Booking Holdings Inc

NASDAQ:BKNG

Earnings Call Transcript 2018-Q4

[Operator]

Welcome to Booking Holdings' Third Quarter (sic) [Fourth Quarter] 2018 Conference Call. Booking Holdings would like to remind everyone that this call may contain forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially from those expressed, implied or forecasted in any such forward-looking statements. Expressions of future goals or expectations and similar expressions reflecting something other than historical facts are intended to identify forward-looking statements.

For a list of factors that could cause Booking Holdings' actual results to differ materially from those described in the forward-looking statements, please refer to the safe harbor statements at the end of Booking Holdings' earnings press release as well as Booking Holdings' most recent filings with the Securities and Exchange Commission. Unless required by law, Booking Holdings undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

A copy of Booking Holdings' earnings press release, together with an accompanying financial and statistical supplement, is available in the For Investors section of Booking Holdings' website, www.bookingholdings.com.

And now I'd like to introduce Booking Holdings speakers for this afternoon, Glenn Fogel and David Goulden. Go ahead, gentlemen.

[Glenn Fogel, President & Chief Executive Officer.]

Thank you, and welcome to a Booking Holdings fourth quarter conference call. I'm joined this afternoon by our CFO, David Goulden. We had a strong quarter with 171 million worldwide room nights booked, which is up 13% year-over-year and exceeded the high end of our guidance range.

Our revenue increased 16% year-over-year in U.S. dollars or about 21% on a constant currency basis. Adjusted EBITDA grew 17% U.S. dollars and the FX impact was a couple of points higher than it was on revenue. Our non-GAAP EPS was up 33% year-over-year.

When I look back at 2018, I am pleased with the financial performance of the company. Our total booked room nights exceeded three-quarters of a billion room nights, and we produce strong year-over-year growth across our key financial metrics. Revenue was up 17%, adjusted EBITDA was up 18% and non-GAAP EPS was up 20%. We not only draw solid top line growth, increasing our share in the accommodation market but also stabilized our operating margins through our performance marketing optimization strategy, which we began in the third quarter of 2017.

In 2018, we invested in three main areas that we believe can drive the long-term growth of the business, and we will continue to develop these in 2019. First, in alternative accommodations, we continue to add to our supply base. And as of December 31st, Booking.com had over 5.7 million reported listings.

However, we are not just focused on the total number of alternative accommodation listings, but are also concentrating on the quality and type of properties joining our platform, so we can provide the best choices for our customers and drive search conversion.

Booking.com's alternative accommodation business has meaningful size and scale and recorded approximately $2.8 billion in revenue in 2018, representing approximately 20% of our overall revenue for the year. It also reached the important milestone of over $1 billion in revenues in Q3 2018. It is also growing faster than our consolidated growth rate and is nicely profitable.

We believe offering real choice with both alternative accommodations and traditional properties on one platform is the best customer proposition. We believe a telling data point underscoring the attractiveness of our model is approximately 40% of Booking.com's active customers booked in alternative accommodation property at some point during the past 12 months.

Second, we invested in 2018, and in 2019 we'll step up our investment in the growth of our business through branding and customer acquisition programs in order to take share in the markets with the highest long-term potential returns. We believe these incremental investments will help drive greater loyalty and higher repeat rates to our direct channel over time.

Just two days ago, we launched our new U.S. brand campaign, which we expect will drive further awareness in this important growth market. We will also look to improve brand awareness across our primary markets to increase brand campaigns in both offline and online channels. These marketing programs are taking on a greater importance as many of our performance marketing partners are experiencing slower customer growth.

Third, we will continue to invest in the rollout of Booking.com's payment platform. This platform provides payment options favored by customers and property partners, particularly non-hotel property partners and provides a platform for merchant product offerings. Merchant offerings provide greater merchandising possibilities for Booking.com.

And this year, we plan to step-up our investment in this capability to drive growth. This payment platform will also facilitate our transport in local attractions business, where we envision a frictionless customer experience that we believe will drive enhanced loyalty. For example, we look to build upon the integration of Rentalcars.com and Booking.com to deliver a better ground transport offering for Booking.com's customers this year. The number of car rentals and rides booked on the Booking.com platform grew rapidly this past year, contributing to our belief that an integrated offering is highly valued by our customers.

China and the broader APAC regions remains an important geographic focus for us, and we invested significantly against this very large opportunity in 2018. As a result of smart growth investments, Agoda produced very solid growth rates in the region despite a very competitive marketplace. We continue to work with our partners Ctrip and Meituan, and we introduced a new strategic and financial relationships with DiDi and Grab, all of which, we believe, will help both Booking.com and Agoda build better brand awareness and acquire customers more effectively in this region.

KAYAK completed a busy year with the integration of Momondo and acquisition of HotelsCombined in December. Both acquisitions bring greater geographic diversity and product strength to the KAYAK platform as it continues to build a global multiproduct, multi-brand travel search platform. We also announced the combined reporting structures of KAYAK and OpenTable during 2018 to further drive experimentation and innovation across both platforms. We're already seeing early signs of this with OpenTable recently announcing that its customers can use OpenTable dining points to book discounted hotel space, and I look forward to seeing further innovation from the combined teams.

Priceline.com is increasing its momentum, and we're starting to see the benefits of our investments on this platform. The redesigned packaged product is growing very rapidly, gaining acceptance in the U.S. market. We're excited about the potential of this product for the entire company.

Finally, as you can see from our Q1 guidance, we witnessed a slow start of the year, primarily in our core European markets, which we believe is largely due to overall macroeconomic factors. The initiatives outlined above are aimed at driving long-term top-line growth and share gains, and will help support the business if macro conditions soften.

We believe these steps strike the right balance between driving growth and operating margins. Furthermore, we believe our financial scale and global diversified platform positions us to perform well to meet macroeconomic challenges.

In conclusion, we had a very good year in 2018 and believe we have a great long-term opportunity ahead of us. We'll always manage our business with a long-term view and will continue to invest in growth this year with the goal of increasing our share across our primary markets.

With that, I will now turn it over to our CFO, David Goulden, for the financial review.

[David Goulden]

Thank you, Glenn and good afternoon. I'll discuss our operating results for the fourth quarter and for 2018 and then provide reports on the full year 2019 as well as our guidance for the first quarter.

All growth rates are relative to prior year comparable of periods unless otherwise indicated. All year-over-year growth rates referenced in my remarks will compare the current year income statements under the new revenue accounting standard to prior under the previous accounting standard.

