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M.D.M. Holding | Fortune

M.D.M. Holding Company Profile, Stock Price, News, Rankings | Fortune

What does AI look like through the eyes of a CFO? At Booking Holdings, the answer is increasingly visible in the numbers. CFO Ewout Steenbergen will share how he evaluates the economics of AI investment, decides which bets deserve more capital, and how he's using AI to create value, not just manage costs, as the technology reshapes the economics of travel itself.  


Ewout Steenbergen, Executive Vice President and Chief Financial Officer, Booking Holdings 
Sheryl Estrada, Senior Writer, Fortune 

Funding the Revolution

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Well, good afternoon, everyone. So great to see you all and good afternoon to you too. Thank you, Cheryl. Good afternoon. So great for you to have you join us. Uh, so the first question I'd like to ask you, how do you think AI will fundamentally change the way that people travel? Yeah, that's a very big question. I can almost talk the whole 15 minutes about that, but I, I will keep it very short because I know you have a lot of other questions you want to work through. Um, so first of all, maybe quickly introduce the 30 seconds explanation. Booking Holdings, we are the largest technology travel platform in the world. We have, uh, many brands like Booking.com, Argoda, which is the largest travel platform in Asia, Priceline, OpenTable for restaurant reservations, Skyak, and many others. So that's a little bit quickly about the company. I think fundamentally, The way how travel will happen in the future is not going to change with AI, but what is going to change is the experience for travelers. What we see is a lot of people now these days use AI to do research. What they did maybe in the past with traditional Google search and many other platforms, on average, everyone does about goes to 5 different platforms and sites to do research before they actually book. But what AI can do is make that experience much better because it's much easier to get inspired, build your itinerary, do the planning, and then from that go to the booking and then also really all the experience in travel and pre-travel. What is going to be really a fundamental difference is that it can become so much easier, so much more convenient, because we all have experienced in our personal lives that travel sometimes can be painful. Something goes wrong. The airline is delayed and now your restaurant reservation doesn't work anymore or your rental car or things happen with travel and we believe with AI it's going to be so much better to create that really peace of mind because everything can be updated, everything is linked together. This is what we call the connected trip vision because now it all is really seamlessly hanging together. I think that's probably in terms of Consumer experience, a traveler experience is going to be, be different, but of course, the hotel is still the hotel and the airline is still the airline, and the rental car is still the rental car. Well, speaking of consumer experience, if consumers increasingly use AI agents to discover, compare, and purchase, you know, hotels, airlines, air, uh, flights, etc. uh, how does that change the economics of customer acquisition? Uh, that's a really important point that we think about, uh, a lot. Um, so about 1/3 of the, uh, Consumers that come to us is what we call come through pay channels. So the search engine marketing, we spend about 8 to $9 billion.08 to $9 billion a year on that, and that could be social media or the different auction platforms that Google's having or the metasearch companies or many others, so. What we really like with this is what we know for sure there are going to be more AI tools agents out there that people are going to use. There will be OpenAI. There will be cloud. There will be Google. We now have Muse and there's Instinct now recently. So for us we will have a much more diversified number of channels that we can work with to get customers to us. By the way, the other 2/3 of the traffic comes direct to us, so we are of course also including a lot of those AI tools in our own. Platforms to make sure that people still come direct to us so for that 2/3 of the traffic, but for that 1/3 of the traffic, we think more diversification of the channels from a unit economic perspective will be in the end a positive for us. How important is consumer feedback to kind of the techniques that you use at booking? It's very important. So I see ourselves as a very scientifically driven company. We test and learn everything. We do every day what we call A B testing, and so we show half of the consumers one way, the other half of the consumers the other way. We look at what works, what works better. If you think about that 8 to 9 billion. That I just mentioned before, we run very large optimization models in terms of where to spend that in the best way to get the highest return. So that is, that is very important and where we see with AI tools what is really encouraging and it's very early stage, so it's not a lot of data. But our traveler customers that come to our platforms and using our AI tools, we see that the time to book is a little shorter. The conversion levels are a little bit higher and the cancellation rates are a little bit lower, so early stage, but those economics of those steps in the end are are are really, I think, encouraging signs. Sounds like a lot of useful data that you're acquiring in this process that helps you inform your decisions exactly so. Uh, there's an enormous pressure to invest in AI. Uh, but not every opportunity will create kind of the durable value. How do you decide which investments require significant capital and maybe which should just remain experiments? Yeah, I, I would like to go back to the first speaker we had here today, Diana from Service now, because she said it really in the right way. I think we are coming out of a period of maybe 2 years that every organization we saw a lot of experimentation, proof of concepts. Small areas where people are testing and learning AI and that's great because we want people in the organization, our colleagues, to get familiar with these tools. But the next phase is going to be really different because now when we really want to harvest the benefits of AI from a productivity perspective we need to start to rethink and redesign processes end to end really from a white sheet and completely rethink how we do it and take the benefit of AI. Let me give two examples of that. So we have, for example, done that in our customer service area and for the last period what we have seen is we see our units of bookings going up by a lot, so at a high single digit level, and our actual costs. For customer service is slightly down, so the average cost per booking has come down by a lot, and the customer satisfaction is actually up at the same time. So it's the best. So and from an economics perspective, very positive, but also much better experience for the customer at the same time. So I think that's real power of AI that we that we're seeing in our business. Another example is in our engineering community. So what we are seeing is our engineers, and we have about 9000 technology engineers. They are using those AI tools a lot. They are putting much more code out, and we have seen about 30% more code that is put in production, so merge requests that are being put in production. It's not what is written, but also what is ultimately tested and the quality control. So ultimately what is really put in production. 