The Online Travel Update: COVID-19 Edition

RBC Capital Markets, LLC Mark S.F. Mahaney Benjamin Wheeler (Analyst) (Associate) (415) 633-8608 (415) 633-8527 [email protected] [email protected] Shweta Khajuria, CFA Spencer Tan, CFA (Senior (Analyst) Associate) (415) 633-8631 (415) 633-8712 [email protected] [email protected] September 27, 2020 The Online Travel Update: COVID-19 Edition

We conducted our 6th Annual U.S. & 4th Annual UK Online Travel survey. We also look at a series of key industry data points to provide an update on the shape of recovery in the various Online Travel segments, similar to our Mobile Matters series for Ridesharing. To summarize, Online Travel has been the single worst impacted sector in our coverage and we characterize the pace of recovery as glacially gradual. Note that we are downgrading EXPE in conjunction with this report, based in part on our survey

EQUITY RESEARCH EQUITY results.

COVID-Specific Takeaways From U.S. and UK Internet User Surveys: 1) A Multi-Year Recovery – 49% of U.S. and 55% of UK respondents expect to return to pre-COVID leisure travel frequency in 2021 with another ~33% saying 2022 or later. These results are consistent with our BKNG and EXPE models that call for Gross Bookings to return to 2019 levels in 2023+; 2) Alternative Accommodations Are Seeing A COVID-Boost – We saw record-high increases in AA adoption to 62% in both countries.

Key Takes From 6th Annual 3,500 U.S. Internet User Survey: 1) Airbnb Now The Leading Planning & Booking Destination with 37% (+6pts Y/Y) and 26% (+6pts Y/Y) of travelers research and booking on the property, respectively. Airbnb also had the highest Selection and Price ratings with the highest satisfaction scores among the top 5 travel sites. 2) Expedia Sites Remain The Collective Leader, Though They Are Ceding Share as Brand Expedia drops to the #3 most popular site for planning trips vs. #1 in every year prior. Including all of its owned sites (Hotels.com, Travelocity, HomeAway/Vrbo, etc.), Expedia had 128%/76% selection as a travel planning/booking destination vs. 190%/107% in 2016. 3) Booking.com Gaining Share in the U.S. – Booking.com was the largest sequential gainer as a site for planning and booking trips up 7pts Y/Y in both categories. As an AA site, Booking.com increased a group-high +11pts Y/Y, making it the #3 most popular site and ahead of Brand Expedia. 4) Metasearch Becoming Less Relevant – Google hit record-high levels of travel planning selection while TripAdvisor and Kayak hit record-lows. 5) Airbnb is THE Leading AA Provider – Of those respondents who had stayed in AA, 50% of respondents reported using Airbnb in the last year with 2x share of #2 HomeAway/Vrbo. 6) Social Media More Important to Online Travel Than Previously Thought – For the first time we included Facebook and Instagram as research & planning options and found 11%and 8% selection, respectively, making FB properties collectively more popular for travel planning than each Travelocity, HomeAway/ Vrbo, Priceline, Kayak, Trivago, Orbitz and Hotwire.com.

Key Takes From 4th Annual 2,300 U.K. Internet User Survey: 1) Booking.com The Clear Travel Planning & Booking Leader – 57% of respondents used Booking.com to plan (vs. 55% in ’19) and 48% used it to book (vs. 44% in ’19) – both levels over 20pts higher than the #2 ranked platform. Booking.com’s 4pt gain as a site to book was the second highest of all surveyed sites it was (unsurprisingly) selected as providing the best Selection, Ease of Use and & Price and gained share in each of these categories. 2) Airbnb Becoming Increasingly Competitive as a Top Online Planning & Booking Site – Airbnb was the largest single-year and multi-year gainer as a site to plan (+6pts Y/Y, +20pts vs. '16) and as a site to book (+6pts Y/Y, +16pts vs. '16) and is now the #2 ranked property in both categories. Airbnb also gained share in terms of offering the Best Prices, Selection and Ease of Use and now ranks top three in each of these categories. 3) Expedia & Sites Largely Consistent –Brand Expedia gained 2pts of share as a site to plan and book to 32% and 19% making it the #4 and #3 ranked destination, respectively. Including its owned properties, cumulative selection was 86% (flat vs. 2019) as a site to plan travel. 4) Metasearch Becoming Less Relevant – Google hit record-high levels of selection as a destination to plan travel, while TripAdvisor and Trivago reached record-lows. 5) Airbnb and Booking.com – The Top Two AA Sites In The U.K. with 44% (+3pts Y/Y) choosing Airbnb as the AA option they use most often, while 43% (+4pts Y/Y) chose Booking.com, and both Airbnb and Booking.com were the largest sequential share gainers, ending with ~2x the market share of #3 TripAdvisor.

Priced as of prior trading day's market close, EST (unless otherwise noted). Disseminated: Sep 27, 2020 12:21ET; Produced: Sep 27, 2020 12:21ET All values in USD unless otherwise noted. For Required Conflicts Disclosures, see Page 33. The Online Travel Update: COVID-19 Edition

Table of contents

Section I: COVID-Specific Takeways From RBC’s Annual U.S. & UK Online Leisure Travel Surveys ...... 3

Section II: Takeways From RBC’s 6th Annual U.S. Online Leisure Travel Survey ...... 7 1. Online Penetration Rising For Travel Planning and Booking In the U.S...... 8 2. Airbnb, Google and Brand Expedia: Top Three Traveler Choices To Research/Plan Their Trips...... 9 3. Hotels and Alternative Accommodations Increasingly Seen As Substitutes ...... 12 4. As Alternative Accommodation Destinations, Airbnb is Dominant, Expedia & HomeAway/VRBO a Solid Number Two and Booking Gains Material Share ...... 15 5. Online Experiences Penetration is Likely Lowest of Travel Segments ...... 16

Section III: Takeways From RBC’s 4th UK Online Leisure Travel Survey ...... 18 1. UK Online Penetration Largely Consistent For Travel Planning & Booking ...... 19 2. Booking.com By Far The Top UK Online Travel Destination ...... 19 3. Hotels and Alternative Accommodations Increasingly Seen As Substitutes ...... 22 4. Booking.com & Airbnb Are Clear Leaders In the UK Alternative Accommodations Market ...... 24 5. Ramping Online Experiences Penetration in the UK ...... 25

Section IV: Recent Data Points in Online Travel ...... 27

September 27, 2020 2 The Online Travel Update: COVID-19 Edition

Section I: COVID-Specific Takeways From RBC’s Annual U.S. & UK Online Leisure Travel Surveys Online Travel has been the most negatively impacted sector in our coverage space by COVID- 19, with both EXPE and BKNG experiencing over 100% Y/Y declines in Gross Bookings (thanks to cancellations) at their absolute worst periods in late March and early April. The Ridesharing and Online Advertising sectors were also materially negatively impacted, but not to the same degree as Online Travel. Our U.S. and UK Travel surveys, collected in mid- September, certainly reflect this reality. In this section we handpick several data points from our U.S. and UK survey results that reflect the impact that COVID-19 has had on Online Travel.

We believe maybe the most important determinant of BKNG’s and EXPE’s stock performance is the shape of recovery of Online Travel. Looking at the survey data, the bulk of respondents expect their frequency of leisure travel to return to pre-COVID levels sometime in 2021: 49% in the U.S. and 55% in the UK. Just 15% and 10% of U.S. and UK respondents, respectively, say that their leisure travel frequency has already returned to those levels. Meanwhile, approximately one third of respondents in both countries believe that their leisure travel frequency won’t return to 2019 levels until 2022 or later. Importantly, 3% or less of respondents expect their travel frequency to never return to pre-COVID levels, which is consistent with our view that travel will eventually return in full strength. Further, we believe these results are consistent with our expectation that BKNG doesn’t achieve 2019 Gross Bookings levels until 2023 and our current estimate for EXPE’s Gross Bookings in 2023 are presently ~7% below 2019 levels.

Exhibit 1: When do you expect the frequency of your leisure travel to return to pre-COVID (i.e., 2019) levels?

60% 55% 49% 50%

40% 33% 32% 30%

20% 15% 10% 10% 3% 2% 0% It already has 2021 2022 or later Never

U.S. UK

Source: RBC Capital Markets, SurveyMonkey (U.S. n=2298, UK n=1619)

Since the start of the COVID-19 pandemic, BKNG, EXPE and Airbnb have all given evidence that Alternative Accommodations (AA) as a category have outperformed Hotels. Specifically, BKNG shared that 40% of the new Bookings in Q2 came from AA vs. our estimate of 20-25% pre- COVID. On EXPE’s Q2:20 EPS, the company said that Vrbo, their AA division, has been the key driver of the recovery since the March/April trough. And finally, Airbnb disclosed that on July 8th they achieved over 1MM booked room nights for the first time since March 3rd. We hosted Airbnb on 05/28 where they discussed recent trends (note here). One key investor question for the OTAs is how long this relative preference for AA vs. Hotels is and if it marks a permanent shift in consumer preferences. Probably the most surprising finding from our survey results is in Exhibit 2: ~60% of respondents in the U.S. and UK said their preference for Hotels vs. AA hasn’t been affected by COVID-19, but 25-27% of respondents said that they now prefer Hotels more vs. just 13-16% said they prefer AA more now. We would have thought the other way September 27, 2020 3 The Online Travel Update: COVID-19 Edition

around. Other results in this survey contradict these findings, including a material jump in AA usage and very bullish results for Airbnb, but we still want to show Exhibit 2 because we are even-handed and open-minded analysts. All that said, we take the findings suggested in this Exhibit with a grain of salt.

Exhibit 2: Has the COVID-19 pandemic changed your preference for Hotels versus Alternative Accommodations?

