Booking takes $1 billion hit over possible FTC settlement

Booking Holdings recorded a $900 million revenue reduction and a $100 million loss in the third quarter, both tied to a potential Federal Trade Commission complaint against its Priceline brand. The online travel group disclosed the figures in a quarterly filing on Tuesday.

"Priceline is in discussions with the FTC to seek to resolve a potential complaint from the FTC," Booking said in a statement.

The filing adds that the FTC may seek restitution and penalties exceeding $1 billion, the level above which the figure matters most. Booking also flagged possible litigation and similar claims in other jurisdictions, and said that litigation remains possible even while the two sides negotiate.

Booking first said in the second quarter that the FTC planned to file a complaint against Priceline and a B2B affiliate partner. The agency's concerns cover disclosures, fees, customer support and billing practices, Reuters reported last month, citing anonymous sources.

Reuters reported last month, citing anonymous sources, that the affiliate partner is Guest Reservations. Booking's own filing does not name the partner, and the company has not said what the partner's share of any penalty might be.

How the quarter looked underneath

Net income fell 1% to $2.7 billion on revenue of $8.9 billion, which was also down 1%. The $900 million reduction and the $100 million accrued loss are the charges the company attached to the FTC matter within those results.

Room nights, the volume measure for stays booked on the platforms, rose 7% in the third quarter. That is faster than the 5% growth recorded in the second quarter, so demand accelerated even as the regulatory cost landed.

Connected trip transactions, meaning bookings across two or more verticals, grew almost 20% year over year. They made up a low double-digit share of Booking.com transactions, so the faster-growing category is still a small part of the flagship's volume.

Chief financial officer Ewout Steenbergen described the fourth-quarter travel environment as "mixed". He pointed to moderation in international demand, with domestic travel holding up as travellers take shorter trips closer to home.

A European investigation alongside

The FTC matter runs alongside a European Commission investigation into Booking.com. The Commission has called the platform's practices for combating fake listings and phishing "substandard", so scrutiny now comes from regulators on both sides of the Atlantic.

The two cases involve different brands and different concerns. The US complaint concerns Priceline and its disclosures, fees, support and billing, while the European inquiry concerns Booking.com and how it deals with fraudulent listings and phishing.

Skift's coverage of the results notes that the Middle East conflict and higher airfares continue to make their mark industrywide. Booking's own commentary on softer international demand and shorter domestic trips fits that wider picture.

Booking has not reached a settlement, so the $900 million revenue reduction and the $100 million accrual are accounting estimates rather than payments. The filing leaves open whether the final outcome is a negotiated deal or a court case.

The company gave no date for resolving the talks.

For now the group reports a quarter in which revenue and net income each slipped 1% while room nights climbed 7%. The next disclosure to watch is any further filing on the Priceline discussions, which Booking says are continuing.

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Images: Booking Holdings