Booking Holdings Inc. (NASDAQ:BKNG) 50th Annual J.P. Morgan Global Technology, Media and Communications Conference May 25, 2022 1:50 PM ET
David Goulden – EVP and CFO
Conference Call Participants
Doug Anmuth – JPMorgan
All right. We’re going to go ahead and get started. So I’m Doug Anmuth, JPMorgan’s Internet analyst. We’re pleased to have with us today David Goulden, EVP and CFO of Booking Holdings.
So Booking is the global leader in online travel with the mission to make it easier for everyone to experience the world. Booking has more than 28 million listings across hotels, homes, apartments and other unique places to stay. It serves global travelers across more than 220 countries through six primary consumer-facing brands. David joined booking in 2018. Prior to that, he held a number of senior executive positions at EMC and also Dell.
So welcome, David.
Thank you. Great to be here.
Q – Doug Anmuth
All right. So let’s kick off and start just kind of getting a sense of where are we in this recovery? You reported strong 1Q results with your highest ever quarterly bookings, surpassing ’19 levels for the first time since the pandemic began. Where are you in the recovery and kind of resurgence? And when will we get to the point of being fully recovered?
Great question. So yes, thanks, Doug. So we were pleased with Q1 results. So our gross bookings were a record for Q1, 7% higher than they were in 2019. But room nights were still down and revenue was still down, so gross bookings were being helped by our ADRs, our average daily rates.
And of course, revenues lag indicated in a recovery. We would see further improvement into April, so it brings you current from Q1 across things improving in all our regions. And actually, in April, our global room nights were up about 10% versus where they were in 2019 and the gross bookings are more than 30% higher than they were in April 2019.
If those April trends continue, we expect Q2 revenue also to be above where they were — where it was in 2019 levels. So in terms of recovery, we’re certainly in a recovery environment. We don’t believe it’s fully recovered. We’re pleased with Q1, we’re pleased in April, and we’re in the recovering phase.
Okay. What parts do you feel like of the business that still need to catch up more?
There’s two parts of the business that really are still underperforming where we were in 2019. The first would be Asia. So Asia is now our only region, this is now for April, where we were operating below 2019 levels. But again, it did recover from Q1. So, we recovered from being down about 35% in Q1 in Asia to being down in high teens. So, a decent recovery.
The other area that’s still lagging would be international travel. For us, international travel is always a strong part of the business and its stock has been over half of our bookings. International room nights were still down slightly in April compared to 2019, whilst the domestic business had very strong growth. Within international, the intra-regional travel within Europe has led — the recovery is actually up versus 2019, but the longer haul international business is still below 2019 levels.
So the good news is what we’ve seen throughout that — this recovery is that once restrictions are lifted and people are able to travel because of safety because of lack of restrictions, travel picks up very nice. If you saw it in the U.S. last year, we’re seeing having in Europe now. Rest of world is now positive rather than 2019, and we’re starting to see Asia beginning to recover as well.
Okay. For those travelers coming back to the platform, perhaps after several quarters, a couple of years, what are some of the biggest changes that they will notice across Booking and the other brands?
I think the biggest change will be at Booking. If you hadn’t used the platform for a couple of years, you’re going to see quite a few different things on Booking.com. You’ll see the impact of us building out the Connected Trip and Payments platform. You’ll see change to the apps. You’ll see more things available in the Genius program. I’ll just cover each one very briefly.
So on the Connected Trip, many bookers on Booking.com will now be able to book or see the flight across all our platforms. Flights are now available in over 40 countries across Booking.com. Over 70% of the hotel bookers, if they want to, can now see a flight. We’ve extended the adoption of our Payments platform, not quite so visible for bookers, but you’ll see it in terms of being able to have alternative currency methods to pay in than they had before. And also, they may see the fact that we are now participating sometimes ourselves in the pricing equation with Booking actually offering a discount or some incentive owned above what the hotel properties will offer from ourselves directly.