70% 59% 61% 60%

50%

40%

30% 25% 27%

20% 16% 13% 10%

0% No, my preference remains I now prefer Hotels more I now prefer AAs more same U.S. UK Source: RBC Capital Markets, SurveyMonkey (U.S. n=1561, UK n=1619)

The adoption of Alternative Accommodations has consistently risen throughout our survey history, with now a majority of Online Travel users having stayed in the form of lodging within the past 12 months. This iteration we saw the largest jump in these results, 14pts in the U.S. and 11pts in the UK to 62% in both regions. These findings are consistent with the trends that the OTAs and Airbnb have publicly disclosed over the last several months and we believe reflect the impact of COVID-19 on travel bookings in addition to the pre-existing trend that AA’s adoption continues to rise. We believe this exhibit trumps the findings suggested in Exhibit 2, as there is a clear growing trend towards AA when it comes to leisure travel lodging.

September 27, 2020 4 The Online Travel Update: COVID-19 Edition

Exhibit 3: Have you stayed in an Alternative Accommodations (vacation rentals, private or shared apartment/ home, etc.) in the past year for leisure/personal reasons? (Yes)

70% United States 70% 62% United Kingdom 62% 60% 60% 48% 51% 51% 50% 46% 43% 50% 43% 40% 37% 34% 40%

30% 30%

20% 20%

10% 10% Yes 2014 2015 2016 2017 2019 2020 2016 2017 2019 2020

Source: RBC Capital Markets, SurveyMonkey (U.S. n=1561, UK n=1714)

We also ask respondents whether they plan to stay in Hotel for leisure travel over the next year and found a material uptick in the percentage of respondents who said they weren’t planning on taking a vacation. Specifically, 18% of U.S. respondents said they weren’t planning on taking a vacation in the next 12 months vs. a historical range of 4% to 10%. And 17% of UK respondents said they weren’t planning on taking a vacation in the next 12 months vs. a historical range of 4% to 5%. Meanwhile, we also observe an uptick in the relative preference for AA vs. Hotels in both the U.S. and UK, which is somewhat contradictory to our findings in Exhibit 2.

Exhibit 4: Are you planning to stay in a Hotel for leisure travel over the next 12 months?

100% 88% 89% United States 90% 100% 88% United Kingdom 78%79% 80% 90% 83% 81% 80% 70% 62% 70% 65% 60% 60% 50% 50% 40% 40% 30% 30% 20% 18% 20% 17% 17% 12%13% 20% 14% 10% 12% 8% 6% 8% 8% 10% 4% 5% 10% 4% 5% 5% 0% 0% Yes No, stay in other lodging No, not taking vacation Yes No, stay in other lodging No, not taking vacation 2015 2016 2017 2019 2020 2016 2017 2019 2020 Source: RBC Capital Markets, SurveyMonkey (U.S. n=2502, UK n=1715)

September 27, 2020 5 The Online Travel Update: COVID-19 Edition

Finally, we observed a shift away from cities and condensed spaces in terms of destination preference among our U.S. respondents, which we believe is consistent with commentary from the OTAs and Airbnb who have seen strength in short-haul (<300 miles) trips. Specifically, 39% of respondents said they traveled most often to “City Downtown” or “City Suburbs” compared to 51% in 2019, 50% in 2018 and 64%/65% in 2016/2015.

Exhibit 5: When booking leisure travel on an Online travel site, which destination do you travel to most often?

Destination Type Preference 40% 37% 35% 36% 35% 30% 30% 28% 25% 25% 20% 18% 14% 15% 14% 11% 10% 6% 7% 7% 5% 7% 4% 4% 5% 5% 2% 2% 3% 0% City City Beach / Mountains Island and Lake Other Downtown Suburbs Ocean countryside

2015 2016 2017 2019 2020

Source: RBC Capital Markets, SurveyMonkey (2020: n=2503; 2019: n=1013; 2017: n=973; 2016: n=1458; 2015: n=679)

September 27, 2020 6 The Online Travel Update: COVID-19 Edition

Section II: Takeways From RBC’s 6th Annual U.S. Online Leisure Travel Survey We ran our 6th annual proprietary survey of over 3,500 U.S. Internet users and their Online Travel patterns and intentions. Key takes include:

1) Online Travel Penetration Rising in the U.S. – According to our survey, a record-high 67% of respondents made an Online booking for Leisure travel over the past year, which compares to 55% in 2019 and 58% per our 2017 survey. 2) Airbnb now the Leading Planning & Booking Destination in the U.S. – As a Website for both travel research and for travel booking, Airbnb is now the number 1 ranked site with 37% (+6pts vs. 2019) and 26% (+6pts vs. 2019) of U.S. travelers researching and booking on the property. The Alternative Accommodations site was rated as offering the best Selection and Prices and was ranked third in terms of Ease of Use. Finally, 74% and 76% of respondents who use Airbnb to plan and book their trips, respectively, were either “Extremely” or “Very Satisfied” – the highest among the top 5 most popular travel sites. 3) Expedia Sites Remain the Collective Leader, Though they are Ceding Share – Brand Expedia is now the third most used site to plan leisure trips dropping from number 1 in 2019. Including all of its owned sites (Hotels.com, Travelocity, HomeAway/Vrbo, Trivago and Orbitz), Expedia Group had a total of 128% selection as a travel planning destination and 76% as a booking destination, making it the collective leader. However, this group total has steadily declined in both categories since peaking at 190% for planning in 2015 and 107% for booking in 2016. 4) Booking.com Gaining Share in the U.S. – Booking was the largest sequential gainer as a site for planning and booking leisure trips up 7pts vs. 2019 in both categories. Booking now ranks as the number 5 and 4 top site for planning and booking travel, respectively. And as a site for booking AA, it now ranks number 3 (ahead of Brand Expedia) with 22% selection, up a group-high 11pts vs. 2019. 5) More Market Share Changes For Online Travel Planning and Booking – The other two notable movers are Google on the positive side and Hotel Direct Websites on the negative. Specifically, Google is now tied with Airbnb for the number one ranked destination for planning and researching leisure travel with 37% selection (+5pts), while Hotel Direct Websites were down 8pts Y/Y as a site to book and pay for travel and dethroning it as the previous leader in the category. 6) Metasearch Becoming Less Relevant – We think it is no coincidence that Google hit record-high levels of selection as a destination for travel planning while TripAdvisor and Kayak reached record-lows with Trivago close to a record-low. TripAdvisor is the largest multi-year decliner, falling 20pts from 2016 levels and another 3pts Y/Y, to 23% selection as a site for planning travel and Kayak has fallen 17pts from 2016 and another 4pts this year. 7) Alternative Accommodations Are Seeing A COVID-Boost – A record-high 62% of survey respondents indicated they have stayed at an Alternative Accommodation over the last 12 months, up from 48% in 2019, 46% in ‘17, 43% in ‘16 and 34% in ‘15. This step-function increase is consistent with recent public disclosures from the OTAs and Airbnb. 8) Airbnb Is the Leading AA Provider in the U.S., Expedia Sites a Close Second – Airbnb is the clear leader in AA—of those who had stayed in an AA property, 50% said they used Airbnb down 8pts Y/Y but up from 45% in ‘17, 30% in ‘16, 23% in ‘15 and 18% in ‘14. HomeAway/Vrbo’s 25% was down materially from 39% in ’19, but Brand Expedia gained 7pts of share to 17%, resulting in Expedia Sites commanding 42% selection. 9) Social Media More Important to Online Travel Than Previously Thought – For the first time we included Facebook and Instagram as options for the “research & planning” question and found they had 11% and 8% selection, respectively. This 19% cumulative amount makes FB-owned properties more popular travel planning sites than each Travelocity, HomeAway/Vrbo, Priceline, Kayak, Trivago, Orbitz and Hotwire.com in the September 27, 2020 7 The Online Travel Update: COVID-19 Edition

U.S. We view these findings as a negative for the metasearch companies and a surprising positive for FB as the use cases for its platform appear to be expanding.

1. Online Penetration Rising For Travel Planning and Booking In the U.S. Our survey work this year indicated 68% of respondents reported making an Online reservation within the last year for a leisure / non-business trip. This number is higher than recent historical numbers of 55% in 2019 and 58% in 2017 and 2016. We would expect Online to continue to be an increasingly important channel to travel overall. We’d note there may be some bias in our results given we’re polling Internet users, who are more likely to book travel Online in the first place. Ok, ok…there IS bias. But the results are still useful.

In this survey, we wanted to test consumers’ use of Online travel sites and their key criteria for selecting certain sites. When we asked respondents to indicate the most important criteria when choosing where to book to travel, the answers weren’t surprising - Price, Ease of Use (i.e. Convenience) and Selection were among the top responses. These three criteria are also among the top three factors for consumers when deciding where to shop Online…go figure. These factors have remained some of the top reasons for most of our prior surveys. Total Reviews is the #3 most important factor at 39% (vs. 42% in 2019) and consistent with prior surveys. Loyalty Programs remained at a relatively low level again through reached a record- high 25%. Brand reputation also reached a record-high level of importance with 30% and may speak to the rise of Airbnb as a top travel site in the U.S. In our view, the survey data reinforces the importance of aggregators (Expedia, Booking.com), given the consistent importance of Price, Convenience, Availability of Reviews and Selection and relatively low importance of Loyalty Programs as factors consumers consider when booking Online travel.

Exhibit 6: What are the most important factors when choosing an Online site to book your trip? (Select all that apply)

79% Best pricing 83% 58% 81% Ease of use 63% 75% 39% Number of Reviews 39% 51% 38% Selection 37% 45% 30% Brand reputation 23% 28% 25% Loyalty programs 20% 18% 18% Offers Both Hotels and AA's 15% 10% Saves personal preferences 9% 9% 0% 20% 40% 60% 80% 100%

2020 2019 2017 2016 2015

Source: RBC Capital Markets, SurveyMonkey (2020: n=2522; 2019: n=2083; 2017: n=1885; 2016: n=1578; 2015: n=756)

September 27, 2020 8 The Online Travel Update: COVID-19 Edition

2. Airbnb, Google and Brand Expedia: Top Three Traveler Choices To Research/Plan Their Trips With key factors for travel booking as a backdrop, we next asked which Internet sites consumers use to research and plan vacation options. Airbnb and Google tied for the most popular sites surpassing the reigning leader, Brand Expedia, for the first time. Collectively, Expedia Sites (Hotels.com, Travelocity, HomeAway/VRBO, Trivago, etc.) still remain the top choices with a cumulative selection of over 100%, though EXPE sites generally are continuing to show slippage. Hotel Direct Websites appear to be incrementally less relevant, at the margin, while Booking may be gaining share in the U.S. with record-high selection. Finally, Social Media is more important to travel planning than we had previously thought.