Gross bookings and other metrics like room night reservations are not impacted by the revenue accounting standard. Our non-GAAP financial results and forecast include stock-based compensation and information regarding reconciliation to GAAP can be found in our earnings release.

Now, on to our results for the quarter. Our booked room night growth of 13% for the quarter exceeded the high end of our guidance range. In the quarter, we observed a modest stepdown in growth rates from October levels.

Average daily rates for accommodations, or ADRs, were up about 1% in Q4 relative to the prior year on a constant currency basis versus our forecast for about 2% ADR growth in the quarter.

Changes in foreign exchange rates reduced Q4 growth rates in U.S. dollars by approximately four percentage points versus last year. We estimate the changes in FX rates impacted Q4 gross bookings and revenue growth rates by a similar amounts and the Q4 EBITDA growth rate by a couple of points more.

Q4 gross bookings grew by 4% -- sorry, by 9% expressed in U.S. dollars and grew by about 13% on a constant currency basis, coming in at the high end of our guidance range. Consolidated revenue for the fourth quarter was $3.2 billion and grew by 16% in U.S. dollars and by about 21% on a constant currency basis, coming in above the high end of our guidance range. Advertising and other revenue, which is mainly comprised of non-intercompany revenues for KAYAK and OpenTable grew by 14% in Q4 compared to the prior year.

Total revenue for the fourth quarter 2018 under the current revenue standard was approximately 5% higher than it would have been if reported under the previous revenue standard.

As a result, our revenue, adjusted EBITDA, and net income growth rate versus the prior year were positively impacted in the quarter. In addition, expenses as a percentage of revenue, as well as margins were impacted from the higher revenue when comparing to the prior year Q4.

So, to help you understand the underlying drivers of leverage and deleverage in the business in Q4, I'll talk about these on a like-for-like revenue basis to eliminate the impact of a Q4 benefit from the revenue accounting change.

Adjusted EBITDA for Q4 was $1.26 billion, which exceeded the high end of our guidance range and was up 17% year-over-year on a reported basis and up about 4% on a like-for-like basis.

As I mentioned previously, our growth rates were negatively impacted from year-on-year changes in FX rates. Our Q4 adjusted EBITDA margin of 36% under the previous revenue accounting standard was above our forecast, largely due to some leverage in performance marketing. We fully lapped our strategy to optimize performance marketing ROIs, which we began in mid-Q3 2017.

We remain disciplined in our spending, and we were encouraged to see a modest leverage of 20 basis points from our proposed marketing in the quarter, which was better than the deleverage we anticipated. We continue to see these channels as an effective way to acquire customers, and we'll continue to invest rationally to optimize growth.

As part of our continued effort to drive more traffic to our websites, we increased our spending and brand marketing in the quarter by 27% versus Q4 last year, which contributed about 50 basis points of deleverage.

Sales and other expense continue to grow faster in revenue, primarily due to the growth of our payments platform of Booking.com. Finally, personal expense came in lower than our forecast, and contributed a small amount of leverage in the quarter.

Our non-GAAP EPS was $22.49, up 33% versus the prior year. Non-GAAP net income reflects a non-GAAP tax rate of 11.3% in Q4, which decreased from the prior year, primarily due to a tax benefit resulting from the application of regulatory guidance issued in November that clarifies a provision of the U.S. Tax Cuts and Jobs Act.

Our full year non-GAAP tax rate was 18.3%. Our 6% lower share count in Q4 versus last year further benefited EPS growth in the quarter. On a GAAP basis, operating income grew by 16%, and GAAP operating margin decreased by 13 basis points compared to Q4 last year.

GAAP operating income is negatively impacted by $21 million pre-tax related to travel transaction tax charges from prior periods that are recorded in the G&A expense line. Q4 GAAP net income amounted to $646 million or $13.86 per share, up significantly from the $11.41 loss in Q4 2017, which was negatively impacted by last year's $1.3 billion provisional net income tax expense related to the Tax Act.

Our Q4 GAAP net income includes a $474 million pre-tax loss related to unrealized losses on equity investments in Meituan and Ctrip. Q4 GAAP net income was also negatively impacted by the travel transaction charges that I just mentioned. We excluded the unrealized loss and the travel transaction charges from our non-GAAP results.

We had a GAAP tax rate of negative 2% for the quarter, which was primarily driven by the reversal of the tax charges related to a provision of the Tax Act that I mentioned previously, as well as the separate $48 million tax benefit related to the finalization of the one-time expense incurred in Q4 2017 due to the Tax Act.

Our cash and investments amounted to $14.7 billion at quarter end. For the full year 2018, we generated $5.3 billion of operating cash flow, which increased by 15% compared to prior year. Our free cash flow for the year was $4.9 billion, which increased by 12%, compared to the prior year.

We returned about $1.8 billion during the fourth quarter to our shareholders through share buybacks. Since the start of 2018, we reduced our fully diluted share count by approximately 6%, through our $6 billion in repurchases for the full year.

As of December 31, we had approximately $4.5 billion remaining of our share repurchase authorization. We will continue to be both programmatic and opportunistic with regard to our repurchases and now we expect to complete this authorization before the end of 2019.

Looking back at 2018, we're pleased with our strong performance during the year as we delivered room night growth of 13%, revenue growth of 17%, adjusted EBITDA growth of 18% and non-GAAP EPS growth of 20%. We exited the year in a stronger position and achieved many of our objectives. We grew our direct channels, which now represents over 50% of our booked to room nights.

Our mobile platform a strong with over half of our room nights booked on a mobile device. And finally, as Glenn noted, in 2018, approximately 20% of our revenue and a higher percentage of our room nights were generated by our alternative accommodations business. Each of directs, mobile and alternative is growing faster than our overall growth rate.

Now turning to 2019. I want to start by talking about some factors that will impact the year and then come back to our guidance for Q1. There are four main factors that we believe will impact the shape of 2019. The first is our growth investments; the second is a continued role out and adoption of our new payments platform of Booking.com; the third is from mechanical timing and comparison factors; and the fourth is the macroeconomic environment.

Now let's look at each of these in turn. Starting with our growth investments. As Glenn talked about, in 2019 we're investing for growth, customer acquisition and loyalty in a number of key areas. These growth investments are step up in spend from normal levels. You will see them impact our financials in brand, in revenue the merchandising as well as customer acquisition and incentive programs and you'll also see them in personnel to support these initiatives.