Payments is now about 1/3 of the business of Booking.com from a gross booking point of view, up from about 13% in Q1 2019, so a pretty big difference. We’ve also made a lot of progress on the app. So apps are very important for us. Mobile is important but apps is very much the majority of our mobile activities. If you look over the last couple of years, we’ve modernized the app in quite a few ways. We’ve changed the kind of look and feel, improving the home page, landing experience to look — make it look more like a multi-vertical travel offering. You see flights, ground transportation, et cetera, and just made it a much more complete and easy-to-use experience.
It’s not been a onetime thing, but there’s been a number of the app releases that we’ve actually reengineered frontend and actually from the backend, quite extensive over the last couple of years. So, you’ll see quite a lot of difference compared to where you were a couple of years ago, particularly on use since, say, Q1 2019.
Okay. Great. And how are you thinking about market share now? I know you talked about those April numbers, which I think you had also provided, I believe, at 1Q earnings, right?
We did. Yes.
In terms of room nights and gross bookings. How are you thinking about market share and how you’ll be able to grow that over time?
Yes. So we know we’ve picked up some share points in 2021 versus 2019. That’s perhaps the best comparison point, especially in the U.S. and in Europe. And we know that we continue to stay ahead of where the travel market is in 2022 from a recovery point of view, kind of look at our growth rate versus the overall growth rate in travel. A lot of the questions have been around the U.S., where we’ve had a fairly strong focus now for a few years, and it’s now started to really pay off a bit more for us in the last couple of years.
Some programs in place last year, we’ve got to build on them. And we see a lot of opportunities ahead for us in the U.S. in terms of improving consumer awareness through our brand activities, improving the competitors of our alternative accommodation products in the U.S. marketplace, ramping up of flights, optimizing cross-sell and increasing the use of payments in our U.S. products. And those, I think, worked for us nicely in 2021, and we’ll — things we can build on as well as building our hotel relationships and just becoming more competitive in some of the brand marketing and overall marketing spend in the U.S. marketplace.
I think longer term, it’s really — if you think about market share, it comes down to a couple of things. It comes back to the quality of the services that we offer and how good we are marketing those to existing and new customers. And those are things that we feel pretty good about. So, we feel that we’re in a strong situation. We’ve really been able to invest through the pandemic to further the overall position of the Company.
Okay. Great. At 1Q earnings, you provided a lot of color just around demand for the summer travel season and obviously, being strong. We are seeing, of course, these growing macro concerns here around inflation, rising prices, really across everything, but certainly travel and the concerns just around the impact to consumer demand. So what data points or what gives you confidence perhaps that demand will remain strong in travel as we go through the remainder of ’22?
Sure. I mean we can talk about the trends that we have seen. And what we can say is that if we look at the trends through the end of April, which is relatively current, our consumers appear to be in pretty good shape. In April, as I said, we saw more room nights booked in 2019 at higher prices. We also see the booking window expanding and getting back closer to what it was in 2019. That’s usually a sign of confidence. People are booking ahead for the summer as opposed to just booking for the short-term needs.
We also can look at what travelers do in response to higher prices. What we’ve seen historically, they would trade down in their property choices if that becomes a factor. So far, we’ve not seen that in our data. Of course, the macro is out there and there are potential risks from inflation and higher ADRs could impact customer spend, obviously, air ticket prices, but we are not seeing that in our data today.
Okay. How does — when you think kind of post-pandemic and with recovery, how do you think traveler behavior and travel mix changes? What are the newer trends that make travel kind of look different over time?
We’ve seen a couple of things happening. Some are coming into the pandemic and some of those people can’t prepare to exit the pandemic. And these trends may or may not hold out longer term. But in pre-pandemic, we saw a slow but steady rise in the mix of alternative accommodations as that sector care becomes more mature. And during the pandemic, we saw more people being exposed to it. We saw a fairly big mix shift in the early stage of the pandemic towards alternative accommodations. People felt safe at traveling in that type of location.