Our six key takeaways were: 1) Airbnb now the leading travel planning site in the U.S. with 37% (+6pts vs. 2019) of respondents selecting it as a top site for vacation planning and research, surpassing the previous four-time running leader, Expedia. Most impressive has been the speed of its rise, going from the 13th ranked site in 2015 with 16% to 1st with 37%, per this survey. 2) Expedia Sites collectively remain the top sources: Brand Expedia is now the #3 top site in the U.S. with 35% of travelers using it to plan travel. Including all of Expedia’s brands, (Orbitz, Hotwire.com, HomeAway/Vrbo, Hotels.com, etc.) that number is above 100%. That said, Expedia’s position has continued to slip since 2015. 3) Google’s innovation in travel appears to be paying off with 37% (+5pts Y/Y) of users selecting it as a site used most often for vacation planning and tying Airbnb for the #1 spot. 4) Hotel Direct Websites deteriorated slightly vs. 2019 and 2017 down 5pts and 4pts, respectively, with 27% selection. 5) Booking appears to be gaining share in the U.S. with a record-high 28% selection (vs. 20% and 21% in 2017 and 2018, respectively) and surpassing Hotel Direct Websites as a top source. 6) Social Media more important than we – and you – thought: For the first time, we included Facebook and Instagram as response options and found that their collective selection rate was 19%, making them more important than each Travelocity, HomeAway/Vrbo, Priceline, Kayak, Trivago and Orbitz. Still waiting on Social Media to become an effective performance marketing channel for OTAs… but this positioning is a distinct positive for FB.

September 27, 2020 9 The Online Travel Update: COVID-19 Edition

Exhibit 7: Over the past year, which sites did you use most often when planning and researching a vacation or leisure trip? (Select all that apply.)

37% 31% 22% Airbnb 17% 16% 37% 32% 31% Google 30% 32% 35% 37% 37% Expedia 45% 47% 32% 29% 33% Hotels.com 36% 37% 28% 21% 20% Booking.com 24% 16% 27% 32% 31% Hotel website 22% 42% 23% 26% 27% TripAdvisor 30% 43% 15% 20% 23% Travelocity 30% 34% 15% HomeAway / 17% 16% 8% VRBO 19% 13% 14% Priceline 18% 25% 26% 12% 16% Kayak 18% 21% 29% 12% 10% 15% Trivago 11% 20% 11% Facebook

9% 11% 15% Orbitz 21% 25% 9% 10% Hotwire.com 13% 18% 22% 8% Instagram

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

2020 2019 2017 2016 2015

Source: RBC Capital Markets, SurveyMonkey (2020: n=2531; 2019: n=2144; 2017: n=1885; 2016: n=1,578; 2015: n=756)

We followed up by asking travelers to indicate what sites they use most often to book and pay for their vacation lodging. Airbnb took over the number one spot, surpassing Brand Expedia and Hotel Direct Websites for the first time ever. Expedia continued to rank as the top OTA at 24%, up a solid 4pts vs. 2019 and surpassed Hotel Direct Websites for the first time since 2016. Expedia owns 5 of the top 10 sites U.S. travelers use most often to book and pay for travel. Booking gained the most this year (+7pts) vs. 2019 and appears to be gaining popularity in the U.S.

Our key takes from this section are: 1) Airbnb now the most preferred booking site with a 26% (+6pts) response rate and surpassing Expedia and Hotel Direct Websites as the previous category leaders. Its rise to the most popular site has been swift from just 8% selection in 2014. 2) Brand Expedia still a top preferred booking site with 24% selection and up 4pts vs. 2019 and 2017, and surpassing Hotel Direct Websites for the first time since 2016. 3) Booking gaining share with a record-high 21% selection, up a material 7pts vs. 2019 and 2017. 4) Largest decliners: The most notable decliners since 2016 are Travelocity (falling from 17% to 8%), Priceline.com (falling from 15% to 7%), Trivago (falling from 11% to 7%), Orbitz (falling from 12% to 4%) and Hotwire.com (falling from 11% to 4%). We note that the 5 non-brand Expedia-owned sites showed relatively consistent results versus 2019, with Hotels.com the only notable mover up 2pts.

September 27, 2020 10 The Online Travel Update: COVID-19 Edition

Exhibit 8: Over the past year, which sites do you use most often to book and pay for your vacation or leisure trip? (Select all that apply)

26% 20% Airbnb 14% 10% 8% 24% 20% Expedia 20% 20% 30% 23% 31% Hotel website directly 20% 39% 21% 14% Booking.com 14% 16% 7% 20% Hotels.com 18% 22% 17% 9% TripAdvisor 7% 14% 10% 9% 9% HomeAway / VRBO 13% 2% 4% 8% Travelocity 9% 17% 12% 8% Facebook

4% 7% Trivago 6% 11% 3% 7%7% Priceline 9% 15% 11% 5% Kayak 6% 11% 7% 4% 5% Orbitz 12% 9% 4% 5% Hotwire.com 11% 6%

0% 5% 10% 15% 20% 25% 30% 35% 40% 2020 2019 2017 2016 2015

Source: RBC Capital Markets, SurveyMonkey (2020: n=2524; 2019: n=2098; 2017: n=1870; 2016: n=1578; 2015: n=756)

When we asked consumers to rank these sites on the basis of Selection, Convenience & Price, it’s no surprise to see their rankings to be largely in-line with the two exhibits above. Our key takes were: 1) Expedia remains the leading OTA: Expedia holds the 1st or 2nd spot across the three - 14% think Expedia.com offers the best selection, 15% say it is the easiest to use and 14% believe it has the best prices. If we widen the net and look at Core Expedia sites (Expedia, Hotels.com, Travelocity, Trivago, Orbitz, Hotwire), 38% (-2pts vs. 2019) of respondents believe these sites offer the best selection, 37% (-3pts vs. 2019) believe they are the easiest to use, while 36% (-1pt vs. 2019) believe they offer the best pricing. 2) Booking.com reached record- high levels across all three metrics – a distinct positive. 3) Airbnb continues its rise and now leads all other sites in terms of Selection and Best Prices while is #3 ranked in terms of Ease of Use. Airbnb posted significant increases in all three metrics vs. 2019. 4) Hotel Direct Websites slipped relative to last year, falling 2pts in terms of Selection, 6pts in Ease of use and 3pts in Best Prices.

September 27, 2020 11 The Online Travel Update: COVID-19 Edition

Exhibit 9: What Sites Do you Think…

Offer the Best Selection Is the Easiest to Use Offers the Best Prices

15% 15% 10% Expedia 15% Airbnb 7% 17% Airbnb 12% 14% 15% 21% 4% 8% 14% Expedia Hotel website 21% 13% 17% 10% Expedia 12% 17% 9% 14% 10% Booking.com Airbnb 7% 9% Hotel website 13% 7% 4% 7% 12% 9% 9% 10% Hotel website 11% Booking.com 8% Booking.com 7% 9% 7% 9% Hotels.com 10% 8% Hotels.com 10% 9% Hotels.com 8% 9% 4% 7% TripAdvisor 5% TripAdvisor 9% 5% Priceline 8% 4% 4% 4% 8% 5% 6% Travelocity TripAdvisor 5% Travelocity 7% 9% 6% 6% HomeAway / VRBO 3% 4% 4% 5% 7% HomeAway / VRBO HomeAway / VRBO 1% 3% 2% 1% 4% Priceline 3% 3%4% 7% Trivago Trivago 6% 3% 3% 7% 7% Trivago 6% 3% 4% 6% Travelocity Priceline 5% 3% 3% 8% 9% Other 6% 5% 2% 2% Kayak 5% Kayak 4%5% 3% 3% 4% Kayak Other 6% 1% 4% 3% 7% Hotwire.com 2% 2% 3% Orbitz Hotwire.com 2% 3% 1% 4% 4% 2% 2% 1% Orbitz 3% Hotwire.com 2% 4% 3% Orbitz 3% 5% 0% 5% 10% 15% 20% 0% 5% 10% 15% 20% 25% 0% 5% 10% 15% 20% 2020 2019 2017 2016 2020 2019 2017 2016 2020 2019 2017 2016

Source: RBC Capital Markets, SurveyMonkey (2020: n=2519; 2019: n=2050; 2017: n=1885; 2016: n=1578)

Finally, we filtered our survey data at the individual response level to analyze the satisfaction scores of the top 5 travel sites for both “research and planning” and “book & pay”. Airbnb leads the top 5 most popular travel sites in terms of satisfaction with 74% of respondents who use it to research and plan their trips saying they were either extremely or very satisfied and 76% who use it to book and pay for their trips. Booking.com and Expedia are roughly equal in terms of satisfaction after Airbnb with Hotel websites having the lowest satisfaction scores among top 5 travel sites. Our take is that while there isn’t a significant difference between the satisfaction levels of these travel sites, Airbnb’s scores suggest the strongest product with Expedia and Booking a close second and hotel websites trailing.

