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Booking Holdings Stock: Benefiting From Strong Travel Demand (NASDAQ:BKNG)

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Young family having fun traveling together

Miniseries/E+ via Getty Images

investment work

posting balances (NASDAQ:BKNG) has been one of the top compounders, with its stock price going from $50 in 2008 to over $2000 in 2020, a 4,000% increase. The company is the world’s leading provider of online travel and related products Services. It primarily operates through six brands including Booking.com, Priceline, Agoda, Rentalcars.com, KAYAK and OpenTable. It is present in over 200 countries with over 100 million active users worldwide. However, the unprecedented pandemic of 2020 shattered the company as the entire travel industry shut down due to global lockdowns. With the company down 30% from its all-time high, I think this presents a good buying opportunity for investors while the company continues to recover.

As the pandemic eases and travel restrictions ease, Booking Holdings should benefit significantly from these tailwinds. It reports strong financial results and has a very solid balance sheet. Recent earnings from other travel companies also point to resilient travel demand and spending despite a slowing economy. The company also now trades at a historically low valuation. Therefore, I believe Booking Holdings is a buy at the current price.

BKNG stock chart
BKNG Data from YCharts

Strong results

posting balances reported very strong gains back in May, signaling a better than expected recovery. The company reported revenue of $2.7 billion, up 136% year over year (YoY) from $1.1 billion. Agency revenue was $1.5 billion, up 102%, dealer revenue was $1.1 billion, up 182%, while advertising and other revenue was $195 million, an increase of 282%. Bookings also posted robust growth, rising 129% year over year to $27.3 billion, the highest quarterly amount in the company’s history. The increase is largely due to improvements in overnight stay trends (up 100% YoY), higher overnight ADRs and significant growth in global air products.

Booking Holdings also returned to profitability during the quarter. Non-GAAP net income for the quarter was $161 million compared to a non-GAAP net loss of $($215) million in the year-ago quarter. Non-GAAP net income per share was $3.9 compared to a loss of $(5.3) per share a year ago. Adjusted EBITDA also increased to $310 million in the quarter from minus $195 million, for a margin of 11.5%. Operating cash flow improved significantly to $1.7 billion from minus $207 million. The operating cash flow margin was 63%. Unlike many other travel companies, which have vulnerable balance sheets due to heavy debt burdens, Booking Holdings’ balance sheet is very strong. It ended the quarter with $10.1 billion in debt and $10.6 billion in cash, more than enough to cover all of its debt.

Glenn Fogel, CEO, next Q1 results

“Despite an uncertain macroeconomic environment, so far in the second quarter of 2022 we have seen a continued strengthening in global travel trends and we are preparing for a busy summer travel season. I am encouraged by how well our teams are at capturing travel demand in this recreational environment and our progress in expanding our payments platform at Booking.com as we work towards our Connected Trip vision.

income from other companies

Recent earnings reports from travel companies indicate strong travel demand and spending as consumers are finally able to travel abroad after nearly two years of global border closures. Companies like Hilton (LDS), Visa (v) and American Airlines (EEL) all indicated stronger than expected travel volume during their earnings. Hilton reported revenue of $2.2 billion, up 68.4% year-on-year, American Airlines reported revenue of $13.4 billion, up 80.1% year-on-year, while Visa a reported cross-border volume growth of 40%. Management’s comments during the earnings calls are also very positive and encouraging. I believe that other companies’ optimistic forecasts for Booking Holdings should bode well as the company is set to report earnings on August 3rd.

Robert Isom, CEO of American Airlines, continued travel demand:

Leisure demand exceeded 2019 levels in the second quarter and customers continue to show us their growing desire to travel. Loyalty program enrollments continue to be at record levels and spending on our co-branded cards is growing faster than ever.

Vasant Prabhu, CFO of VISA, continued cross-border travel volume

The robust recovery in cross-border travel continued. Index to 2019, cross-border travel volume, excluding transactions within Europe, rose to 112 in June from 94 in March. This was helped by the opening up of much of Asia earlier in the quarter.