We did see it normalize back again, but obviously, more people have been exposed to it. So that’s something we expect to see going forward. Obviously, the most impacted segment of travel during pandemic was business travel. And that may never return to the same levels. What it takes to be productive from a business trip point of view, obviously, comments like this are great. But we’ve been operating virtually for two years. And I think people are recalibrating what really justifies a business trip.
And that have to be played out. Now that’s obviously a very small part of our business, but it does impact the other part of our business because a lot of our property partners that were more dependent upon business travel are now looking for leisure travel, which is to think where we can provide them a source of demand when they didn’t have before. We do think things will normalize back towards people have been staying away from those big city tours. I think that will come back again. I don’t think that will be something that’s structurally impaired.
But I think going forward, there’s also an opportunity that being created by the new work environment, the place of work environment, maybe did not exist pre-pandemic. This will not necessarily apply to every single person, but as people go back to work in a more flexible hybrid environment, there’s more opportunity for people to extend their account where we can travel and do a business leisure trip, maybe traveling somewhere for a long weekend, combining some business and some leisure.
We also see people extending the summer vacations in Europe. It’s now quite popular to let people go work for a month or so for a different country to avoid triggering the tax rules, but extend a some vacation, maybe spend a couple of weeks on vacation, a couple of weeks working you, may be visiting family. And then as we get more remote workers against small segment, that could result in more people kind of traveling from their remote locations back into some office hub for travel as well.
So these are segments that we’re still seeing how they develop. Certainly, there’s more opportunity, I think, in people’s calendars in their lives to the travel potential coming out of the pandemic than they had, in many cases, going into it.
Okay. Certainly, alternative accommodations could play a role in that as well. What’s your latest view just around kind of the role of alternative accommodations really during these next few quarters of the recovery? And how do you think about that as a continued strong driver of growth or perhaps mix kind of shifting, perhaps stepping back a little bit as things kind of reopen further?
Yes, I think that the mix has stepped back. So, I think, we kind of saw a spike in alternative accommodations soon after start of the pandemic and may move back to a more normalized environment. Of course, one of the real value propositions on our platforms that we do provide that mixture in one place of alternative, independent change all in one platform.
So we did see a mix shift happen. And I mentioned, we saw a slower steady increase in the alternative accommodation mix pre-pandemic. It’s now about 31% of our online bookings are in alternatives in the first quarter. That’s a little higher than it was in Q1 of 2019 and it was high in Q1 2021. So, I do think it’s going to kind of continue to slowly increase.
I don’t think it has to do a step back before it grows up again. I’d say more people were exposed to the alternative accommodation mix to a pandemic. So that might fuel the growth a little bit. But I think we’re back into that slow steady mark situation. I don’t — we’ve seen — we’ve already seen the normalization at least from the data we see.
Got it. Okay. You also talked about seeing a large sequential increase in alternative accommodations properties on booking in 1Q. Was there a particular region or a property type that’s really driven that growth?
No regional property type. It’s been a focus of ours to really improve our accommodation offering mainly in the U.S. We have a very strong business in Europe. It’s a very broad business. Our average is 31%. In Europe, it’s a fair amount higher than that. So if you think about the kind of segments in Europe, alternative, independence and change, there are three very strong legs to the stool that change proportionately that’s important in Europe than they are in the U.S. just from our wholesale mix point of view.
A lot of the folks has been on the U.S. We’ve been doing a couple of things. We had some pretty strong feedback from our partners. They want us to improve our products in the alternative space. We’ve done some things recently. We introduced liability insurance globally for all of our accommodation partners in the alternative space. That’s an important factor for them. We’ve also been improving our payment principally in the U.S. to allow our multi-property partners to handle easily more handle reconcile and paper bookings in the U.S. marketplace across the all properties on their platform.