Exhibit 10: Percentage of [Airbnb, Booking.com, Expedia, Hotels.com, Hotel Website direct] users that are “Extremely” or “Very Satisfied”

Research & Planning - "Extremely" or "Very" Satisfied Book & Pay - "Extremely" or "Very" Satisfied 76% 80% 74% 76% 76% 73% 72% 72% 72% 71% 72% 70% 69% 67% 68% 68% 68% 64%

64% 60% Airbnb Booking.com Expedia Hotels.com Hotel Website Airbnb Expedia Booking.com Hotels.com Hotel Website Direct Direct

Source: RBC Capital Markets, SurveyMonkey (n=942)

3. Hotels and Alternative Accommodations Increasingly Seen As Substitutes Hotels remain, not surprisingly, the dominant lodging choice for leisure travelers. However, Alternative Accommodations (“AA”) (such as apartment, room, vacation rentals and camping sites) have continued to gain in importance. The various disclosures from BKNG, EXPE and Airbnb (see Section I) suggest that AA as a category has been relatively less affected by COVID- 19 than Hotels. And our survey responses collected in mid-September generally reflect that. We asked respondents what percentage of all vacations they stayed at a traditional Hotel vs. another form of accommodation - 27% of respondents reported staying in traditional hotels September 27, 2020 12 The Online Travel Update: COVID-19 Edition

at least 80% of the time (down a whopping 18pts vs. 2019) and 43% reported staying in a hotel more than 60% of the time (down a substantial 13pts vs. 2019). These levels are by far the lowest overall Hotels mix that we have ever recorded and we believe this reflects a shift in consumer preferences to more spacious forms of accommodations. Overall, Hotels remain the primary type of lodging for U.S. leisure travelers, but there has clearly been a shift in preference towards Alternative Accommodations during this COVID-period. A large uptick in those not planning to take vacations and this share shift to AA is consistent with the fundamental results we have seen from the OTAs. The key question is whether this shift in preference will stay “post-COVID”. Our semi-educated guess is yes.

Exhibit 11: Hotels Remain the Dominant Lodging Category for U.S. Travelers

What percentage of all vacations did you stay at a Hotel vs. Other? 60%

50% 49% 44%45% 41% 40%

30% 27% 24% 22% 21% 21% 17% 19% 20% 17% 16% 16% 14% 13% 11%12% 12% 13%11% 10% 9% 10% 7% 8%

0% 81-100% 61-80% 41-60% 21-40% 0-20%

2015 2016 2017 2019 2020

Source: RBC Capital Markets, SurveyMonkey (2020: n=2502; n=2019: n=1928; 2017: 1763; 2016: n=1459; 2015: n=679)

For the past five years, we have asked our surveyed audience what percentage of their vacations is spent at a paid AA. The key take is that AA has shown a steady march toward greater usage since 2015 but saw a material increase this iteration with 62% of respondents having stayed at a paid AA, up from 48% in 2019, 46% in 2017, 43% in 2016 and 34% in 2015.

September 27, 2020 13 The Online Travel Update: COVID-19 Edition

Exhibit 12: Percent (%) who answered “Yes” to: “Have you stayed in an Alternative Accommodations (vacation rentals, private or shared apartment/ home, etc.) in the past year for leisure/personal reasons?”

70% 62% 60%

48% 50% 46% 43% 40% 37% 34%

30%

20%

10%

2014 2015 2016 2017 2019 2020

Source: RBC Capital Markets, SurveyMonkey (2020: n=2502; 2019: n=1924; 2017: 1764; 2016: n=1561; 2015: n=756)

We asked travelers whether they expect to stay in a Hotel over the next 12 months and 62% indicated they did (down 16pts Y/Y), while 20% indicated they expect to stay in other forms of lodging, up 7pts from last year. Similarly, we asked Alternative Accommodation users whether they plan to stay in an AA over the next 12 months and found that an exact same 62% did (down 9pts Y/Y), while 23% indicated they expected to stay in a Hotel, up 2pts Y/Y. Further, 18% of travelers and 14% of AA users planned on not taking a vacation in the next year – up significantly to record-high levels. The key take here is that trial and usage of AAs from Hotel users (and vice versa) continues to increase, suggesting that travelers are increasingly viewing Hotels and AAs as substitutes. The so-what here is that companies who are able to offer a good experience in both forms of lodging are likely to outperform those who only offer one of them, in our view. Thus, we view these results are relatively bullish for both BKNG and EXPE.

Exhibit 13: Are you planning to stay in a [Hotel / Alternative Accommodation] over the next 12 months?

100% 100% Alternative Accommodations 88% 89% Hotels 90% 90% 78%79% 80% 80% 75% 72% 72% 71% 68% 70% 62% 70% 62% 60% 60% 50% 50% 40% 40%

30% 30% 23% 20% 18% 21%21% 21% 20% 19% 19% 12%13% 20% 14% 8% 10% 8% 9% 11% 6% 4% 5% 10%8% 10% 10% 4% 0% 0% Yes No, stay in other lodging No, not taking vacation Yes No, will stay in a hotel Not planning to take a vacation

2015 2016 2017 2019 2020 2014 2015 2016 2017 2019 2020

Source: RBC Capital Markets, SurveyMonkey (2020: n=2502; 2019: n=1924; 2017: 1764; 2016: n=1561; 2015: n=756)

September 27, 2020 14 The Online Travel Update: COVID-19 Edition

4. As Alternative Accommodation Destinations, Airbnb is Dominant, Expedia & HomeAway/VRBO a Solid Number Two and Booking Gains Material Share Airbnb was the choice for AA bookings half of respondents who had stayed in an AA, with 50% saying they used the service at least once in the past year. While Airbnb did retrace somewhat from 2019 levels, its rise to prominence has been impressive: 18% in 2014; 23% in 2015; 30% in 2016; 45% in 2017 and 58% in 2019). Perhaps more important though is that Airbnb continues to stretch its lead over the number two player for the 3rd year in a row. HomeAway / VRBO saw an ever bigger retracement in this year’s results going from 39% in 2019 to 25% this year. Lastly, both major OTAs (Expend and Booking.com) gained momentum in this iteration with Booking now the third most popular AA site in the U.S.

We believe we can draw three reliable conclusions: 1) Airbnb is the established leader in Alternative Accommodations in the U.S. and continues to gain separation with the number two leading player, HomeAway/Vrbo, with its share gap going from a 7pt lead in 2016 to a 25pt lead this year. 2) HomeAway/VRBO is a solid number two competitor to Airbnb with 25% (-14pts vs. 2019). And including Brand Expedia (+7pts Y/Y), that number is 42% but still trailing Airbnb. Expedia has been on a two-year journey of integrating its Vrbo listings to its Brand Expedia site, which we believe partially explains the uptick in Expedia selection and drop off in HomeAway/Vrbo. 3) Booking.com continues to gain AA share in U.S., growing 11pts vs. 2019 results to 22% and making it the third most popular AA site in the U.S.

Exhibit 14: What sites do you typically use to book an Alternative Accommodation? (Select all that apply.)

50% 58% Airbnb 30% 45% 18% 23% 25% 39% HomeAway / VRBO 23% 36% 25% 46% 11% 22% 9% Booking.com 8% 24% 4% 10% 17% Expedia 11% 26% 5% 21% 13% 13% Tripadvisor 9% 24% 17% 3% 9% DiscountVacationRentals 4% 10% 1%2% 5%8% Priceline.com 8% 14% 3% 13% 5%7% Vacationrentals 9% 4% 9% 5% Hipcamp

1% 4% HouseTrip 9% 1% 4% Sonder

0% 10% 20% 30% 40% 50% 60% 70%

2020 2019 2017 2016 2015 2014

Source: RBC Capital Markets, SurveyMonkey (2020: n=1547; n=2019: n=915; 2017: 791 2016: n=674; 2015: n=253)

September 27, 2020 15 The Online Travel Update: COVID-19 Edition

5. Online Experiences Penetration is Likely Lowest of Travel Segments For the second time in our survey history we asked our respondents about whether they booked Experiences (guided tours, sightseeing) Online, given it has become an increasingly important area of focus, especially for BKNG and Airbnb. Just over half of survey respondents (56%) in the U.S. who reported making an Online reservation for a leisure trip in the past year said that they have booked a travel Experience Online, up 7pts from the 49% in 2017. Our survey results indicate approximately ~38% penetration of Online Experiences in the U.S. compared to 68% for Online leisure Travel, making Experiences likely the least penetrated segment of travel on the Internet.

Exhibit 15: Have you booked Experiences (tour tickets, guided tours, sightseeing tickets) Online?

58% 56% 56%

54%

52%

50% 49%

48%

46%

44% Yes

2019 2020

Source: RBC Capital Markets, SurveyMonkey (2020 n=2502, 2019 n= 1927)

We analyzed our survey data by respondents who answered “Yes” to having stayed in an Alternative Accommodation in the past year and observed that those individuals were more likely to book an Experience online, with 67% of them having booked an Experience online, vs. 56% for all respondents. Our key take is that Online travel booking companies with a strong position in Alternative Accommodations may have a better opportunity to cross-sell Online Experiences than others.