Number of Visa transactions

Visas

Convincing rating

After falling 30% from its all-time high, Booking Holdings is now trading at a very compelling valuation. The current PE ratio looks expensive at 156x, but that’s because it’s pricing in growth for the remaining quarters of this year. If we factor in EPS (earnings per share) growth, the company is actually trading at a FWD-PE ratio of 19.6x, which is historically undervalued. From the chart below you can see that the company has traded around an average PE ratio of 25x and almost never below 20x PE since the Great Financial Crisis.

With pent-up travel demand, the company is expected to continue its strong growth, which will further weigh on its valuation. According to Seeking Alpha analyst estimate, FWD 23’s PE ratio is forecast at 15.1x, a sharp discount compared to its historical average. The company’s share price is now trading at 2017 levels, but this year’s sales are expected to be up 41.7% from 2017. I believe the current valuation is attractive and a reversal in the average PE ratio will offer over 25% upside potential in the near term.

PE ratio of BKNG stock
BKNG PE ratio Data from YCharts

Outbreak of monkeypox

Monkeypox has been one of the latest hot topics. The virus outbreak first began in the UK earlier this year and is rapidly spreading around the world. It’s over now 22,000 cases worldwide with nearly 5,000 cases in the US alone. Health authorities around the world are very alarmed and vaccines are now on the way. I believe investors should monitor this closely as it could create significant headwinds for Booking Holdings.

Last Thursday, San Francisco and New York state of emergency declared about the disease, citing the rapid rise in cases over the past month. The statement will allow local authorities to mobilize more resources and personnel to combat the outbreak and speed up emergency planning. No emergency closures or restrictions are planned at this time as monkeypox is believed to be spread through very close contact. The scale and impact of this outbreak is still very small compared to COVID, but lockdowns or border closures may be possible if it continues to spread rapidly. This will once again bring the travel industry to a halt and significantly affect the company in the short term. I think the likelihood of this happening is remote, but it’s definitely a risk to be wary of.

Conclusion

In conclusion, I believe the current decline is unwarranted and long-term investors should take advantage of this opportunity. Although the stock price is close to 30%, Booking Holdings continues to see a robust recovery. It posted a very strong result with the highest booking amount in the company’s history. Sales increased by triple digits with strong growth across all revenue streams and the company returned to profitability. The results of other travel companies also indicate that the demand for travel remains very strong. The company is also now trading at a historically low valuation while continuing to benefit from reopening tailwinds. The recent monkeypox outbreak could bring unprecedented headwinds for the company, but the risk of it happening is very slim right now. Therefore, I rate Booking Holdings as a buy.



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Travel

Beyond the hype, a dirty side of Da Lat

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Most of this is true, but that’s not the only local reality where things get pretty ugly, too. Unless this reality is recognized and seriously addressed, Da Lat will lose its charm and become a shadow of itself.

Here’s an unflattering picture of the other side.

When walking or running on a sidewalk around Xuan Huong Lake in Da Lat in the early morning, at a certain point you can no longer stay on the sidewalk. One is forced to walk or run into the street as there can be up to ten street kitchens completely blocking sidewalk access. Going out on a street at night can be a bit dangerous as there are quite a number of drunk drivers on the road at night, some driving at speeds well in excess of 120km/h.

These street vendors sell food and drink in plastic bowls and cups. Plastic waste is scattered about a hundred meters in front of and behind their stands. Food and drink thrown away or spilled on sidewalks and streets is a common sight.

Because food safety isn’t monitored regularly, or because people might be very drunk, it’s also not uncommon to see vomit on sidewalks. Open stool and urination is a regular occurrence in the early hours of the morning.

There are many signs along the lake advising that making fires is forbidden, but the street vendors completely ignore them. Many tourists from warmer parts of Vietnam easily come to Da Lat in shorts and T-shirts, despite the colder weather. Street vendors want these visitors to stay warm so they stay longer and buy more food and drink. Sidewalks are often blackened with ash from these staying-warm fires.

When I was photographing these fires, a street vendor threatened to stab me with scissors several times. Some vendors started throwing rocks. A man tried to grab my walking stick and the cell phone I use to take pictures. I reported these incidents to the police but they took no action.