We expect there will be some in-year revenue return, but after taking this into account, these growth investments will reduce our EBITDA a growth rate by a few percentage points in 2019. These investment starts at the beginning of this year. We expect to returns to be higher in the second half of the year so there'll be a greater negative impact on EBITDA growth during the first half. This means that our consolidated EBITDA growth will be higher in the second half.

Now moving to payments for Booking.com. In 2018, approximately 10% of the gross bookings of Booking.com was processed via our payments platform and we expect this to continue to increase. In 2018, payments put pressure on EBITDA in the form of higher sales and other expenses that were not fully offset by associated revenue. This reduced our consolidated EBITDA growth rate in 2018 by a little over 1%. Going forward, we do not expect any additional reduction in EBITDA growth from payments and will continue to see increases in revenue. This will pressure margin rates modestly.

We also see the opportunity for payments to drive EBITDA growth in the future. Of course, payment provides advantages in many areas, including merchandising flexibility, a better customer experience, reduced customer service expenses and the ability to coordinate on most integrated trips.

The third set of factors are more mechanical, but important as you think about the year. FX is expected to be quite significant this year. Using current FX rates, assumed in our guidance, gross booking growth and the revenue growth through the non-GAAP EPS growth will be reduced by approximately 250 basis points for the full year and 500 basis points for the first half of the year. Additionally, the timing of Easter will impact revenue growth in Q1 and Q2.

Last year, Easter was in April 1 and therefore majority of Easter revenue was recorded in the first quarter. This year, with Easter on April 21, Easter travel revenue will be recorded in Q2.

Compared with Easter falling on the same day as last year we estimate that about $65 million of revenue will move into Q2. We estimate this shift in timing will reduce Q1 2019 revenue growth rate by approximately 200 basis points and increase Q2 2019 revenue growth rates by approximately 200 basis points.

The fourth is the external -- the fourth factor is the external macro environments. We continue to expect travel to grow faster than GDP on a global as well as on a region-by-region basis. Of course, this means that the growth of travel on a regional basis will be impacted by regional, GDP and sentiments.

Consistent with recent economic indicators, we saw slow start to the year in Europe and this is impacting our room nights, growth guidance for Q1. To provide a little bit more insight, January room nights growth in Europe was a step-down from December and February is looking stronger than January but still below December.

We expect to continue to gain share in accommodations in Europe, especially with our investments. Room night growth rates in other parts of the world are more in line with what we saw in December.

We think that working through these factors will be helpful as we describe and you build your models for the year. We also think that sharing some expectations for the full year, taking these factors into account, will be helpful as well.

For 2019, we expect to gain share in accommodations in each major geographic region, and we are confident that the strength of our business, reinforced by the growth investments we're making this year will enable us to achieve this.

We'll manage the balance between growth and profitability with an expectation that non-GAAP EPS on a constant currency basis will grow in the low-double-digits, in 2019, after factoring in the impact from the growth investments I previously mentioned.

If economic conditions were to further soften, we still -- we'll still preference growth over realizing short-term margin because we believe this is the best for our business in the long-term. So with that, as a framework, let's turn our attention to Q1.

Our Q1 guidance reflects our quarter-to-date actual results forecast for the remainder of the quarter. Foreign exchange rates are expected to be an approximately 6 percentage points to 7 percentage points headwind to year-over-year growth rates in Q1, which we estimate will impact gross bookings, revenue, EBITDA and non-GAAP EPS growth rates by similar amounts.

We used a dollar-to-euro exchange rate of 1.13 when setting up our Q1 guidance. We are forecasting booked room nights to grow by 6% to 8% and total gross bookings to be approximately flat at the midpoint of our guidance in U.S. dollars and to grow by 5% to 7% on a constant currency basis.

This reflects what we've seen so far this quarter and also limited impact from our growth investments. Our Q1 forecast assumes a constant currency ADRs for the company will be down about 1% compared to the prior period.

We forecast Q1 non-GAAP revenue to be approximately flat at the midpoint of our guidance in U.S. dollars and grow by 5% to 7% on a constant currency basis. Normalizing for both Easter and constant currency, we estimate that Q1 non-GAAP revenue to grow by 7% to 9%.

We forecasted Q1 GAAP revenue will be down 2% to approximately flat when compared to Q1 last year. Q1 adjusted EBITDA is expected to range between $680 million and $700 million. The resulting growth rate is also negatively impacted by unfavorable year-on-year FX change and by Easter timing.

Normalizing for both Easter and constant currency, we estimate that Q1 EBITDA will grow by 2% to 4%. As I mentioned earlier, this is negatively impacted by our growth investments, especially in our seasonally slowest revenue quarter.

We are forecasting leverage from performance marketing expense line in Q1, reflecting low volumes in the pay channels and our continued focus on acquiring high quality traffic. We expect to accelerate our brand marketing spend in the quarter, which will contribute to deleverage to the P&L and more than offset leverage we're expecting from performance marketing.

Brand marketing is a key area where we're making growth investments to drive more direct traffic to our website and build better awareness. Finally, sales and other expense growth is expected to decelerate relative to Q4, but will continue to grow faster than revenue, primarily due to ramp up of our payment platform at Booking.com.

We are forecasting Q1 non-GAAP EPS of approximately $10.90 to $11.20. Normalizing for both Easter and constant currency, we estimate Q1 non-GAAP EPS growth to grow in the low-double-digits. Our non-GAAP EPS forecast includes an estimated income tax rate of approximately 18%, which is lower than Q1 last year, primarily due to the clarification around the provision of the tax act previously mentioned and a lower than our full year non-GAAP tax rate due to certain discrete tax benefits typically realized in the first quarter. We expect our full year non-GAAP tax rate to be 19% to 19.5%.

Our Q1 non-GAAP EPS guidance assumes a fully diluted share count of about 45.6 million shares, which is 7% below Q1 last year. We forecast GAAP EPS between $9.90 and $10.20 for Q1. Our GAAP EPS guidance for Q1 assumes a tax rate of approximately 18%.

We have hedge contracts in place to substantially shield our first quarter EBITDA and net income from any further fluctuation currencies versus the dollar between now and the end of the quarter, but the hedges do not protect our gross bookings, revenue or operating profit from the impact of foreign currency fluctuations. Our forecast does not assume any significant change in macroeconomic conditions in general, or in the travel market, in particular.

With that, we'll now take your questions.