So those are things we’ve introduced recently that we’ve rolled out that I think are healthiest push. And then we’ve also recently, just last month, launched an alternative property acquisition campaign in the U.S. to really raise the awareness that we have a very viable platform with significant numbers of alternative bookings happening throughout the lifetime of our portfolio as a really viable alternative to the other names who may be out there. And we’re hopeful that supply acquisition will continue.
Okay. Let’s talk about those U.S. investments in a more broader context. About a year ago, you really talked more about kind of stepping up attention levels in the U.S. Can you talk about some of your investments there? You have, of course, on alternative, but how some of those investments have played out? And if there’s anything you can share on your progress in the market?
I think we’ve talked a little bit about the different aspects. There’s no single silver bullet here. There’s a number of things we’ve done, working more closely with the chain partners to help those relationships get stronger over time, leaning into marketing, more those perhaps did last year as we saw demand start to return, alternative payments, air, cars, just basically making the offer, particularly on Booking.com, much more complete in the U.S. and more comparable to what it is within Europe.
In terms of data points, I think it’s quite important just to clarify what we said here because we said that for the full year 2021 in the U.S., our room night growth was strong versus 2019. So stronger than a normal growth rate, up significantly versus 2019, way ahead of where the market was in the U.S. And that growth rate accelerated to very strong in April. So, we have put data points out there that kind of indicate that we’re well ahead of where the market is in the U.S. as we’ll be able to get some of these benefits to pay off things we’re working on for quite some little time now.
Okay. So let’s shift gears, talk a little bit about payments. You now process about 1/3 of bookings — gross bookings through your payment rail, essentially. How do you think about how that implementation has really helped the business operationally? And then also how it’s helped on both the sides of consumers and of course, your suppliers?
Yes. I think payments is very important. It’s certainly a key point for us to help take friction out of the travel experience for both the bookers and for the partners. I’ll give you kind of some examples. So with payments, we’re able to do some things with bookers we can’t do before. So we’re able to basically merchandise and improve the value proposition to our bookers were offering two or three things together through the same price, if we had to sell more separately before. So it’s a level we can drive outside of marketing to drive growth. It’s another level for us.
We have the ability to package bundle and cross-sell more components of the Connected Trip because we have them on Payments platform. We can remove friction between the customer and the partner. Even in the agency model, a number of our customer service requests are from the customer, the partner saying, was I paid — was I charged the right amount? Was I paid the right amount? Even though we weren’t in the middle of that equation, when we’re handling both sides of the payment equation, that’s on us, we can handle that and resolve any issues right away.
For our accommodation partners, we can provide them a couple of different things. Certainly, we have a large global at-scale payments network, and we can pass on some of the rates that we can get from our acquirers to our property partners and give them, in some cases, a more economic way to handle payments, but also we can handle things like additional factors of authentication. In Europe, there’s now PSD2, where if a card not present, you have to have multifactor authentication on the booking transaction.
Not all of our partners have invested to be able to do that. We have and we can do that for them. And last but not least, related to one of my other comments, our customer service expensive friction comes down on those payment-related activities because, again, we’re not trying to solve somebody else’s payment equation, we can take care of it ourselves.
So related to that, I think you’ve formed a new fintech unit at Booking about six months ago. What are some of the opportunities that, that unit is pursuing?
Yes. So the Payments platform is very fundamental to the basic equation of the book or sale proposition. But once you have a Payments platform, which is where the fintech unit comes on, we can start doing things on top of that. So, building some financial services oriented products that are focused on travel.
So for example, later this year, we’ll be rolling out a Booking.com or paying your own currency feature that will let our bookers be able to kind of lock in their exchange rate and we wanted to use our services capability to kind of handle that for them. So they’re not leaving themselves to the vagaries of future exchange rates when they’re paying in their partners’ currency as they stay.
We can derive some revenue from that over time, of course. That’s the first example that you’ll see. Other payment-enabled features will roll out in the course of the year and into next year with things like a buy now, pay later. It’s quite a fairly popular offering in the travel space, but also using the ability to use our payment platform so that customers maybe pay for additional flexibility on the Booking.com platform using our risk management approach.