September 27, 2020 16 The Online Travel Update: COVID-19 Edition

Exhibit 16: Have you booked Experiences (tour tickets, guided tours, sightseeing tickets) Online? (Filtered by “Yes” to having stayed in Alternative Accommodations in the past year)

68% 67% 66% 64% 62% 60%

58% 56% 56% 54% 52% 50% Overall % of respondents who booked AA that booked Experience online

Source: RBC Capital Markets, SurveyMonkey (2020 n=2502, 2019 n= 1927)

September 27, 2020 17 The Online Travel Update: COVID-19 Edition

Section III: Takeways From RBC’s 4th UK Online Leisure Travel Survey We ran our 4th proprietary survey of nearly 2,300 UK Internet users and their Online Travel patterns and intentions. Key takes include:

1) Online Penetration For Travel Planning and Booking Largely Consistent – 67% of UK travelers reported making an Online booking for Leisure travel over the past year, below the 78% and 77% in 2019 and 2017, respectively, but above the 65% in 2016. 2) Booking.com The Clear Leader as a Planning & Booking Destination – A record-high 57% of respondents used Booking.com to plan (vs. 55% in ’19, 53% in ’17 and 43% in ’16) and a record-high 48% used it to book (vs. 44% in ’19, 38% in ’17 and 32% in ’16) – both levels are materially higher than competitors. And Booking.com’s 4pt sequential gain as a site to book was the second largest of all surveyed platforms and it has ~2x the share of the number two platform. Unsurprisingly, Booking.com was selected as providing best Selection, Ease of Use & Price, and gained share in each of these categories – a distinct positive. Booking is Bully Bullish! 3) Airbnb Becoming Increasingly Competitive as a Top Online Planning & Booking Site – The home sharing site was the largest single-year and multi-year gainer as a site to plan (+6pts Y/Y, +20pts vs. 2016) and as a site to book (+6pts Y/Y, +16pts vs. 2016) and is now the number two ranked property in both categories, surpassing TripAdvisor and Expedia as a site to plan. Airbnb also gained share in terms of offering the Best Prices, Selection and Ease of Use and now ranks top three in each of these categories. 4) Expedia & Sites Largely Consistent as Online Planning & Booking Destinations – Historically one of the most consistent assets, Brand Expedia gained 2pts of share as a site to plan and book to 32% and 19% making it the number four and three ranked destinations, respectively. Including its owned properties (Hotels.com, Trivago, HomeAway/Vrbo) cumulative selection was 86% (flat vs. 2019) as a site to plan travel. 5) Metasearch Appears Less Relevant – Google hit record-high levels of selection as a destination to plan travel, while TripAdvisor and Trivago reached record-lows, with Kayak near a record-low. TripAdvisor is the largest multi-year decliner, falling from the number one ranked site with 50% selection in 2016 to number three with 34% in 2020. These results are very consistent with U.S. results. 6) Alternative Accommodations Are Seeing A COVID-Boost – We found a record-high 11pt uptick Y/Y in the percentage of respondents who said they have stayed in an Alternative Accommodation at some point in the past year to 62%. And when we asked UK travelers whether they planned to stay in a Hotel over the next 12 months, a record-high 17% (+3pts Y/Y) said they would stay in another form of lodging. 7) Airbnb and Booking.com – The Leading Alternative Accommodation Sites in the U.K. – The competitive race between the two clear leaders Airbnb, with 44% of respondents selecting the site as the AA option they use most often, and Booking.com with 43%, is intensifying. Airbnb and Booking.com were also the largest gainers in this year’s survey, up 3pts and 4pts Y/Y, respectively. The market leaders widened the gap with TripAdvisor and Expedia, with ~2x the share as these number three and four players, respectively. 8) Social Media More Important to Online Travel Than Previously Thought – Facebook gained 5pts of share as a site for “research & planning” to 15%, and for the first time we included Instagram which garnered 9% selection. This 24% cumulative amount makes FB-owned properties more popular travel planning sites than each Hotel websites directly, Lastminute.com, Skyscanner, Kayak, Laterooms, HomeAway/Vrbo and TravelZoo in the UK.

September 27, 2020 18 The Online Travel Update: COVID-19 Edition

1. UK Online Penetration Largely Consistent For Travel Planning & Booking Our fourth annual survey of UK consumers indicates that respondents were equally likely to book Online Travel compared to their U.S. counterparts, whereas they had previously shown relatively higher penetration. Specifically, 67% of UK survey respondents (vs. 78% in 2019, 77% in 2017, 65% in 2016 and 67% in the U.S. in 2020, 55% in ’19, 58% in ‘16 & ‘17) reported making an Online reservation for a leisure travel trip. We acknowledge that these levels are surprisingly lower than the prior two surveys but not wildly inconsistent. We also believe it is likely that COVID has caused less people to book travel in general, which would weigh on this number.

Like we did in the U.S. survey, we wanted to test consumers’ use of Online Travel sites and their key criteria for selecting certain sites. In the UK, consumers again ranked Price, Ease of Use (i.e. Convenience) and Number of Reviews as the top three criteria. Selection ranked high again with a 35% response rate. Interestingly, Loyalty Programs continued to rank low among UK respondents at 18% (vs. 15% in 2019). The key takeaways from both the U.S. and the UK is that Price, Convenience, Number of Reviews, and Selection remain some of the most important criteria which we believe highlights the importance of aggregators (Expedia, Booking.com).

Exhibit 17: What are the most important factors when choosing an online site to book your trip? (Select all that apply)

77% Best pricing 82% 83% 59% Ease of use 64% 64% 43% Number of reviews 41% 41% 35% Selection 39% 37% 35% Brand reputation 31% 30% 22% Offers hotels and AA's 22% 18% Loyalty programs 14% 12% 12% Saves personal preferences 10% 9% 1% Other 1%2% 0% 20% 40% 60% 80% 100% 2020 2019 2017 2016

Source: RBC Capital Markets, SurveyMonkey (2020: n=1732; 2019: n=1730; 2017: n=1250; 2016: n=1533)

2. Booking.com By Far The Top UK Online Travel Destination Next, we asked which Internet sites consumers use most often to research and plan vacation options. Booking.com posted its fourth consecutive increase in selection as the market leader with 57% of respondents (+2pts vs. 2019) indicating they use the site most often for travel research and over 20pts ahead of the second-ranked site. Airbnb was the largest sequential

September 27, 2020 19 The Online Travel Update: COVID-19 Edition

gainer (+6pts Y/Y) and now ranks as the number two travel planning site with 36% selection, surpassing TripAdvisor that now ranks third at 34% (down 1pt Y/Y). Booking.com increased the gap with the No. 2 ranked site to 21pts from 19pts in 2019 and 12pts in 2017. Over the course of our survey history Expedia has been the most consistent, ranging between 30% and 32% selection, while Airbnb and Booking have been the biggest gainers, respectively, and TripAdvisor and Lastminute.com the biggest decliners, respectively.

Comparing the top travel sites that UK consumers use most often, we come away with three insights: 1) Booking.com is the clear market leader: Booking.com continues to gain share as the market leader with 57% (+2pts vs. 2019) and widened the gap with the number 2 site to 21pts (vs. 19pts in 2019); 2) Expedia Sites Largely Consistent: Brand Expedia ranked fourth with 32% (+2pts Y/Y) selection and has historically been the most consistent site and including Expedia-owned properties (Hotels.com, Trivago, HomeAway/Vrbo) cumulative selection was 86% (flat vs. 2019); 3) Airbnb gaining share rapidly: Airbnb saw the largest 1-year and multi- year uptick, growing from 16% in 2016 to 24% in 2017 to 29% in 2019 to 36% in 2020. We note that HomeAway/Vrbo has remained largely flat at 5-6% since 2016.

Exhibit 18: Over the past year, which sites did you use most often when planning and researching a vacation or leisure trip? (Select all that apply.)

Booking.com 55%57% 43% 53% Airbnb 36% 16% 24% 29% 34% TripAdvisor 36% 40% 32% 50% Expedia 30% 31% 29% Google 26% 26% 25%27% Hotels.com 31% 24%25% Trivago 29%31% 18% Hotel website directly 19% 21% 10% 15% Facebook 11% 9% 15% 19% 22% Lastminute.com 28% 13% Skyscanner 16% Instagram 9% Kayak 9% 8% 11% 6% Laterooms 10% 5% 6% Bing 4% 5% 6% HomeAway / VRBO 5% 5% 4% TravelZoo 5% 8% 3% Other (please specify) 9% 0% 10% 20% 30% 40% 50% 60%

2020 2019 2017 2016

Source: RBC Capital Markets, SurveyMonkey (2020: n= 1746; 2019: n=1739; 2017: n=1250; 2016: n=1,533)

Next, we asked consumers which sites they use to book and pay for vacation lodging. As expected, Booking.com was the clear #1 with a 48% response rate (vs. 44% in 2019) and a 22pt lead (vs. 25pt in 2019) over number two ranked Airbnb. Airbnb had 25% (up 6pts vs. 2019) and Expedia stayed at 3 with 19% (vs. 17% in 2019). Overall, we note the dynamic between Booking and Airbnb is becoming more competitive and the two sites are emerging as the leaders in this market.

We come away with four key insights from these results: 1) Booking.com has a significant lead as a booking site; According to these results, Booking.com has nearly 2x the share of the September 27, 2020 20 The Online Travel Update: COVID-19 Edition

number two ranked site in the UK, and was the second biggest Y/Y gainer; 2) Airbnb extends its position as the number two site with 25%, from 14% in 2017. Airbnb’s 6pt gain makes it the biggest one-year and multi-year gainer (+16pts vs. 2016) while Booking is now up 15pts vs. 2016; 3) Expedia maintained its number 3 position with a 19% response rate (+2pts vs. 2019); 4) Metasearch and Hotel Direct Websites largely stable: Trivago and TripAdvisor gained 2pts and 1pt vs. 2019, respectively, while Hotel Websites Direct gained 2pts. Their 15-16% selection is largely in-line with historical results with no true discernable trend, unlike the U.S. where metasearch players have historically shown a decline in usage.

Exhibit 19: Over the past year, which sites do you use most often to book and pay for your vacation or leisure trip? (Select all that apply.)

Booking.com 48% 32% 38% 44% Airbnb 19% 25% 9% 14% Expedia 19% 17%19% Hotel website directly 15%16% 20% 13% 15% Trivago 13% 17% TripAdvisor 15% 15% 13% Hotels.com 16% Lastminute.com 8% 11% 12% 8% Skyscanner 5% Bing 3%4% HomeAway 2% 4% 3% 4% Kayak 4% Hotel Tonight 2% 3% 2% Laterooms 5% 2% TravelZoo 3% 2% Hotwire.com 2% 0% 10% 20% 30% 40% 50% 2020 2019 2017 2016

Source: RBC Capital Markets, SurveyMonkey (2020: n= 1739; 2019: n=1733; 2017: n=1253 2016: n=1533)

We then followed up by asking UK respondents to rank Online Travel sites across Selection, Ease of Use and Pricing. Similar to the U.S., the results are largely in line with the two exhibits above. Our key takes were: 1) Booking.com the clear market leader in every category with 31% (+1pt vs. 2019) of respondents believing it offers the best Selection, 35% (+1pt vs. 2019) naming it is the Easiest To Use, and 30% (+2pts vs. 2019) noting it offers the best Prices. These selection levels are ~3x higher than the respectively ranked number two site in every category. 2) Expedia and its Owned Sites fell moderately tho remained in the top four across these criteria in our results. Specifically, Brand Expedia was flat to down in each of these categories while including its owned sites declined by 2-3pts in every category. 3) Airbnb continues to gain in all categories increasing 1pt of share in Prices, 2pts in Selection and 3pts in Ease of Use relative to 2019 results. Airbnb is now ranked number two or three in each of these categories.