These charcoal fires release many deadly toxins such as PM2.5, carbon monoxide and benzene. When street vendors run out of charcoal, some start burning plastic waste. Burning plastic waste releases dioxins and other highly toxic substances. A piece of dioxin the size of a grain of rice is enough to poison a million people.

To keep their customers happy, some street vendors sell beer and other alcoholic beverages. Some install large speakers so their customers can sing and make lots of noise when they get totally drunk. Not infrequently, the karaoke singing continues until 4 a.m. and can be heard up to two miles away. Although the law prohibits singing karaoke after 10:30 p.m., this law is not enforced around Xuan Huong Lake. Once I heard karaoke singing in three different places around the lake, all blaring at the same time.

Almost everything I have described so far represents laws that are constantly being broken. But why don’t street vendors and their customers obey the law when it’s clearly stated on signs in the area?

The answer is simple.

Laws are not enforced. I have more than 12,000 pictures on my files of breaking the law in this city that gets dirty and ugly quite often, but I didn’t see a fine being issued when I called the police to intervene — not once.

A policeman explained it to me in a somewhat pompous way. If the police consistently enforce laws, it would infuriate many people, and with many angry people out and about, the country’s stability would be undermined and civil unrest could ensue.

The same officer went on to explain that if the police strictly enforce the law, things could get out of hand very quickly. People could become violent, and if the police hit back to defend themselves, controversy would ensue.

Police Policing

With a huge police force and militia, Vietnam has everything it needs to counter the violence and maintain political stability. So what’s the problem?

For many years, the police in Division 8 themselves have blatantly flouted the laws about dumping trash, throwing cigarette butts on the ground, and burning garbage. They even ran a fire pit on police property.

How can the police enforce laws when they themselves break them all the time?

On October 31, I informed a senior police officer in Da Lat that I have over 12,000 pictures of people breaking laws – laws related to setting fires on sidewalks, burning trash, dumping trash, dumping of waste and fishing in the filthy waters of Da Lat Xuan Huong Lake and its stinking lagoons, singing karaoke until 4 a.m., binge drinking, drunk driving, high speed motorcycle racing and so on.

I was surprised when he explained that I should not photograph people breaking the law unless their lawlessness directly impacted my safety and well-being.

Surely it is every citizen’s duty to record violations of the law and report them to law enforcement?

Even when someone threatened me with violence, he advised me not to take photos and to report the person to the police unless I had stab wounds or other injuries.

I was stunned.

I think the government needs to be much more serious about enforcing its most basic safety and environmental laws. If it doesn’t, it won’t be able to tackle far bigger things like the impact of global warming, carbon neutrality and sustainable development.

Photos by Paul A. Olivier of public waste in Da Lat:

*Paul A. Olivier is an American expat living and working in Da Lat.



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How two Hyderabadi 3D artists are popularizing city’s flyovers, roads, buildings at global level

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Kodak Moment: How two 3D artists from Hyderabadi are popularizing overpasses, roads and city buildings on a global scale

Hyderabad: For most of us, photography means clicking photos of a beautiful sunset, landscape or people. But Laxman Pithani and Nikhil Chakravarthy from Hyderabad are crazy about new buildings, roads, highways, flyovers and other infrastructure projects in the city.

“When you’re driving on a newly constructed freeway, with not many vehicles and hardly anyone to stop you or ask you anything, you have a kind of absolute freedom. We both enjoy it,” says Nikhil.

Laxman and Nikhil jointly run a Twitter and YouTube page, Traveling with Laxman, where they post videos and photos of newly constructed or inaugurated flyovers, roads and buildings. They have released drone footage of the Uppal SkyWalk project, the renovated Yadagirigutta Temple, Gandipet Park, the Biodiversity Flyover and more.

Laxman (left) and Nikhil (right) at the recently inaugurated Shilpa layout transition

Her most recent work was the transition of the Shilpa layout. When the city witnessed their first Formula E racing event, they were there to capture the track on which the race took place. On their Twitter Page Travel with Laxman, they have around 2,806 followers and on their youtube Page they have around 57,000 subscribers.