[Operator]

[Operator Instructions] And our first question is from Justin Post from Bank of America Merrill Lynch. Your line is now open.

[Justin Post, Bank of America Merrill Lynch]

Great. Thank you. I'll just start of with just a high-level question. When you look at your bookings growth rate in Q1 and you think about how you're performing versus other companies, it seems like it's a bit of a difference, your guidance versus other people in the travel industry.

So how do you kind of reconcile that? And then, maybe if you could tell us how much better February was versus January, and if you think there was just something really abnormal for the first two months of the year. Thank you.

[Glenn Fogel, President & Chief Executive Officer.]

Hi, Justin, it's Glenn. So, as you know, we are very European-centric in our business. We're a global company for sure, but our biggest business is, by far, in Europe. And Europe has definitely seen and is experiencing a slowdown, if you look at any of the macro indicators out there, any of the published information, whether it come from the EU's data people, it comes out from any of the investment banks that put out predictions for how European economics are going to go. And you see, and even, I think it was yesterday, our Chairman of the Federal Reserve who actually said seeing headwinds in Europe. So I think that is the one element that would show a difference.

On the other hand, I think if you look at the pure European payers, if you look at some of the tour operators, the two who are biggest in there, and I would suggest to take a look at their numbers and what they said, I think I should see significant consistency with what we're saying right here, right now. And there are a lot of uncertainties there. And uncertainty is something that absolutely makes people a little hesitant to both. And I can go through -- besides just general macro, we can talk about Brexit, which is obviously creating a tremendous amount of uncertainty, and people -- I spend a lot of money right now or not? I don't know what's going to happen. I know they’re going to be troubles traveling into Europe, are there going to be troubles with FX changes or if you go into political issues.

In France, weekly political issues with the yellow vest protest, which makes you do I want to go to Paris with that happening on Saturday and Sunday? Go to Germany where the cars who drives the German economy, which has slowed down is a secondary impact from trade, particularly China and U.S., is having secondary impact on Germany. Go to Italy, where the government there seems to be a little bit influx with whatever. I can go on and on. The fact is, we are more impacted by things that happen in Europe than, say, a U.S. based company. So I would say that on that one. In terms of actually in February in how that was, I think David said it about as much color. What we're to say is that February was a nice uptick from January, but it was still below December in Europe, and I think that's about all. David you want to comment?

[David Goulden]

I just want maybe to recap the other comment which I made. I think, Glenn, you just talked exactly what I said about Europe. But I also just want to recap, Justin, that you heard that we said this really is an issue that is focused upon Europe and that room night growth in other parts of the world were in line with what we saw in December.

[Justin Post, Bank of America Merrill Lynch]

Got it. Thank you.

[Operator]

Thank you. Our next question is from Mark Mahaney from RBC Capital Markets. Your line is now open.

[Mark Mahaney, RBC Capital Markets]

Okay. Appreciate I think the relatively new disclosure on alternative accommodations. I didn't quite get expect it to be that high as a percentage of revenue. So maybe talk a little bit more about that. I think you said that it was nicely profitable. So is it as profitable as the non-alternative asset core business? Maybe how much faster it's growing than the overall business? And then any color -- the particular regions, is there any more color about where that growth is coming from in alternative accommodations? Any more color there would be helpful. Thank you.

[Glenn Fogel, President & Chief Executive Officer.]

Hi Mark. So it is a new disclosure, and we were very proud of that. What I mentioned about Q3 and breaking that $1 billion milestone, I think we were all pretty darn pleased about that. In terms of profitability, I would say it was nicely profitable. I'm not going to get into the details of it. One thing we have talked about in the past though about how sometimes the cost involved there can be more than the cost with the traditional hotel product, and it's easier to see that when we start talking about scale. If you want to deal with a hotel that has hundreds of rooms, you can distribute that cost much more easily than when you're going property by property by property. And that's not as much color I'll give in terms of profitability.

Well, say in terms of geographic growth, et cetera, we have made a point in the past, so I'm going to continue this, is that we know that we are -- and I just mentioned how we're European-centric Company. And we do very well in the capital cities in the alternative accommodations. We've got great properties there. We are able to produce a very good offering there.

In other parts of the world, in the U.S., in particular, we need to increase our properties, particularly a certain type and that is a single home that is in the beach locations, some of the ski locations. And just to give others point an example to show this.

I was looking talking about getting a Hampton's house for the family, and I looked at that on our site and I looked at some of our competitor's site, and I'm saying we've got to get some more of that stuff. And that is something that we are doing as part of the things we invest in, and I look at is a glass half-full type. And this is a great opportunity for us to increase and really drive the accelerated down a little bit in that area and grow our business.

[Mark Mahaney, RBC Capital Markets]

Okay. Thank you, Glenn

[Operator]

Thank you. Our next question is from Lloyd Walmsley from Deutsche Bank. Your line is now open.

[Lloyd Walmsley, Deutsche Bank]

Thanks. I guess, first, it looks like performance marketing spend is up about 12% in the quarter, call it 16x, 17x effects and almost 20 when you include brand spend and yet room nights booked was up only about 13. Can you give us a sense for what's going on with marketing ROIs? And maybe some more color on how that's trending in kind of acquired channels, growth that's trending in acquired versus direct.

And then, I guess, in some of the prepared remarks, you talked a lot about growth investments. It sounds like most of those are going to be on the brand side. Are you also going to be leaning in on the performance side for growth? And any color you can provide there would be great.

[David Goulden]

Yes, Lloyd, this is Dave. Let me start that. So let me just kind of clarify the difference between what we expect and what we saw in the Q4. You have to look at Q4. You have to exclude the impact of the extra revenue when kind of doing your leverage and deleverage calculations.

So on a like-with-like basis, we actually expected to get some deleverage in the performance marketing line. We actually wind up with a little bit leverage, which is part of the reason why we came over on our EBITDA guidance for the quarter. And based on what drove that compared to expectations was a little bit less volume than we're expecting in those channels and actually with ROIs that are in line with our guidance, where we spoke to you about the quarter, the beginning of it.

And actually, if you look at my comments about Q1, you see a similar trend as well. We're expecting some leverage in the performance marketing channel again in Q1 because volumes are a little lower, but we're still getting solid ROIs against those volumes. So you'll see our mix towards direct continuing to increase as a result of that leverage we're getting in those channels.

And then in terms of growth, I think we kind of gave you the growth investments, so we gave you a feel that they're going to impact our EBITDA growth this year by a few basis points. In terms of income statement, I kind of basically told you where you'll see them.

