By Anshuman Tripathy
Aug 4 (Reuters) - Booking Holdings beat Wall Street estimates for second-quarter profit on resilient U.S. domestic travel, but trimmed its annual gross bookings forecast as the online travel firm navigates the fallout of the conflict in the Middle East.
Shares of the Norwalk, Connecticut-based company, which is kicking off earnings season for the U.S. online travel industry, rose 6% in extended trading on Tuesday.
Appetite for travel has remained steady, despite the conflict in the Middle
East, which has entered its sixth month, clouding the outlook for the global industry.
"While long-haul international travel remained pressured by elevated airline prices and reduced capacity due to the conflict in the Middle East, domestic and intraregional travel remained relatively healthy," CEO Glenn Fogel said on a post-earnings call.
Booking said it expects reduced inbound travel to the Middle East and pressures on global flight routes to persist through the third quarter.
The Agoda-parent expects full-year gross bookings growth to be in high single-digits, down from its prior forecast of high single-digits to low double-digits.
Hotel operators such as Marriott, Hilton and Hyatt have also flagged a drag in room revenue in the Middle East region.
The Kayak-parent posted an adjusted profit of $2.54 per share, beating analysts' estimates of $2.45, according to data compiled by LSEG.
AI BETS PAY OFF
The company's executives said AI investments are already yielding measurable financial benefits.
"We are already seeing a return on investment that is positive on our AI investments today as a company," said finance chief Ewout Steenbergen.
Fogel said customer service cost per booking continued to decrease at a double-digit rate during the quarter while overall customer satisfaction remained high.
Worries about AI agents, such as OpenAI's ChatGPT and Google's Gemini, taking over the booking process have weighed on share performance of online travel companies.
"We expect gradual testing (of Google's AI Mode agentic hotel bookings) rather than large-scale displacement of price ads, and expect a strong presence from Booking & Expedia in the new format," TD Cowen analyst Kevin Kopelman said.
(Reporting by Anshuman Tripathy in Bengaluru; Editing by Sriraj Kalluvila)