Transition of the Shilpa layout

It’s not about the end product. But Laxman and Nikhil began pursuing infrastructure projects in the city from the start. “If there are upcoming projects, we consult the person concerned and get detailed information about it. We shoot it from start to finish,” says Laxman.

In this way, it helps the audience to keep up to date with the progress of these projects.

T hub

When Laxman met Nikhil

Laxman is originally from Hyderabad but Nikhil is from Tenali in Andhra Pradesh. He moved to Hyderabad in 2002. Both met in 2007 in an animation institute `Arena; where they served as 3D training faculty. Here they taught the students how to use animation techniques in films and character forms. They later moved on to teach interior design at the same institute. In 2015 they both joined Custom Furnish, a company specializing in interior design, where they worked as 3D artists. In 2019, Nikhil left and Laxman continued for another year and a half before retiring in 2021.

Durgam Cheruvu Bridge

Ever since they met, they have discovered their shared passion for travel. Your definition of travel sounds very unique and interesting. “We both love to explore unknown roads. I can drive straight for 10 hours without thinking about the destination. We used to always discover new roads, overpasses, buildings, etc. on such trips, which fascinated us a lot. Each specific destination where nobody bothered us gave us a different kind of freedom,” explains Nikhil.

Until December 2021, Laxman and Nikhil were doing this as a part-time job. But in December 2021 both resigned and started doing so full-time.

Her work is now also being recognized by the Telangana government, which is asking for her help in getting photos of some of the infrastructure projects in the city.

Command and Control Center, Banjara Hills

Development in Hyderabad

Both Laxman and Nikhil say the pace of development in Hyderabad has been very fast compared to other cities. “I was born here, so I’m really excited to see the city developing at this pace,” says Laxman. Nikhil adds: “Something happens every week that it just can’t keep up with this speed. For example, the other day when the Shilpa layout flyover was inaugurated, on the same day Skyroot Aerospace’s private rocket was launched from Sriharikota.”

transfer of biodiversity

In addition to updating townspeople on the development, Travel with Laxman now allows many expatriate Hyderabadis to regain their lost connection with the city. “We have people calling from places like the United States and telling us they’re excited about how their city is doing,” says Laxman.

Renovated Yadadrigutta Temple

The duo are happy to be able to fill this gap faced by Hyderabadis living elsewhere.



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Wedding of the week: Lovebirds elope on a Balinese beach following three months of top secret planning

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Jamie Hart, 36, and Daniel Sutton, 44

Western Australian senior graphic designer Jamie and welder Daniel always knew their wedding should be small and intimate, but they also wanted an element of surprise.

The couple, who met online in March 2021, had planned a trip to Indonesia and made the spur of the moment decision to elope because why not? They were too excited to wait a year to tie the knot, so they turned their engagement party into a secret wedding celebration.

After legally signing the papers at The Old Tower House in Perth a week earlier, Jamie and Daniel said ‘yes, I do’ in Bali, with Daniel honorably taking Jamie’s maiden name, Hart.

Jamie Hart and Daniel Sutton get married on the beach in Bali.
camera iconJamie Hart and Daniel Sutton get married on the beach in Bali. Recognition: Srivijaya Stories

When and where

The big day took place on October 22, 2022 on the white sandy beaches of the Nusa Dua Beach Hotel & Spa.

Jamie and Daniel's big day in Nusa Dua, Bali.
camera iconJamie and Daniel’s big day in Nusa Dua, Bali. Recognition: Srivijaya Stories

a dress

Jamie’s dress of choice, Morilee, was by New York bridal designer Madeline Gardner.

Jamie's dress was a stunning Madeline Gardner piece.
camera iconJamie’s dress was a stunning Madeline Gardner piece. Recognition: Srivijaya Stories

honeymoon

There was no need to travel to their honeymoon destination as the newlyweds were already there! They celebrated in Nusa Dua, Ubud, Seminyak and Canggu.

Jamie and Daniel started their honeymoon in Bali.
camera iconJamie and Daniel started their honeymoon in Bali. Recognition: Srivijaya Stories

If you would like to be featured, send your wedding details and high resolution photos to [email protected]

Add details about when, where, dress information, honeymoon and anything that made your big day special!

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