VALUE: After Hours (S08 E07): Buying Booking.com at Peak Fear: COVID, Google & Mispriced Risk

During their recent episode, Taylor, Carlisle, and Jonathan Tepper discussed Buying Booking.com at Peak Fear: COVID, Google & Mispriced Risk. Here’s an excerpt from the episode:

[Jonathon] Certainly. So with Booking, it was actually very interesting because it wasn’t just COVID. Obviously, COVID, people had questions about the duration of the lockdowns and the disruption of travel.

And our view was that historically, when you’d seen, for example, there was the recession in 2001, 2002, and you had SARS and there were fears about travel, these tend to be temporary in nature. People want to travel, they want to see friends, they want to see relatives. Almost any interruption of travel historically had been brief.

And our view was that that would be the case. The stock price was certainly not priced for that. It was priced for a much more negative outcome.

But on top of that, you had the fear that essentially Google might get into travel, it might disintermediate booking, people might go to booking first, sorry, Google first and then go book their hotel. And so you had a variety of reasons why it might be lowly valued, despite being such a high quality company. Today, it’s interesting that you obviously have the fear of AI, where agents might do what people were thinking Google might do, which is to disintermediate some of the platforms.

So some of these fears don’t go away, they just sort of recur over time. Our view is that Google does not want to be the merchant of record. They don’t want to run a customer service department.

They don’t want to be the ones dealing directly with the hotels. Booking and Expedia actually do advertise significantly on Google. They would end up hurting themselves too in terms of losing all the ad revenue if they actually did want to go into that line of business.

And Google is much more sort of search for everything rather than trying to dominate a vertical. And so I think our view is diverse in those two areas. One, the duration of the downturns and two, the threat posed by Google.

And as it turns out, booking, I think they have one of the best CEOs in the world, Glenn Fogle, and they’ve managed to dramatically increase the traffic that they get directly going via their app. People aren’t starting on Google and ending up on booking. And then Google has never really actually followed through in terms of the worst fears that people had, where people might do their entire booking experience via Google, which just doesn’t happen.

You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:

VALUE: After Hours (S08 E07): Buying Booking.com at Peak Fear: COVID, Google & Mispriced Risk

Read next