Some of them will appear in the branding line, some of them will appear in the revenue line in terms of merchandising, customer acquisition, customer incentive programs. You'll see some increases in the personnel aligned to support those investments directly. In some of the countries where we talked about investing for long-term returns, there are some increases in performance marketing associated with those countries, but it's not a major part of the investment program.

[Lloyd Walmsley, Deutsche Bank]

Okay. Thanks.

[Operator]

Thank you. Our next question is from Kevin Kopelman from Cowen and Company. Your line is now open.

[Kevin Kopelman, Cowen & Co.]

Hi. Thanks a lot. Could you give us -- so just to go into the room nights growth a little bit more for the first quarter. The guidance is about 400 basis points lower compared to your guidance for the fourth quarter. So, is that fully just from the European kind of macro comments that you were mentioning? Are there any other key factors there for the Q1 night guide? And then I have another one. Thanks.

[David Goulden]

Kevin, I'll take that. I mean, that really is the major factor. Just kind of stitched together the couple of points that we made to make sure that you kind of gotten. So, we said that -- as we said we guided for Q4, we expected some deceleration in room nights in the fourth quarter. From what we've seen we, obviously, came quite strongly out of the Q3 in September. We mentioned that we were seeing pretty good room night growth in October.

And as we expected, we saw a step -- a little step down in the fourth quarter. And in fact, November and December room nights were quite comparable to each other, but a little bit less than October, and therefore, a little bit less than the average where we came out for the quarter. And then you jump off that point, and I think the rest of it kind of being true. We saw a step down, a bit of bounce back in Europe. And we really do believe that's tied to the macro and we looked at very carefully. And then we saw relatively similar performance in the first couple of months this quarter as we saw to the last few months of last quarter outside of Europe.

[Kevin Kopelman, Cowen & Co.]

Okay. Thanks for that. And then just to follow-up on your -- on the investment in customer acquisition programs, particularly the incentive programs. Can you give us more color on what you're doing there? And are you focusing on an incentive-based loyalty program? Or is it more on special one-off offers for new customers or old customers? Thanks.

[Glenn Fogel, President & Chief Executive Officer.]

Well, actually, Kevin, it's actually that and many more. There are lots of different ways to put that money to work and achieve what we want to do in terms of ROI that we think is acceptable over the long run. And certainly, the two you mentioned are there, and there are a lot of other ones as to which geography you're in to.

If you go to -- similar things happening in the Asian marketplace where there is a significant more price competition with discounting by wholesalers that's being put into retail, all sorts of things. We need to be able to compete with that straight out. If we don't have -- provide a value to our customers, we're not going to get those customers. We've got to do that.

Certainly, there are things like potential loyalty programs. There are different things for just bringing in new customers. And even things, I'll give you an example, it's a small thing. But I got a postcard yesterday from Booking.com that offered up -- a snail mail that offered me a discount if I went to the site and went in. So, lots of different things to do. And on top of those pure ones, it's important to getting the packages with different types of our inventories, different types of our products to create a better value, that we may end up doing some subsidy for us, but we may also be working partially with suppliers. So, for example, we have new deals with DiDi and Grab, those are ground transportation companies primarily. We're working with them. We remain together, worked to be able to get more customers to those companies in areas that they need, where they help us get us customers in areas that we need and doing different types of cooperative types of marketing programs that will help us get more customers. Lots of different ways to do that and we're not going to always be measuring which ones are given us the best ROI.

[Kevin Kopelman, Cowen & Co.]

Thanks. And just a housekeeping on the EPS guide. Does that assume the future buybacks now that you expect to use that program in 2019?

[David Goulden]

Yeah. Basically, yes. The EPS guidance, from a housekeeping point of view, we said that we expect to use our remaining authorization. So, we gave you a specific share count number for Q1, but in our guide for the full year, it assumes we extinguished our remaining authorization.

[Kevin Kopelman, Cowen & Co.]

Thanks, David.

[David Goulden]

That’s, Kevin.

[Operator]

Thank you. Our next question is from Doug Anmuth from JPMorgan. Your line is now open.

[Doug Anmuth, JPMorgan]

Thanks for taking the question. Glenn, I was hoping you could drill down more on the key benefits of the payment platform. And if you could talk a little bit about when you start seeing those benefits more and how long it takes to fully roll out.

And then David, just on the 1Q guide, is it safe to assume here that you're assuming further decel as you usually have done in previous quarters in the past? Thanks.

[Glenn Fogel, President & Chief Executive Officer.]

Doug, you're right. This payment platform is a very important paying for Booking.com as we go forward and developing its merchant capability, so we can provide this greater merchandising and a couple of things I just mentioned. You need a payment platform to be able to do some of the things I just talked -- answering Kevin's question. So that's the basics there.

But there's even more. Just simple, yeah, I mentioned how important it is for our alternative accommodations business, that we want to continue to grow that out. Well, that's also a very important thing to have, because as you go after those single-home property owners, we're not that sophisticated. The old agency method that we used primarily at Booking.com is not really the thing that they want to use. They're not planning to be there and take a credit card and then get a bill from us to send us our commission. They want to have a merchant product there. So that's important thing, too.

It's one of those things we're always going to be working on because our payments platform is not just the simple thing in America where we're using credit cards. There are new payment systems throughout the world that are coming up all the time, and we need to be able to provide that to both sides of our marketplace. There are people on the supply side that we connect to Alipay. I want to be part of WeChat Pay. That's how I want to get my money and you've got to do that.

Same thing on the customer who wants to pay. They say hey, I want to use Paytm or I want to do M-Pesa. I can go through an endless list of these things. So when we talk about payment platform, we're talking about something's global and able to use throughout and helping to reduce that friction in the entire transaction.

[David Goulden]

And Doug, let me just pick up on that and also clarify your question. Of course, payment's is very important but let's make sure it's not going to the entire business. We do believe that pay at the property, which has been a big piece of our business, continues to be a big piece of our business is also very important part of our portfolio, and a lot of our customers and a lot of our partners also like that as well. So it's bringing an additional capability to complement what we do so well at Booking.com.

And then to comment upon your question on the Q1 guide. No, our Q1 guide does not assume a deceleration. That's why I did not say that. In fact, specifically, we said that January was, in fact, again, with the rest of the world being relatively consistent with December, I said that, in Europe, January was a step-down and February was a step-up. So it reflects what we've seen so far and our expectations the rest of the core, but it does not reflect the deceleration.

