviously, I guess a year now approximately. We are getting some learnings, how can we improve it, how can we make it better? We really haven't marketed this at all in terms of the way we market our hotels offering because we want to get it right before we start spending a lot of money. We don't want to waste money as you know. I am very pleased, though, with the very limited effort that we've done that people are using it and we are getting feedback that people are coming back. So, that's good. It's something that's important for the long run. And I want to emphasize how much this is a long game we're playing here because, as you know, the number is still very, very, very small and this is very early. But we hope in the long run that this connected trip, which is not just the flights, but it's also the ground transportation and the attractions and the dining, all the things that people do when they are traveling, to create something that makes them want to always use our app more than anything else. When they think of travel, they come back to us. So, it's critical that we have that first thing, which is important to a lot of people, flights. And we're going to continue to make investments into it to make sure that is absolutely a great, great service.

Just one follow-up. I think a couple quarters ago, you guys had tested a digital brand campaign. I'm not sure if there's anything you can share on that. But maybe bigger picture, as we look at the performance channels ex search, do you see any opportunities to sort of lean into more of the non-search performance channels with online video as we're seeing increasing sort of digital transformation as a result of the pandemic?

We recognize that's where the eyeballs are going. So, we need to make sure that we are putting our name appropriately in front. So, people when they think of travel, they think of us. So we are cognizant of that fact and we are we are working on that. So yes, we will continue to work with that.

I have one on agency versus merchant bookings and one on payments. So, the one on agency versus a merchant, it looks like the merchant bookings recovered to a level much quicker in 1Q compared to agency. Is there anything to kind of call out there to explain the quicker recovery? And then on payments, you guys mentioned you guys are north of 20% of bookings. Is there a specific target you guys plan to reach in the long term? And how should that flow through to say revenue and operating margins over time?

Actually, we saw a slightly lower mix of merchants in Q1 this year than in Q1 last year, both in total and at Booking.com. Because bear in mind, you're kind of comparing essentially an almost a non-crisis quarter – last year, of course, Q1, in March, things got worse, but most of the quarter was not crisis. And now you're talking about – comparing with a quarter that is very much still in the crisis with recovery mode. So, people in the short term, looking at the more flexible agency, pay the hotel model because that has just an attractive proposition in times like this when flexibility becomes very, very important. We do expect the merchant business to actually increase during the year at Booking.com where we have obviously the big mix shift happening. And we still think that the merchants business in total in 2021 will be a slightly higher mix than it was in 2020. But of course, flexibility is one of the factors that is important as people are looking at the bookings in this environment.

In the long view, we'd like to get as much business as possible on payments because we believe we'll create a better service for both our customers for traveling and our supplier partners to be able to do all sorts of things you can't do when it's just a straight agency play. And we believe we can provide value to everyone in that way. And I gave that example earlier about – we couldn't do a back to travel promotion if we didn't have a payment product to do that. And there are many ways we're going to be able to merchandise people's – our supplier partners, different ways to merchandise their offerings in ways that you can really only do well with a payment platform.

Just to kind of reiterate what we said before about how it plays out in the income statements, we get additional revenue from providing the payment service. We have a variable cost related to that sitting in sales and other, which is where you see the biggest offsetting a cost element to offset – to match the revenue. There are some incremental expenses, obviously, in our other lines as well related to running the payments program, but the biggest variable cost is sitting in sales and other. As we mentioned, in 2020, the payments business operated very close to breakeven when factoring particularly variable costs into account, which is an improvement from what it was before. And it's obviously an enabler for business, as Glenn just articulated.

This is Dae on for Doug. Thanks for taking the questions. My first one is on your alternative accommodation product. You've talked about works needed to improve the product in the US. Is that just inventory and awareness that you've talked about in the past? Or are there other areas where you see opportunities to improve? And then, just on the room night growth and booking growth, it seems like there's been a sizable divergence in trajectory. Kind of feel like anything else notable that's driving that and how should we think about the relationship between the two going forward?

I'll take the first and, Dave, why don't you take the second? So, in terms of the alternative accommodations in the States, the things you mentioned are very, very important. We've got to have the right properties for the customer. And I've talked about this in the past that we under-index with the private homes, the single homes in the States. And that has been a popular product in the States because of the pandemic. And that's something that we are continuing to work on in the future. It's also just the process in general, how we get people on board, who we're dealing with to get them to come in. And we currently use the multi-product property managers more than, say, some of our competitors who go out and get individual properties. So, there's a difference in how we're doing it right now. I do believe this is a very achievable goal to be as competitive as anybody else. As David mentioned earlier about mix, we do a great business in Europe in the alternative accommodations area. A very good business. And there's no reason we shouldn't be able to do the exact same thing here in the States, though it is taking time.

On what's going on between the dynamic between room night growth and booking growth, a couple of factors going on here. One, I mentioned the fact that we're doing – that we're seeing better booking growth performance from flights because of volume. And also, we are doing – even though the units are down for 4% to 6% in car, there's actually fairly good increase in rates for cars. So total bookings, the TGV, has done better for both flights and cars than it did for accommodations. But the biggest factor is really what's going on with ADRs. And there has been a bit of a shift in what we've seen even in the last couple of months. And we are – saw that ADRs in the quarter were only down 1%. Now, I would say a couple of things. Now, the like-for-like ADRs are absolutely still under pressure due to lower occupancy rates. But there are some mix benefits that really impact the year-on-year comparison. The first mix benefit was the mix shift towards the US as the US really started to accelerate, particularly in March. You saw a really fast pickup in growth rates in March that we were not forecasting when we last met you. So, that was a positive for room night growth, but also for ADRs. And also in Europe, what's happening is, right now, because there are still a lot of restrictions, people booking today are generally booking more often for the summer holiday and the summer holiday period in Europe has higher ADRs than most short-term stays. So, those two mix effects are really helping the ADR picture. And we expect both the phenomena that I talked about in terms of air and car and ADRs are likely to go through to Q2 as well. But we do think the ADRs will start to be driven down again in the second half due to a couple of reasons. Again, the like-for-like ADRs are under pressure. As an example, our stay ADRs in the first quarter were down mid-teens if you exclude regional mix.

Thank you. So, in closing, I want to thank our partners, our customers, our dedicated employees and our shareholders. We appreciate your support as we continue to navigate through these better, though still difficult times, and we want to continue to build on the long-term vision for our company. Thank you. Thank you, everyone, and please be safe. Good night.