So over time, we’ll be able to drive new services for bookers, but also drive a financial services revenue stream that we can enable with the Payments platform. That’s a longer-term thing in terms of generating returns from it, but with the amount of cross-border business that we do and the size of what our payments platform will be as it rolls out at scale, there’s a good opportunity there for us.
Okay. Great. So let’s shift gears, talk about Connected Trip a little bit. So this has been an investment area for a little while. That will continue. But if we think about flights, that’s kind of the biggest piece of the Connected Trip vision, next to accommodations, of course. Can you just talk about where you are in terms of the rollout of flights, how big it is for you? And how are you able to do this in a differentiated way, perhaps relative to some other platforms?
Sure. So, I think there’s a benefit to answer your last question. First, there’s a benefit in kind of coming in from a greenfield situation in a fairly mature marketplace. And there’s opportunity because we have this big book of base that has expressed interest in buying more things promised. For us, we wouldn’t be doing it, plus the fact we can just drive a differentiated solution for our customers in the future.
So in terms of be able to get a fine product out is very effective. One of the things that our customers really enjoy in Booking.com is the transparency and the simplicity and the clarity of the offering. The booking site is very clean. The prices are very transparent. Reviews are good, they’re current, hidden charges don’t exist. You pay what you see on the slide. People ask for that in flight. Flights is a difficult marketplace, a lot of extras, baggage, seats, you name it, it’s not the most easy transaction to navigate through change fares, et cetera. So we do want to make it very simple and very clean and very transparent in terms of what people are paying.
And so far, the feedback we’ve had from our customers is we’re doing a good job of that. In terms of rollout, we’re live in about 40 countries now. As I mentioned, about 70% of our bookers can now see a flight offering. In terms of volumes, it’s still smaller than obviously than our combinations. But last quarter, we sold 5 million tickets. It’s about 2.5x the number we sold in Q1 2019 before we start rolling flights out. So, it’s beginning to scale and beginning to make a difference.
Okay. Great. What are some of the other things that you think about in terms of Connected Trip that will just continue to improve the kind of booking experience, make it better for travelers going forward?
Yes. I go back to flights a little bit to start off with you and talk about a couple of things we are seeing in terms of benefits. So what we’re seeing because flights will be the next big vertical, right? Other verticals I’ll come on to in just a minute, but — what we’re seeing is that for over 70% of the flight bookers on Booking.com, flight is the first only thing that they’re booking. That’s important because it shows that it is a distinct booking form. And of course, it helps with the cross-sell.
Now the good news is that of all the flight bookers we’re seeing, 25% are brand new to the platform. We’ve never seen them before ever. And in those bookers, we’re getting a nice cross-sell into accommodations. And then finally, what we’re seeing is that our combination bookers who are buying flights, we’ve changed this across a few key markets. In a couple of those markets, we now are seeing signs that they’re more likely to come back and buy more accommodations. So this kind of nice virtual circle is beginning to happen for us around the flights business.
The data point that we can track them on to carefully and we’ll continue to disclose as we go along. So that’s the benefit of flights. In terms of new things, well, we are continuing to experiment around the Connected Trip. We have done some good work in terms of seeing if we can drive frequency and loyalty by us working with, for example, our ride partners to offer discounted taxi from the airport, from the train station to our high-value customers, us contributing some of the economics of that to produce a positive return is providing value.
Obviously, the more we drive down the Genius program. We use that. Principally, Genius today is funded by our hotel partners. Over time, we can kind of participate in some of the verticals on top of the use discounts to really offer a great solution to our customers. So it just gives us more ways to interact, more ways to merchandise, more ways to market with our customers. Particularly our top customers, the ones we want to kind of drive a higher level of frequency and even a higher level of direct bookings.