[Doug Anmuth, JPMorgan]

Thank you, both.

[Operator]

Thank you. Our next question is from Deepak Mathivanan from Barclays. Your line is now open.

[Deepak Mathivanan, Barclays]

Hey, guys, thanks for taking the questions. Somewhat related question on the payment side, what is currently the go-to-market strategy for the payments platform? And whether that's incentivizing hoteliers to choose your payment solution versus their existing one? And in over time, do you think there's additional opportunity to generate economics from the payments efforts? Right now, it sounds like you are probably using some incentives for adoption. So, just wanted to get some color there.

[Glenn Fogel, President & Chief Executive Officer.]

I'll take that and I'm going to reverse, because it is exciting, the second part of your question, about being able to use the payment platform, not necessarily something that's increasing cost, or it's something actually over time, will actually enable us to make more money. And given the volumes that we put through and are going putting through in the future, I believe that is a great opportunity but that is down the road.

Right now, in terms of incentivization and why -- listen, as David just mentioned, our agency a product is still a -- it’s a nice part of the progress. It's the way people, major hotels are still going buy one or two for some time. But again, I go back to the thing about merchandising, putting in packages. One of the things we always try and emphasize how we try and work with our supplier partners cooperatively in a way that adds value to both of us. And having that merchant payment product available so that we can combine a hotel with another service in a way that helps bring that customer to that hotel in a way that is frictionless, easy, makes that payment so much easier for the customer, well, I think hotels are going want to want to do that if it gets them more business. And I think that's really the incentive for that. Over time, it could also be a volume issue where we can make or do a payment product that is significantly less expensive for smaller hotels in other parts of the world where their costs are higher.

[Deepak Mathivanan, Barclays]

Okay. It’s helpful. Thanks, Glenn.

[Operator]

Our next question is from Stephen Ju from Credit Suisse. Your line is now open.

[Stephen Ju, Credit Suisse]

Hi, Glenn. So building on your highest potential market commentary earlier, it seems like there's more dialogue around your local efforts in China both in terms of earnings calls like this as well as interviews with your local management teams and talking about the opportunity for outbound. So you've always had partnerships there, but why is now the right time for what looks like what's probably more of a direct effort to advertising establish to Booking.com brand in the country? And is perhaps a greater conversion rate from the payment product, is that what's making I guess the ROIs there possible now? Thanks.

[Glenn Fogel, President & Chief Executive Officer.]

I would look at it a little differently, actually. We first started our business in China many, many, many years ago. We now have approximately 1,000 employees there, and we have different call centers there. We have always been pushing out our own brand. It's not just Booking.com, Agoda has been operating in China for very long time. So I think the way we look at is we're always trying to use to all the different ways to get more customers through our platform and be able to provide more value to customers and hoteliers. So yes, we absolutely are doing deals with lots of different players in China because we think that's a way to help build up our business. But I don't think it's anything different. In terms of the payment product, there is some difference in some thing that do help in terms of doing business in China, having that product there is good. I'd like to point out Agoda has always been a merchant player, and they've done very well there.

Booking in the past was primarily agency business, they've done very well there. But I do think having that flexibility, particularly with Alipay, and with WeChat Pay and some of the other things coming in here, our agreement with DiDi, Meituan, I think these things are helpful to have that platform there.

[Stephen Ju, Credit Suisse]

Thank you.

[Operator]

Thank you. Our next question is from Naved Khan from SunTrust. Your line is now open.

[Naved Khan, SunTrust]

Yeah, thanks a lot. I'd like 2 clarifications. On this sort of recent trend in sort of macro-related slowdown in Europe, are you seeing sort of customer eventually booked but not really booking in advance, kind of waiting more to the last minute? Is that kind of a behavior you're seeing? Or are you seeing kind of demand weaken all together? And then, another question I have is about just the growth in different sort of channels. I think I heard you mentioned mobile growing faster and alternative growing faster. I did not here about direct growing faster. Was that still the case the direct bookings are faster growing?

[Glenn Fogel, President & Chief Executive Officer.]

All right. So, I'll take that first and I'll let David talk about growth and speed. I think that it'll be interesting -- we need more time to see if this uncertainty factor that I met, this propensity, perhaps, to wait to book. We'll need a little more time to see if it's going to be drastic change and that is what is happening right now.

I would say that it was interesting in the third quarter where we did have a lot of people who, obviously, waited to book because of either World Cup, or the heat or whatever, and we did see that delayed pick up and bookings in third quarter. Things a little early to say exactly and I'm going think also what's going to happen in the macro environment.

[David Goulden]

Yes. And then -- sorry, I obviously, covered a lot of things in my earlier comments, but I did talk about direct. And just to confirm and recap, the direct channel did grow faster. We used to say it was approximately 50 -- approximately half the business, now we're seeing it's over half the business and growing faster down the average.

So, we have the direct channel of over half and growing faster than the average. We've got mobile over half and going faster than the average. And we've got the alternative business at about 20% of our revenues, a high percentage of our room nights and also growing faster. So, each three those are doing well and growing faster than the average.

[Naved Khan, SunTrust]

Okay. Thank you, Glenn. Thank you, David.

[Glenn Fogel, President & Chief Executive Officer.]

Thank you.

[Operator]

Thank you. Our next question is from Anthony DiClemente from Evercore. Your line is now open.

[Anthony DiClemente, Evercore]

Thanks very much for taking my questions. In terms of your investments in the alternative accommodation space, it would be great to understand within that investment bucket, how much of it is investing in new supply?

Glenn, in your example, you mentioned like beach house listings versus marketing of that supply versus investments in the consumer tools to integrate that supply, whether it be like technology or AI that improves the user interface for the customer.

And then related to that, just wondering if you're seeing any consumer behavior that suggests maybe an incremental shift to home versus hotel. Is that inflecting in any way that is notable? Or is it more kind of a steady, linear trend that's going on out there? Thanks a lot.

[Glenn Fogel, President & Chief Executive Officer.]

So, one of the thing -- it may be a little confusing, is the difference between what our steady growing listings, growing the business, and sort of our steady state, that's what we do all the time versus what we try and call out a little bit here is that we're doing a step-up in investments.

The listings is not a step-up added investments that's going continue to grow our business and I want to do something of the important, but we don't see that as a different thing that we're doing right now. So, that would not be as part of what we're talking about the step up investments.