September 27, 2020 21 The Online Travel Update: COVID-19 Edition

Exhibit 20: What sites do you think…

Offer the Best Selection Is the Easiest to Use Offers the Best Prices

31% 35% Booking.com 30% Booking.com 26% 30% Booking.com 34% 22% 28% 21% 24% 30% 21% 12% 11% 11% 13% Airbnb Airbnb 6% Expedia 5% 7% 4% 13% 10% 13% 10% 8% 11% Trivago Expedia 13% Airbnb 5% 17% 12% 4% 9% 7% 9% Expedia 9%10% 11% Trivago Trivago 12% 7% 13%15% 9% 8% 7% TripAdvisor 9% TripAdvisor 12% Hotel website directly 7% 10% 17% 11% Google 4% 6% 5% 5% 4% Google 3% TripAdvisor 7% 5% 4% 9% Hotel website directly 5% 5% 8% 4% Google 3% 4% Hotels.com 5% Hotels.com 5% 7% 3% 6% 4% 4% 4% Hotel website directly 4% Hotels.com 6% Lastminute.com 6% 5% 6% 9% 2% 2% 3% Facebook 2% Facebook Skyscanner 3% 1% 1% 0% 10% 20% 30% 0% 10% 20% 30% 0% 10% 20% 30% 2020 2019 2017 2016 2020 2019 2017 2016 2020 2019 2017 2016

Source: RBC Capital Markets, SurveyMonkey (2020: n=1723; 2019: n=1725; 2017: n= 1247; 2016: n=1530)

In terms of satisfaction, we did not find that any single travel property exhibited scores that were statistically significant from one another. Among five of the top travel properties in the UK, the percentage of respective site users that said they were “Extremely” or “Very Satisfied” was between a narrow range of 81% and 83% for research and planning trips. And the percentage of “Extremely” or “Very Satisfied” users for booking travel was between a slightly wider range of 78% and 85%. Our take on these findings are i) The vast majority of UK travelers are very satisfied with the Online options for booking travel and ii) None of the options offer a vastly superior or inferior customer experience.

Exhibit 21: Percentage of [Airbnb, Booking.com, Expedia, Hotels.com, Hotel Website direct] users that are “Extremely” or “Very Satisfied”

Research & Planning - "Extremely" or "Very" Satisfied Book & Pay - "Extremely" or "Very" Satisfied 84% 88%

83% 83% 85%

83% 84% 83% 83%

82% 82% 80% 79% 78% 81%

76%

80% 72% Hotel Website Booking.com Airbnb Expedia TripAdvisor Expedia Booking.com Airbnb Hotel Website TripAdvisor Direct Direct

Source: RBC Capital Markets, SurveyMonkey (n=1001)

3. Hotels and Alternative Accommodations Increasingly Seen As Substitutes We asked UK consumers whether they have stayed in an Alternative Accommodation in the past year for personal/leisure travel. Similar to our U.S. survey results, we found a significant uptick of 11pts Y/Y in the percentage of respondents who said they have stayed in an Alternative Accommodation at some point in the past year to 62% - the exact same number we found in the U.S. This surge in AA adoption is consistent with public disclosures from the OTAs and Airbnb whereby COVID-19 appears to be exacerbating the pre-existing trend towards higher AA usage.

September 27, 2020 22 The Online Travel Update: COVID-19 Edition

Exhibit 22: Have you stayed in an Alternative Accommodations (vacation rentals, private or shared apartment/ home, etc.) in the past year for leisure/personal reasons?

70% 62% 60% 51% 51% 50% 43% 40%

30%

20%

10% Yes 2016 2017 2019 2020

Source: RBC Capital Markets, SurveyMonkey (2020: n= 1714; 2019: n= 1712; 2017: n= 1232; 2016: n= 1518)

While adoption of Alternative Accommodations rose materially, Hotels still remain the dominant form of lodging in the UK with 39% of respondents staying in a Hotel more than 60% of the time, vs. 38% in 2019 and 41% in 2017. That said, the percentage of respondents who stay in Hotels 80%+ of the time has trended down from 30% in 2016 to 24% in 2020.

Exhibit 23: Hotels Remain the Dominant Lodging Category for UK Travelers

What percentage of all vacations did you stay at a Hotel vs. Other? 35% 30% 30% 28% 26% 27% 24% 24% 25% 22% 22% 21%21% 22% 19% 20% 17%17% 15% 15% 15% 14% 12%12% 12% 10%

0% 80-100% 60-80% 40-60% 20-40% 0-20% 2016 2017 2019 2020

Source: RBC Capital Markets, SurveyMonkey (2020: n=1715; n=2019: n=1714; 2017: 1232; 2016: n=1265)

September 27, 2020 23 The Online Travel Update: COVID-19 Edition

Similar to our U.S. survey results, we are seeing an incremental trend to suggest that UK travelers are increasingly viewing Hotels and Alternative Accommodations as substitutes. When we asked UK travelers whether they planned to stay in a Hotel over the next 12 months, 65% said “Yes” while a record-high 17% (+3pts Y/Y) said they would stay in another form of lodging. Meanwhile, 65% of AA-stayers said they would stay in an AA over the next 12 months with another 22% saying they would be staying in a hotel. The most notable change in this year’s survey results is the obvious uptick in respondents who said they didn’t plan on taking vacation over the next year, which we attribute to the impact of COVID-19.

Exhibit 24: Are you planning to stay in a [Hotel / Alternative Accommodation] over the next 12 months?

100% 100% 88% Hotels Alternative Accommodations 90% 83% 81% 90% 80% 80% 75% 74% 71% 70% 65% 70% 65% 60% 60% 50% 50% 40% 30% 40% 17% 17% 30% 20% 12% 14% 22%21%23%22% 8% 10% 4% 5% 5% 20% 13% 0% 10% 4% 4% 6% Yes No, stay in other lodging No, not taking vacation 0% 2016 2017 2019 2020 Yes No, will stay in a hotel Not planning to take a vacation 2019 2017 2016 2020

Source: RBC Capital Markets, SurveyMonkey (2020: n=2502; 2019: n=1924; 2017: 1764; 2016: n=1561; 2015: n=756)

4. Booking.com & Airbnb Are Clear Leaders In the UK Alternative Accommodations Market When we asked UK travelers which site they typically use to book an AA, Airbnb and Booking.com ranked as the two most popular sites, at 44% and 43%, respectively. We note that both of these leaders are also the biggest single-year and multi-year gainers among all Alternative Accommodation options. TripAdvisor and Expedia were the number 3 site and 4 sites, at 22% (+1pt vs. 2019) and 20% (+2pts vs. 2019), respectively.

Our three key takes: 1) The two leading sites are also gaining the most traction with Airbnb at 44% up 3pts vs. 2019 (+21pts vs. 2016) while Booking at 43% is up 4pts vs. 2019 (+15pts vs. 2016). These two sites increased their lead against other AA sites in the UK and are clearly in a competitive race. 2) HomeAway/Vrbo & Expedia are a collective third with 12% (-2pts Y/Y) and 20% (+2pts Y/Y) selection, respectively, resulting in a cumulative 32%, flat vs. 2019 and up 2pts vs. 2017. 3) TripAdvisor largely consistent as a solid No. 3 ranked individual property, up 1pt vs. 2019 and largely in line with historical results.

September 27, 2020 24 The Online Travel Update: COVID-19 Edition

Exhibit 25: What sites do you typically use to book an Alternative Accommodation? (Select all that apply.)

44% 41% Airbnb 35% 24% 43% Booking.com 35% 39% 28% 21%22% TripAdvisor.com 29% 20% 20% 18% Expedia.com 16% 16% 12% 14% HomeAway / VRBO 14% 10% 8% 6% DiscountVacationRentals.com 4% 4% 6% HouseTrip.com 4% 5% 3%4% Vacationrentals.com 3% 4%

0% 10% 20% 30% 40% 2020 2019 2017 2016

Source: RBC Capital Markets, SurveyMonkey (2020: n=1055; 2019: n=871; 2017: n=629; 2016: n=654)

5. Ramping Online Experiences Penetration in the UK As in our U.S. survey, we asked UK respondents who had booked leisure travel Online in the past year if they have ever booked an Experience Online and found that they were relatively less likely than their American counterparts to do so with 47% answering “Yes” compared to 56% in the U.S. While two data points do not make a trend, we note the sequential 9pt uptick in Online Experiences penetration vs. 2019 Overall, we find that Online Experiences has roughly ~32% penetration in the UK, but lower relative penetration among those who book travel Online compared to the U.S. with a material Y/Y increase in Online adoption.

Exhibit 26: Have you booked an Experience Online (guided tours, sightseeing tickets)?

50% 47%

39% 40%

30%

20%

10%

0% 2019 2020

Source: RBC Capital Markets, SurveyMonkey (2020: n= 1715, 2019: n=1713)

September 27, 2020 25 The Online Travel Update: COVID-19 Edition

Similar to our U.S. results, when filtered by respondents who have stayed in an Alternative Accommodation in the past 12 months, we found those respondents were a lot more likely to book an Experience Online, with 59% of them having done so compared to 47% overall. Our key take is that Online travel booking companies with a strong position in AAs will have a better opportunity to cross-sell Online Experiences than others.