Okay. Great. Let’s shift gears, I want to talk about marketing. What are some of the key trends that you’re seeing in performance marketing now? I think we’ve heard a little bit this week, we’ve heard a lot this week about advertising. But some in particular, I’ve just talked about maybe some of the froth perhaps coming out of the marketing environment a little bit, making it somewhat easier perhaps from a performance marketing perspective? How are you thinking about those trends?
Yes. We said — we continue to say, we do expect these online marketing channels to remain competitive. There are a lot of people are playing in those channels not just the OTAs. You’ve got the hotel chains, you’ve got the meta players, a lot of people participate in these channels. We have seen a reduction in, as we said, in offline spending more going to online, that’s helpful. That helps everybody. Our approach hasn’t changed. We are a disciplined player in those channels. We’re looking to attract high-quality customers as a positive ROI. And that’s been our focus for quite some time.
We have seen that the marketing — the ROI to those channels have changed over time. Remember, in 2021, in the first half of the year, the ROIs improved compared to 2019. But in Q3, because we chose to lead into what we saw a recovery summit travel environment in Q3 ’21, the ROIs came down because we are a little bit in control at destiny to ourselves. Where we see more volume in these marketing channels, we want to lean in and leverage our strength and leverage our performance marketing capabilities to attract customers onto the channel.
The most recent quarter, Q1 of 2022, the ROIs were also higher than they were in 2019 but lower than they were in 2021, a little bit better than we expected. We said we expect them to be flat in the first quarter. They’re actually up a little bit. So that is a good thing. But bear in mind, this year, don’t forget, we said we do expect to lean in. We think this is going to be — we’ve seen it to be a recovering travel marketplace. Some of our customers haven’t been using online channels for a couple of years, and they have lost a little bit of memory as to which ones they the like best. So now is the time to really take advantage of our strength and to lean in.
Again, that’s something that is up to us in terms of how often we do it. Over time, we do expect our direct mix shift to benefit the overall return on those marketing channels. Obviously, to the extent that we are — higher percentage of direct, it means we’re spending a lower amount of our total spend on marketing across a smaller piece of the overall business where an example of that would be in 2019. You saw our spend on marketing space and TTV come down from 5.3 to 5.1, a meaningful shift because we had a higher mix of direct business. The ROI stayed pretty constant in the channel. So a number of dynamics going on here, but we’re pleased with the way that it’s working out, and we’re pleased about the opportunity we see for ourselves this year as the market recovers.
Okay. You pushed a bit more into brand last quarter. You’ve unveiled some new creative tied to the Super Bowl. How is that approach to brand change coming out of the pandemic? And is there anything to share perhaps just early on in how some of those efforts are working relative to your expectations?
Yes. Not surprising, we were relatively quiet from ground spend during the pandemic. But we did push into — had our first-ever Super Bowl ad this year. I think it went pretty well. We have good social activity around the campaign itself, of the campaign. We got a lot of PR on the back of, we continue to drive that program out of in previous years, reignite our program in the last couple of weeks.
Importantly, what we’re seeing is a fairly meaningful increase in top of mind awareness in the U.S. of Booking.com, which is kind of really where brand is aimed at just making people aware of the proposition. So we’re pleased with what we’re seeing so far.
I would remind you that brand marketing was a relatively small percentage of our overall marketing spend, pre-pandemic. We don’t expect it to be meaningfully more as we go forward a little bit more, but we count more focused upon a fewer markets with our brand spend.
Okay. When you put all of this together, we talked about some of the product changes, marketing efforts, clearly, an improved backdrop. But how do you think about normalized top line growth? You have kind of talked about a goal of growing faster on the other side of the pandemic. How do you think about that?
I think this is a very important point to put it in into context, particularly with what we’ve learned during the pandemic in our core accommodation business, then also the fact we’re growing these additional businesses alongside it quite rapidly. We are absolutely focused on being a larger business with a more diverse offering that we had before that’s growing faster than it was pre-pandemic with more earnings per share and higher earnings per share growth. It sounds like that’s a preorder.