In terms of what we need to do to make that business continue to accelerate, do well is all the elements that we've done -- all of our business forever, and that is -- I think one of the key things is really is just getting that knowledge out among certain groups of customers around the world who may not have as much knowledge that we have this great product.

And yes, I mentioned I called out where I think we a little bit of shortfall in some parts of it, but the fact is, in the U.S. we've got a great product. And we do need though to make more customers aware of it, and that's part of the coming out with that new branding campaign that we launched two days ago. You won't see it and the stuff you're seeing the right these couple of days that's coming out in terms of, as part of it, to make sure that people are aware that we have a non-hotel accommodation product that is out there, that is good.

And we talked about the reason why we think it's a great thing, about the fact that instant confirmation. We talked about that you can see that on the same search results as your traditional so you can do a comparison. We talked about how you don't need hit at the end with a fee at the end. All these reasons that we think we have a great product, but definitely getting that branding out and that scenario we talked about, increasing our spend.

In terms of actually looking at numbers and inflection points, I think that there's nothing that I would see that we saw a crack, oh my God, this is a difference. We're going to have a huge inflection point. This is a little bit of blocking and tackling do all the right things and continue to do it day-in and day-out, and we'll get there.

[David Goulden]

Yeah. And then, Anthony, just to clarify, to build up on Glenn's point, just to make sure everyone is clear, when we talked about these incremental investments that we make in 2019, incremental above investments that we normally make with the regular size and growth of the business, these are all focused upon driving growth. They're focused upon branding. They're focused upon customer acquisition. They're focused upon merchandising, incentive programs. They're all focused on driving incremental customers to our platform, driving incremental transactions and driving loyalty. So top-line focus.

[Anthony DiClemente, Evercore]

Awesome. Thank you very much.

[David Goulden]

Thank you.

[Operator]

Thank you. Our next question is from Michael J. Olson from Piper Jaffray. Your line is now open.

[Michael J. Olson, Piper Jaffray]

Hey. Good afternoon. I just had one. You mentioned several areas of near-term investment. I don't believe experience is one of those areas. Just curious where that falls in the list of priorities at this point with all the other initiatives going on in alternative accommodations, direct channel growth, payment platform, China, et cetera? Thanks.

[Glenn Fogel, President & Chief Executive Officer.]

So it is important. And as David just said, we're trying to just show a little difference into one of the incremental things that we're doing to drive growth. It's a very important part of our business. We bought FareHarbor, put that in. I can tell you now, we have over 100 cities now, and I think almost 120 that have these attractions and things people can do when they show up.

And we talked about in the long run, how important it is to offer that holistic solution for our customer. And that goes back to why we're having this payment problem. You've got to have that to put together all the elements of the trip, and reduce the friction for that customer. So the fact that we didn't throw it out, and we didn't talked about it, we're half an hour into our prepared remarks and stuff. I'm glad you ask the question, so I could make a point that this is still extremely important part, and we're very pleased with some of the progress we're seeing there.

[David Goulden]

And it size together what the work we're doing, booking also to bring in the cars and rides, and put together these great trips. So it's a very important part of our building out the connected trip experience for our customers.

[Michael J. Olson, Piper Jaffray]

Got it. Thanks.

[Operator]

Thank you. Our next question is from Heath Terry from Goldman Sachs. Your line is now open.

[Daniel Powell, Goldman Sachs]

Thanks. This is Daniel Powell on for Heath. Just a couple of questions for us. Just want to dig in a little bit more on some the comments you made around what you saw in your various marketing channels in the fourth quarter. It sounded like the ROIs were stable, but the volumes you are seeing were pretty consistent. Just curious if there was a decision around, because of what you're seeing in the macro environment, not to look to lean into other channels. Or if there was a lack of ROI that you saw outside of the traditional channels that you weren't getting the volume that you would have expected to.

And then just another one after that, on the delta between room nights growth and bookings growth in the first quarter that you're guiding too. I realize it's not very big, but just curious if there's anything about the growth that you're seeing in alternative accommodations that we should think about over the course of 2019 that could be impacting the delta between those two. Thanks, guys.

[David Goulden]

Let me take the second one. As you've got to look at everything on a constant currency, Easter adjusted basis. Sorry you have to do that, but unfortunately it's the only way to kind of look at things on a like-for-like basis. So you look at the basis into the first quarter, room night growth is 6 to 8, and gross booking growth is 5 to 7, so pretty consistent. There's an ADR difference. We do expect ADR and we're seeing a little bit of pressure on ADRs tied to the macro, we're seeing it tied to two things. One, we are seeing a little bit less international traveler into certain cities. And those international travel transaction since we have higher ADR. And also we are seeing some local pricing pressure as well impacting the ADR. So that's the story between room night growth and gross bookings on a like-for-like basis during the first quarter.

And then, just to recap again, what we said on the fourth quarter, we're expecting to get some deleverage from the performance marketing channels. We've got a little bit of leverage. That's because there was just lest volume there than we expected, but we're pleased with ROIs and we're pleased with the share that we maintained in those performance marketing channels. So it's a function of volume we saw in the channel as opposed to anything else.

[Daniel Powell, Goldman Sachs]

Got you. And there weren't other channels that you thought you could have spent into when you weren't getting that volume? Or is there an issue around timing there?

[Glenn Fogel, President & Chief Executive Officer.]

We always are -- always look at every way we can spend money to bring in growth and we're always looking at what's the ROI for it, what do we think the long-term benefit is going to be, what's it do for the brand. All things we've we talked about in the past about that we're pleased with the way things were at that point?

[David Goulden]

Really, just to kind of put those two points back together again, if you think about it, we did better than we expected in the Q4 on room nights growth. And as we just said, we got a little bit less volume from the performance marketing channels. So the fact that we were able to beat our room night growth guidance for the quarter and an important channel for us had a little less volume than we expected I think that's a good thing. Therefore, we were able to still lean in elsewhere and do better than we had thought we might do.

[Daniel Powell, Goldman Sachs]

Thanks. Appreciate the detail.

[Operator]

Thank you. Our next question is from Brent Thill from Jefferies. Your line is now open.

[Brent Thill, Jefferies]

Thanks. Just back to the growth initiatives for 2019. I'm just curious if you could help us prioritize if you had to wait each of the initiatives, where the biggest rate goes and the biggest investments in descending orders. If you could just give us a high-level view, that would be very helpful.