Exhibit 27: Have you booked an Experience Online (guided tours, sightseeing tickets)? Filtered by respondents that have stayed in an Alternative Accommodation in the past year.

70% 59% 60%

50% 47%

40%

30%

20%

10%

0% Overall Filter: Stayed in AA

Source: RBC Capital Markets, SurveyMonkey [2020: n=1715 (left); n=1057 (right)]

September 27, 2020 26 The Online Travel Update: COVID-19 Edition

Section IV: Recent Data Points in Online Travel In this Section, we pull together several key data points from three main areas of travel relevant to our coverage: 1) Hotels; 2) Alternative Accommodations; and 3) Air Travel. From a high level, the recovery in Online Travel is glacially gradual… similar to our findings in our Mobility Matters series on tracking the recovery in Ridesharing.

1) Hotel Industry Data Points To A Slow Recovery in the U.S. and Europe

Smith Travel Research provides monthly updates on Hotel data in the U.S. and Europe. Hotel Occupancy in the U.S. reached a monthly trough in April at -64% Y/Y and has since recovered gradually to down 32% Y/Y in August. The rate of recovery / improvement has been slowing every month from 12pts of improvement to -52% in May, to 9pts in June, 6pts in July and just 4pts in August. Hotel Occupancy in Europe was impacted to a greater degree than the U.S., reaching a trough of down 85% Y/Y in April and has recovered at a relatively similar slow pace to down 45% in August. The pace of recovery throughout the spring and early summer was even slower than the U.S., improving just 2pts to -82% Y/Y in May, 10pts in June and 6pts in July. That said, Europe showed a significant 22pt improvement in August. All in, the U.S. Hotel industry was less negatively impacted than the Europe hotel industry at the trough and has recovered at a very gradual pace. Europe’s recovery has also been very gradual, though it did show a step-function improvement in August.

Exhibit 28: Hotel Industry Data – U.S. & Europe

United States February March April May June July August Occupancy 62.2% 39.4% 24.5% 33.1% 42.2% 47.0% 48.6% YoY % growth 0.2% -42.3% -63.9% -51.7% -42.5% -36.1% -31.7% ADR (U.S. dollars) $ 130.78 $ 110.66 $ 73.23 $ 79.57 $ 92.15 $ 101.76 $ 102.46 YoY % growth 1.4% -16.6% -44.5% -39.9% -31.5% -24.8% -22.8% RevPAR (U.S. dollars) $ 81.33 $ 43.54 $ 17.93 $ 26.35 $ 38.88 $ 47.84 $ 49.83 YoY % growth 1.5% -52.0% -80.0% -71.0% -60.6% -52.0% -47.3% Europe February March April May June July August Occupancy 63.6% 26.3% 11.1% 13.3% 21.6% 26.5% 43.0% YoY % growth -1.8% -61.6% -84.6% -82.3% -72.8% -66.4% -44.6% ADR (Euros) € 101.69 € 96.13 € 77.52 € 77.56 € 83.69 € 96.43 € 103.95 YoY % growth 1.2% -8.1% -30.1% -33.7% -34.8% -20.9% -13.0% RevPAR (Euros) € 64.68 € 25.27 € 8.58 € 10.30 € 18.11 € 25.51 € 44.69

YoY % growth -0.6% -64.7% -89.2% -88.3% -82.3% -73.4% -51.8% Source: STR

On a more granular level, Hotel Occupancy in the U.S. recently peaked at 50% (-30% Y/Y) in mid-August and has since faded slightly to 48.5% (-30% Y/Y) in the week ending September 12.

September 27, 2020 27 The Online Travel Update: COVID-19 Edition

Exhibit 29: Weekly U.S. Hotel Occupancy Data

Source: STR

2) An Update on the State of Alternative Accommodations

In July, Airbnb publicly disclosed that on July 8 they booked 1MM+ future stays for the first time since March. While we are unsure if this would constitute Y/Y growth given that July is a seasonally high month for travel compared to March, it is clear that the AA category has recovered a much greater deal than traditional Hotel lodging.

On 09/03, Edison Trends published a report including their estimates for recent spend levels on Airbnb and found that spend on the platform grew 22% Y/Y in July after reaching a trough of down 75% Y/Y during the week of April 6. And even more recently, Edison Trends estimates that spend on Airbnb reached a whopping +75% Y/Y in the week of August 17th. We take these data points with a grain of salt given that Airbnb’s public disclosure about achieving 1MM+ future stay on July 8th may not constitute Y/Y growth given the seasonal high, but directly this data speaks very positively to Alternative Accommodations. The y-axis in the chart below is based on an indexed value (index = 100) relative to the highest level of spend across multiple vendors (Marriott and Hilton) over this comparable period in another exhibit in the Edison Trends report. Edison Trends uses a sample of 65,000 Airbnb transactions for its estimates.

September 27, 2020 28 The Online Travel Update: COVID-19 Edition

Exhibit 30: Airbnb Relative Spend Levels – Edison Trends Estimates

Source: Edison Trends

According to AirDNA, global future bookings on Airbnb were down 41% Y/Y in the April to August period but they were only down 8% Y/Y in July. On the supply side, Airbnb had 5% fewer listings available in the July and August period (6.97MM) compared to last year in the same period (7.35MM). And the number of new listings in July and August were down 40% Y/Y. We believe that the health concerns regarding COVID-19 are resulting in less people being comfortable sharing their homes.

September 27, 2020 29 The Online Travel Update: COVID-19 Edition

Exhibit 31: Active Listings Growth on Airbnb

Source: Edison Trends

3) An Update on the State of Air Travel

On its Q2:20 EPS call, BKNG shared that 70%+ of its bookings in the quarter were Domestic compared to ~45% in 2019 and that they were seeing travelers take shorter trips close to home. In our 05/28 virtual meeting with Airbnb, the company disclosed that the “vast majority” of their bookings were now Domestic compared to ~60% pre-COVID and they were seeing pronounced resilience in short-haul local travel within 200 miles (i.e., driving distance). Therefore, we are not surprised that Air Travel has been one of the most negatively impacted segments of Online Travel.

We use the Kayak Flight Search activity tracker to gauge the recovery path of air travel in several key countries. Overall, flight search activity remains very muted down over 50% Y/Y as of late September in all regions (vs. Hotels down 32% and 45% in August in the U.S. and Europe, respectively, per STR). The U.S. troughed at down 80% Y/Y in early April and has since very gradually recovered to down 56% now. Three major European countries all troughed slightly lower than the U.S. (-87% in Germany, -82% in UK and -82% in France) in early/mid-April, then mounted a recovery in June and have since faded down gradually into September.

September 27, 2020 30 The Online Travel Update: COVID-19 Edition

Exhibit 32: Flight Search Activity – U.S., Germany, UK and France

United States

n i t e d S t a t

e Germany s

United Kingdom

France

Source: Kayak

September 27, 2020 31 The Online Travel Update: COVID-19 Edition

Finally, we look at TSA passenger throughput data as a way to track the recovery of Air travel in the U.S. Passenger flight traffic was down 95% at its worst in April and has slowly recovered to -68% in September month-to-date. The pace of recovery is glacially gradual with just 3pts of improvement in the Y/Y decline from July to August and then another 3pts of improvement from August to September (MTD). This -68% Y/Y level for Air passengers in the U.S. compares to -32% Y/Y in U.S. Hotels in August, showing the relative resiliency of Lodging vs. Flights through COVID-19.

Exhibit 33: TSA Total Traveler Throughput Data Y/Y Change (U.S.)

0% 3/1 3/15 3/29 4/12 4/26 5/10 5/24 6/7 6/21 7/5 7/19 8/2 8/16 8/30 9/13 -10%

-20% September (as of 9/22): -68% August : -71% -30% July : -74% June: -81% -40% May: -90% April: -95% -50%

-60%

-70%

-80%

-90%

-100%

Source: TSA

September 27, 2020 32 The Online Travel Update: COVID-19 Edition

Companies mentioned Booking Holdings Inc. (NASDAQ: BKNG US; $1,657.77; Outperform) Expedia Group, Inc. (NASDAQ: EXPE US; $93.57; Sector Perform) Facebook, Inc. (NASDAQ: FB US; $254.82; Outperform) Required disclosures Conflicts disclosures The analyst(s) responsible for preparing this research report received compensation that is based upon various factors, including total revenues of the member companies of RBC Capital Markets and its affiliates, a portion of which are or have been generated by investment banking activities of the member companies of RBC Capital Markets and its affiliates. Please note that current conflicts disclosures may differ from those as of the publication date on, and as set forth in, this report. To access current conflicts disclosures, clients should refer to https://www.rbccm.com/GLDisclosure/PublicWeb/ DisclosureLookup.aspx?entityId=1 or send a request to RBC CM Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South Tower, Toronto, Ontario M5J 2W7. RBC Capital Markets, LLC makes a market in the securities of Booking Holdings Inc.. A member company of RBC Capital Markets or one of its affiliates managed or co-managed a public offering of securities for Expedia Group, Inc. in the past 12 months. A member company of RBC Capital Markets or one of its affiliates received compensation for investment banking services from Expedia Group, Inc. in the past 12 months. A member company of RBC Capital Markets or one of its affiliates expects to receive or intends to seek compensation for investment banking services from Expedia Group, Inc. in the next three months. RBC Capital Markets, LLC makes a market in the securities of Expedia Group, Inc.. RBC Capital Markets is currently providing Expedia Group, Inc. with investment banking services. RBC Capital Markets has provided Expedia Group, Inc. with investment banking services in the past 12 months. RBC Capital Markets, LLC makes a market in the securities of Facebook, Inc.. A member company of RBC Capital Markets or one of its affiliates received compensation for products or services other than investment banking services from Facebook, Inc. during the past 12 months. During this time, a member company of RBC Capital Markets or one of its affiliates provided non-securities services to Facebook, Inc.. RBC Capital Markets is currently providing Facebook, Inc. with non-securities services. Facebook's common shares consist of both a Class A and Class B issue. The holder of each share of Class A common stock is entitled to one vote, while the holder of each share of Class B common stock is entitled to ten votes. Any transfer of shares of Class B common stock will generally result in those shares converting to Class A common stock. Explanation of RBC Capital Markets Equity rating system An analyst's 'sector' is the universe of companies for which the analyst provides research coverage. Accordingly, the rating assigned to a particular stock represents solely the analyst's view of how that stock will perform over the next 12 months relative to the analyst's sector average. Ratings Outperform (O): Expected to materially outperform sector average over 12 months. Sector Perform (SP): Returns expected to be in line with sector average over 12 months. Underperform (U): Returns expected to be materially below sector average over 12 months. Restricted (R): RBC policy precludes certain types of communications, including an investment recommendation, when RBC is acting as an advisor in certain merger or other strategic transactions and in certain other circumstances. Not Rated (NR): The rating, price targets and estimates have been removed due to applicable legal, regulatory or policy constraints which may include when RBC Capital Markets is acting in an advisory capacity involving the company. As of March 31, 2020, RBC Capital Markets discontinued its Top Pick rating. Top Pick rated securities represented an analysts best idea in the sector; expected to provide significant absolute returns over 12 months with a favorable risk-reward ratio. Top Pick September 27, 2020 33 The Online Travel Update: COVID-19 Edition