But when you think about what we’re doing in terms of the strengthening of the accommodations business, the fact we gained share there, we’re adding these extra businesses to it. We think the Connected Trip will also impact and help accommodations. It’s — that’s the focus that we have. A lot of it is tied back to loyalty and directness and getting more of our customers coming to us through repeat mechanisms. But that really summarizes the strategy of what we’re trying to do here.
Got it. Okay. So you hit on, obviously, earnings growth. I want to talk about margins. So you’ve been pretty clear that — of course, the margins are likely not getting back to those high 30s levels that you once saw and there’s obviously some mix elements in there. But can you talk about some of the drivers there and how you’re thinking about that going forward?
Yes. So again, within that context, we expect to have industry-leading margin rates, but we do expect some pressure compared to 2019. And basically, by the fact that we’re moving into some other businesses that will become quite large that will produce EBITDA dollars, but at a lower margin rate than the core accommodations business. Within the core accommodations business, there are some puts and takes. Generally, we’ve done a good job of driving stability in that business from a margin point of view.
I think that one of the biggest factors in the short term will be this growth versus profitability, how much we’re leading into that gain share. That will obviously drive margin down a shorter point in time. But then we can normalize that when we choose to go back to kind of more market-based growth rates. There are some other takes from a mix point of view in there that could push things down. Of course, we’ve got the direct share gain that can help stabilize them.
So, I think that we can look at a fairly stabilizing margin profile for our combination business. Most of that is under our control. Just how quickly we want to grow, how quickly we respond to some of the mix shifts. And then the biggest driver of our overall margin rate reduction will be the fact we’re moving into some other verticals that have different margin profiles. Again, good things for the business, more earnings per share, better bottom line growth, but obviously a different margin rates in accommodations.
Okay. Got it. You’ve talked about the impact of book-to-stay timing on take rate and margins in the near term. Just as you look out further, is there a reason to think that take rate will look any different versus pre-pandemic?
If you take the book to time factors out, which I think we’ve explained quite clearly, you kind of left with a couple of things, which should the underlying take rates from our property partners and they’re solid and they have been solid and continue to be so. And we are adding to that take rates with the payments revenue and things we can build on top of payments revenue, things like fintech, those add to the overall take rate, things like insurance dependent upon payments as well.
So, there are reasons to think that the underlying take rate on the combination side actually has some upward movement, which it has been, but we’re also pleased with our ability to do more merchandising. I talked about payments before and how we can use payments to select in the merchandise in the key markets or cross-subsidize things. So when we lean into those areas, those will offset some of the benefits from the payment increase in take rates. And you saw in 2021, that those merchandising efforts offset much of that payment increase.
And this year, we expect, again, pretty most of the payments increased take rates to be offset by our merchandising activity. But again, we control that. We choose to do more or less, based upon how we think the returns are on those areas. Over time, it’s a very small impact now, but obviously, things like the mix of the business will also impact take rates. I don’t think that’s the question you’re asking me. But obviously, an air take rate is very different from an accommodation take rate. But again, those teams can be pretty easily broken out, and you can see what’s happening to accommodation take rate, which has been very strong and say the underlying rates are stable.
Okay. Great. Last question, I want to ask you about capital allocation. You’ve resumed share repurchase activity, made some acquisitions in recent quarters. Has anything changed in terms of how you’re viewing capital allocation?
No. The bigger picture hasn’t changed. Obviously, job number one is to invest in the business, which we can do organically. We’ve made a number of investments or partnerships. We’ve done a number of those in Asia over the year or M&A. You’ve seen us spend more on M&A than we have recently. And then over and above that, we think share repurchases are a good form of returning capital to our shareholders. We restarted our share repurchase program last quarter. We spent about $1.3 billion through the end of April, which is faster than the three-year time frame we gave you to spend a 10.4 authorization we came out of COVID with.
Got it. Okay. We’re going to leave it there. Thank you, David.
Great. Thank you, everybody. Thanks, Doug. Thank you.