[Glenn Fogel, President & Chief Executive Officer.]

Yes. I don't think we're going to able to give you more color. Those are -- the ones we listed out are the important ones. And one thing I'll make a point of is that we set up a budget, we think of what it's going to be for the year and we put it out and then we start actually executing. And as you go throughout the year, you may notice some things are performing better than other things. We want to put more money into things or things are not working as well and you pull that back. So even if I were to give color say, okay this is as of this moment here's what we're going to spend -- it's still not going to be that helpful because these things I know will change as the environment changes.

[David Goulden]

Yeah. Brent, just to kind of give you a little bit of color and tell which is the smallest of the three areas. We told you there's going to be some impact you'll see on the branding line, some impact you'll see on the revenue line, some impact you'll see on the personnel line. Well the personnel line is by far the smallest of those three. The other two are the major spend areas and the personnel increase, so really those we're adding to support those growth initiatives.

[Brent Thill, Jefferies]

And Glenn, just a quick follow-up. If Europe continues to lag a little bit longer than you would like, can you just give us a sense of how you think about the alternative opportunities to counter that, what's happening, how you think through that for the back half of the year? Thank you very much.

[Glenn Fogel, President & Chief Executive Officer.]

Yes. So we believe that areas of slowdown can be great opportunities to gain share, develop loyalty, increase your value to your supplier partners. When things start getting a little bit slower, our hotel partners are looking for getting demand wherever they can. They look at the incremental. And they want to be able to say can you supply somebody in this bed? And as you know, hotels have high fixed costs. They need to get that person to help hit their bottom-line or get us close as they can to make a breakeven environment.

I've had the fortunate of going through some of these in the past. I've been the company now -- it's not more than 19 years. So we've been through this before. We've been able to add value in the past. And I suspect if things do slow down a bit, that we can position ourselves in a way that, as we come out, we'll be even stronger.

[Operator]

Thank you. Our next question is from Justin Patterson from Raymond James. Your line is now open.

[Justin Patterson, Raymond James]

Great, thank you very much. I appreciate the commentary around the payment platform earlier and a providing more frictionless experience. My question is if you layer in more of these services, how do you think about really making consumers aware of all the features in the app? And in turn, how does that change kind of your view of LTV over the long-term? Thanks.

[Glenn Fogel, President & Chief Executive Officer.]

Yeah. That is a good point, because as we pointed out, just having great service in your product, that's not very helpful if people don't know about it. One of the great things, as people become more mobile savvy and as they're using their mobile devices more and more, and you're able to push opportunities to be able to communicate more with them, you're able to demonstrate what the value can by going to our systems.

And we see this developing around the world, this concept of the super app type thing. And this is everything from all the way, from the WeChat, which is completely know so many different things you can do off that. To things that are a little bit not quite but are -- our partner now with Grab is doing a lot of different stuff.

We need to make sure that our customers are aware of these great things. I'm not as concerned though about being able to communicate what the value is. And I think we're not going to be there when we set these things up, as we continue to set them up. I think it's going to be fine.

[Operator]

Thank you. Our next question is from Tom White from D.A. Davidson. Your line is now open.

[Tom White, D.A. Davidson]

Great thanks for taking my question. Just wondering you talked about profitability of your alternative accommodation room nights, I think you said solidly profitable, but when you kind of called out some of the higher cost for that relative to the traditional hotel business.

I also remember that, in the past, you talked about the potential for technologies like AI and better automation to reduce your OpEx per room night. Is that something that should help drive kind of the EBITDA per room night for alternative to be more in line with traditional hotel over time? Or will that always kind of be structurally lower?

[Glenn Fogel, President & Chief Executive Officer.]

So first, I just want make sure we're on the same page, I said nicely profitable. That was the word I used, not solidly. But, I believe all new types of technology that we're developing are going to reduce that cost over time for both non-hotel accommodations and hotel accommodations.

And it's interesting which ones will help the most, fastest I don't know the answer to that. I do know though that some of the things that we see, even right now in terms of lowering our customer service cost.

And because we do have more customer service contacts with our non-hotel accommodations area. This is an area where we probably will get a benefit more there than we would in hotels, but there can be other examples that could go on the other way.

The fact is though one of the benefits for a company, having the size and scale that we have, the ability to go out and hire lots of really smart AI-type people, help developed technologies that we can then put into our platform, distribute throughout the world for all of our supplier partners, we're providing a value that they can't do on their own. That adds to the reason why they connect with us, that's the reason why they give us the information, that's the reason why they want to work with us. That something that we do that they can't do as well, particularly somebody who is not a multi-billion dollar global chain. If you're not one of those, you're definitely not going to be able to play that game. We bring that to them.

[Tom White, D.A. Davidson]

Thank you.

[Operator]

Thank you. Our next question is from Jed Kelly from Oppenheimer. Your line is now open.

[Jed Kelly, Oppenheimer]

Great. Thanks for taking the question. Just -- where is the company strategy around some of the -- or by owner managed inventory that's sort of, I guess, more frictional? And what's the overall strategy? And then you signed an agreement with FareHarbor, a couple of months ago. Have you seen an uplift in that agreement since you started that partnership?

[Glenn Fogel, President & Chief Executive Officer.]

I'll answer the second one. I haven't kept up with the details of that, so I'm just going to pass on that. I think that if it was significant, right now, though I'd know. So that's one.

Let's go with the second thing. Any type of non-hotel accommodation whether it be a single home that is operated by a mom-and-pop that do it once a year for one-week all the way up to very sophisticated players who have multiple units and are working with multiple distribution channels, we want to be able to get all these people onto the platform. The thing that we want to do though is in the right order, at the right times and the right amount of money and obviously go for the more profitable ones first. So that -- for the ones you're mentioning I think those are sometimes more costly. We got significant number of sophisticated owners and to deal with to get them onto the platform, but we'll get to them all eventually.

[Glenn Fogel, President & Chief Executive Officer.]

So, I want to thank everybody for the call. In summary, I am very pleased with our performance in 2018 as we met many important financial and strategic goals. And I'm truly excited about our upcoming key investments for 2019 as we position the company for long-term growth.

And finally I want to thank everyone who made 2018 such a successful year, including our supplier, our marketing partners and now more than 24,000 employees distributed across more than 300 offices around the world and most of all our traveler customers who are out there being what we call our new advertising campaign, the bookers, the doers, the people out there exploring the world. By doing this they're making the world a better place. Good night.

[Operator]

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect.