At a Glance

  • Online travel company Booking Holdings has cut customer service costs per booking by about 10% by using generative AI as an automation tool. This was disclosed by Chief Financial Officer Ewout Steenbergen during the company's fourth-quarter earnings call on Wednesday (February), as noted in the meeting transcript.
  • Steenbergen said on the call that customer service costs declined even as total bookings grew about 10% year over year.
  • "We are encouraged by the tangible results we have seen from accelerating the integration of generative AI into our customer service operations," he said. "Even with double-digit growth in total bookings and revenue, customer service costs have declined year over year, which is remarkable."

Deep Dive

The news comes as large companies in the tech industry and beyond face growing pressure to prove that their massive investments in AI are generating returns.

According to a survey released by PwC in January, only 12% of CEOs said AI has delivered both cost and revenue benefits. Overall, 33% of respondents reported gains on either cost or revenue, while 56% said they have not yet seen significant financial benefits.

Despite this, AI spending is expected to rise this year as many business leaders look to scale projects and focus on smarter investments and higher returns.

Paris-based technology consultancy Capgemini said in a report last month that organizations globally expect to allocate an average of 5% of their annual budgets to AI projects in 2026, up from 3% in 2025.

"As AI moves from experimentation to enterprise-scale deployment, organizations face a new challenge: how to translate rapid advances in AI capabilities into sustained business impact," the report said. The research shows that over the next year, organizations plan to accelerate investment in infrastructure, data, governance, and employee upskilling, aiming to lay a solid foundation for 'sustainable AI adoption.'

For Booking itself, the focus is on deploying technology to areas that can "deliver tangible, measurable results for our customers, partners, and our business," by "continuously improving existing products and testing constantly so we can learn quickly and help shape the next chapter of travel," CEO Glenn Fogel said on Wednesday's call.

"Being in travel, these are extraordinary times, and generative AI is accelerating the pace of innovation and changing how we fulfill our mission—to make it easier for everyone to experience the world," he said.

Booking, headquartered in Norwalk, Connecticut, offers online travel services globally through brands such as Booking.com and Priceline.

According to its earnings report, the company's total revenue for the fourth quarter was $6.3 billion, up 16% year over year. Total operating expenses for the quarter rose 15% to $4.3 billion, compared with the same period last year.

The company reported that adjusted fixed operating expenses increased 10%, driven by "unfavorable foreign exchange (FX) movements, an indirect tax matter, and higher cloud computing costs."

Booking's annual operating expenses accelerated during the post-pandemic travel boom but have since slowed. After jumping from $8.5 billion in 2021 to $12 billion in 2022 (an increase of more than 40%), the company's annual operating expense growth rate fell to about 4% in 2024 and about 12% in 2025.

In November 2024, Booking announced a transformation plan aimed at achieving savings of up to $450 million by the end of 2027 through layoffs and other cost-cutting measures, while reinvesting some of the freed-up funds in AI projects and other initiatives.

Steenbergen told CFO Dive last year that customer service work can be done "better" with AI.

"You don't have to wait in long lines, and it can find information faster," he said.

The executive also said Booking is exploring automation opportunities in finance, such as using generative AI to more quickly analyze competitors' earnings calls and disclosures.

Meanwhile, rival Expedia is partnering with major online platforms to ensure its brands are "prominently featured in generative AI search and can operate effectively in agentic browsers," CEO Ariane Gorin said on last week's earnings call.

"We are running bold experiments," she said.