HOTREC Takes Stock of Booking.com Changes Following DMA Regulatory Dialogue

Truist Securities lowered its price target for Booking Holdings (NASDAQ:BKNG) to $216 from $242, citing sentiment concerns. The stock is down 24% over the past year. Despite this, the firm maintains a Buy rating, noting the company's diversified global business and attractive valuation with a P/E ratio of 18 and PEG ratio of 0.3. Recent Q2 results beat expectations, with an 8% increase in gross bookings and 7% revenue growth in constant currency.

Booking.com has stopped using external hotel prices to determine eligibility for its Sponsored Benefit program in the European Economic Area, following regulatory dialogue with the European Commission. The change aligns with the Digital Markets Act, ensuring hotels can offer different rates outside Booking.com without disadvantage. The platform also removed 'competitive' and 'non-competitive' labels and increased transparency for hoteliers.

Booking Holdings, owner of Booking.com, has removed parity clauses in the EEA to comply with the EU's Digital Markets Act (DMA). The DMA bans such clauses for designated platforms like Booking.com, ensuring service providers can offer different prices and conditions elsewhere. The European Commission designated Booking Holdings as a gatekeeper in November 2024, triggering these obligations. The changes do not affect ongoing proceedings against Booking by member states' competition authorities.

Booking Holdings' bid to acquire Etraveli Group was dismissed by the EU court, which ruled the deal would strengthen Booking's dominance in the hotel market. The court accepted Booking's market share would increase by a small fraction. Booking plans to review the judgment and consider an appeal. The deal was valued at about 1.63 billion euros, according to Reuters.

The EU General Court upheld the European Commission's 2023 prohibition of Booking Holdings' acquisition of eTraveli, citing concerns over conglomerate effects. The court ruled that the EC can intervene in mergers where an adjacent market acquisition may strengthen a dominant firm's ecosystem, even with a marginal market share increase. Booking argued against the EC's theories of harm and counterfactual assessments, but the court largely sided with the EC.

Airbnb (ABNB) fell 8% to $150 despite 17% revenue growth, as investors reacted to Meta's AI agent Muse, which could bypass travel intermediaries. Booking Holdings (BKNG) and Expedia (EXPE) also dropped. Airbnb's unique inventory and direct host-guest relationships may mitigate AI impact. The stock's consensus target is $184.35.