rated securities have been reassigned to our Outperform rated securities category, which are securities expected to materially outperform sector average over 12 months. Risk Rating The Speculative risk rating reflects a security's lower level of financial or operating predictability, illiquid share trading volumes, high balance sheet leverage, or limited operating history that result in a higher expectation of financial and/or stock price volatility. Distribution of ratings For the purpose of ratings distributions, regulatory rules require member firms to assign ratings to one of three rating categories - Buy, Hold/Neutral, or Sell - regardless of a firm's own rating categories. Although RBC Capital Markets' ratings of Outperform (O), Sector Perform (SP), and Underperform (U) most closely correspond to Buy, Hold/Neutral and Sell, respectively, the meanings are not the same because our ratings are determined on a relative basis. Distribution of ratings RBC Capital Markets, Equity Research As of 30-Jun-2020 Investment Banking Serv./Past 12 Mos. Rating Count Percent Count Percent BUY [Outperform] 776 51.63 238 30.67 HOLD [Sector Perform] 635 42.25 130 20.47 SELL [Underperform] 92 6.12 12 13.04

Rating and price target history for: Booking Holdings Inc., BKNG US as of 25-Sep-2020 (in USD)

09-Aug-2017 06-Nov-2017 28-Feb-2018 09-May-2018 09-Aug-2018 05-Nov-2018 27-Feb-2019 07-Aug-2019 07-Nov-2019 26-Feb-2020 09-Mar-2020 Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Target: 2,050.00 Target: 2,100.00 Target: 2,500.00 Target: 2,400.00 Target: 2,250.00 Target: 2,425.00 Target: 2,150.00 Target: 2,100.00 Target: 2,225.00 Target: 2,150.00 Target: 1,900.00 2,400 2,200 2,000 1,800 1,600 1,400 1,200 1,000 Q2 Q3 2018 Q1 Q2 Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 20-Mar-2020 15-Apr-2020 08-May-2020 09-Jul-2020 06-Aug-2020 Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Target: 1,675.00 Target: 1,535.00 Target: 1,550.00 Target: 2,025.00 Target: 2,050.00

Legend: TP: Top Pick; O: Outperform; SP: Sector Perform; U: Underperform; R: Restricted; I: Initiation of Research Coverage; D: Discontinuation of Research Coverage; NR: Not Rated; NA: Not Available; RL: Recommended List - RL: On: Refers to date a security was placed on a recommended list, while RL Off: Refers to date a security was removed from a recommended list; Rtg: Rating. Created by: BlueMatrix

September 27, 2020 34 The Online Travel Update: COVID-19 Edition

Rating and price target history for: Expedia Group, Inc., EXPE US as of 25-Sep-2020 (in USD)

28-Jul-2017 27-Oct-2017 08-Feb-2018 26-Jul-2018 26-Oct-2018 07-Feb-2019 25-Jul-2019 06-Nov-2019 04-Dec-2019 13-Feb-2020 10-Mar-2020 20-Mar-2020 Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Target: 175.00 Target: 155.00 Target: 141.00 Target: 150.00 Target: 163.00 Target: 169.00 Target: 177.00 Target: 142.00 Target: 125.00 Target: 143.00 Target: 113.00 Target: 100.00 180 160 140 120 100 80 60 40 Q2 Q3 2018 Q1 Q2 Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 30-Mar-2020 15-Apr-2020 20-May-2020 09-Jul-2020 31-Jul-2020 Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Target: 79.00 Target: 71.00 Target: 90.00 Target: 105.00 Target: 93.00

Rating and price target history for: Facebook, Inc., FB US as of 25-Sep-2020 (in USD)

26-Jul-2017 02-Nov-2017 31-Jan-2018 25-Jul-2018 30-Oct-2018 30-Jan-2019 25-Apr-2019 15-Jul-2019 24-Jul-2019 30-Oct-2019 29-Jan-2020 13-Mar-2020 Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O Rtg:O RL 12 On Rtg:O Rtg:O Rtg:O Rtg:O Target: 195.00 Target: 230.00 Target: 250.00 Target: 225.00 Target: 190.00 Target: 200.00 Target: 250.00 Target: 260.00 Target: 270.00 Target: 255.00 Target: 230.00 350

300

250

200

150

100 Q2 Q3 2018 Q1 Q2 Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 20-Mar-2020 26-Mar-2020 15-Apr-2020 29-Apr-2020 30-Jun-2020 30-Jul-2020 Rtg:O Rtg:O Rtg:O Rtg:O RL 12 Off Rtg:O Target: 225.00 Target: 248.00 Target: 238.00 Target: 271.00 Target: 320.00

References to a Recommended List in the recommendation history chart may include one or more recommended lists or model portfolios maintained by RBC Wealth Management or one of its affiliates. RBC Wealth Management recommended lists include the Guided Portfolio: Prime Income (RL 6), the Guided Portfolio: Dividend Growth (RL 8), the Guided Portfolio: ADR (RL 10), and the Guided Portfolio: All Cap Growth (RL 12). RBC Capital Markets recommended lists include the Strategy Focus List and the Fundamental Equity Weightings (FEW) portfolios. The abbreviation 'RL On' means the date a security was placed on a Recommended List. The abbreviation 'RL Off' means the date a security was removed from a Recommended List. Equity valuation and risks For valuation methods used to determine, and risks that may impede achievement of, price targets for covered companies, please see the most recent company-specific research report at https://www.rbcinsightresearch.com or send a request to RBC Capital Markets Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South Tower, Toronto, Ontario M5J 2W7.

Booking Holdings Inc. September 27, 2020 35 The Online Travel Update: COVID-19 Edition

Valuation

Our valuation framework is based on an average of P/E and EV/EBITDA methodologies. Our P/EPS valuation framework applies a 20x target multiple to our 2022 GAAP EPS estimate of $101 to arrive at a $2,027 value. Our EV/EBITDA valuation framework applies a 12x target multiple to our 2022 EBITDA estimate (excl. SBC) of $6.5B to arrive at our $2,089 value. Our target multiples are in line with historicals. A blended average of our methodologies results in a PT of $2,050, which supports our Outperform rating.

Risks to rating and price target

(1) BKNG’s domestic opaque travel business has faced material inventory access challenges in the air and car rental segments due to capacity cuts in the former and consolidation in the latter; (2) BKNG could experience deleverage in its online advertising line due to increased competition for search keywords; (3) BKNG is fully exposed (60% of bookings) to weak macro conditions in Europe and euro swings; and (4) Google's increased activity in the Travel space needs to be monitored carefully.

Expedia Group, Inc.

Valuation

Our $93 price target is based on 2022E EV/Adjusted EBITDA. Our EV/EBITDA Valuation framework applies an 8x target multiple to our 2022 EBITDA estimate of $2.0B to arrive at a $93 PT. This target multiple is in line with historicals. Our $93 PT supports our Sector Perform rating.

Risks to rating and price target

1) The recovery in travel from COVID-19 is faster than expected (i.e., 2019 levels achieved before 2023); 2) Expedia is able to maintain and/or gain share in the U.S.; & 3) the company is able to generate reasonable top line growth with less reliance on performance marketing.

Facebook, Inc.

Valuation

Our price target of $320 supports our Outperform rating. We value Facebook using a blended average of 22x P/E multiple and 12x EV/EBITDA multiple on our 2022 estimates. For key context, we estimate 20% EBITDA CAGR for FB through 2022, which we believe supports these multiples.

Risks to rating and price target

Risks to our price target and rating include but are not limited to: 1) broad decreasing engagement trends as new competitors arise and take market share; 2) failure to drive significant adoption from major advertising brands; 3) limitations due to regulatory/ user actions on privacy concerns; 4) poor user reaction to site redesign/new product initiatives; 5) personal data ownership TAC arising from potential widespread adoption of Crypto protocols; and 6) COVID-19 has a greater impact on advertiser demand for Facebook impressions than expected. Conflicts policy RBC Capital Markets Policy for Managing Conflicts of Interest in Relation to Investment Research is available from us on request. To access our current policy, clients should refer to https://www.rbccm.com/global/file-414164.pdf or send a request to RBC Capital Markets Research Publishing, P.O. Box 50, 200 Bay Street, Royal Bank Plaza, 29th Floor, South Tower, Toronto, Ontario M5J 2W7. We reserve the right to amend or supplement this policy at any time. Dissemination of research and short-term trade ideas RBC Capital Markets endeavors to make all reasonable efforts to provide research simultaneously to all eligible clients, having regard to local time zones in overseas jurisdictions. RBC Capital Markets' equity research is posted to our proprietary website September 27, 2020 36 The Online Travel Update: COVID-19 Edition

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