30% more that is being put in production. So again, that's a huge benefit that we're seeing and obviously as a CFO I'm very happy with the returns on that. Speaking of returns, uh, how are you measuring the financial returns on investment? I know ROI is a is a big topic. Yeah, and I think in this area, there isn't a perfect answer. I have to say that in advance. I even think that the hyper scalers that spend hundreds of billions on the development of their uh large language models. They don't really know what is going to be the ROI. They have maybe some assumptions and some hypotheses, but the whole point is you don't want to fall behind. I think the good news is for all the rest of the companies in the world, if you're not a hyperscaling, you have to develop those models, but you're a user of the models, it's much cheaper to use those models. But you have to pay attention to the token cost and the licensing costs because you don't want to make sure you want to ensure that those run out of control. So we do something that we call cost. Um, model cost, uh, routing, effective model cost routing in order to make sure that the organization is using, uh, basic models, open source models for simple tasks. And then more advanced models, more expensive models for very complex tasks, and we have different metrics that we are using within our engineering world to really keep an eye on that. So I think that is really important. The returns will be there for those processes that are being. Redesigned end to end, but you also have to make sure that those costs on the other hand, are not going out of control. So you're able to watch that token spend and kind of exactly and we have so incentives in our system to achieve that. For example, I was just speaking about that 30% more productivity. Another metric that we have given to our engineering groups is the cost, the total IT cost per merge request. So that's both the human cost and the AI token cost. So maybe the AI token cost is going up, but if you also have 30% more productivity, you of course want to look at that ratio in the end because even if the token cost is a little bit more expensive, if it's still overall cheaper. To put the same amount of of merge request out. So we are trying to build that into our uh our metrics so that that really that trade-off decision as an incentive is embedded in that for our engineering organization. I'm gonna come to the audience for a question in just a moment, but I have an additional question for you. As a CFO, do you find that you are At the center of being tapped to create value of AI or or coming up um with a systematic way in which to do that. I think the role of the CFO in this world is going to be only more reinforced. CFOs that have to think strategically, CFOs that have to be very disciplined, CFOs that have to really track the performance, CFOs that need to be agile because this is moving so fast, so you have to change all the time. CFOs that have to be disciplined with respect to capital allocation, all of that was already there in the past, but is even more important is even moving faster in an in an AI world plus of course what you do for yourself within the finance organization and even for yourself as as a leader. So uh just to give you two examples of that, so uh I have the pleasure of having an AI AI coach. Because I think everyone has to learn this. No one knows this. And so I have a coach, and I'm talking about it internally to the organization to make everyone feel comfortable. Like if I have to learn and I have a coach, it's very normal that everyone has to learn. So that is one example. The other example is I have actually two agents working for me. One I call the strategic thought partner, so it's helping me with big strategic reports or if I have to give presentations to the board or prepping Q&A. Or if I get big strategic plans to assess those, so that is one, and the other is the critical equity research agent. So this is basically playing the role of helping me preparing for earnings goals and doing the sparing with with me on on that and I learned a lot from from those two agents. That's excellent. Is there any questions in the audience? Um, we have a question, uh, up front here. Hi, Rick Chevia Via. How do you see using AI to be able to develop unique bundles, vacation packages, all that kind of thing, you know, it changes so rapidly. What's, what might be the role in that to be able to improve your margins, improve your, uh, penetration? Um Thank you for that question, because for me that's actually the most interesting question, not so much about productivity and cost, but how does AI change your growth profile as a company? How does it change your business model? How does it change the customer experience in the end? And we think for travel this will be a completely different experience because Travel today, as I said before, can be really complex. Things go wrong and if we can connect the dots between all those different elements, it can be proactive. It can be personalized. It can be much more higher frequency because people today come to our platform and it's more transactional and we can become a much more high frequency business. So to give a few examples to make that concrete. Uh, someone has a trip to Paris organized and we see that the weather on Wednesday is going to be bad and we can proactively say, hey, shall we change your schedule around on Wednesday it's bad, so why don't you do the Louvre tour then and your outside walking tour on Thursday so we can say that or your uh your flight is delayed, we can say. Hey, press here. We already have pushed out your restaurant reservation, or we can even proactively make suggestions of, hey, we know you like to do active sports, and this day it seems like you have no activity planned. Do you want us to organize some kite surfing activity or something else? So it can be much more a very Um, very much proactive personalized experience that was very hard to organize in the past, but with AI that will be possible and we think that will be ultimately great for our supplier partners, for our traveler partners, but also, uh, of course great for us as a as a company because it will create more loyalty, more trust, and, and more brand value for us. Well, that was a great discussion. We're, we're out of time, but, uh, thank you so much for joining us and sharing your perspective.

AI is rewriting the rules of marketing, but not every brand is ready for it. At Cannes Lions, Fortune's Ruth Umoh sat down with the marketing and growth chiefs behind four major brands to drop the polish and tackle the messy middle: what's really holding AI adoption back. How do you build momentum when your data strategy is still warming up? How do you chase innovation without torching the budget? And what happens when "AI-powered everything" creates more noise than results? Expect straight talk, live debate, and hard numbers on where the hype ends and the business impact begins.

A McKinsey Partner Warns Slow AI Adoption Could Cost Companies Their Existence | Next to Lead

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You may know Coach and Kate Spade, but you may not know Tapestry, the $30 billion company behind them. After a blocked merger with Capri Holdings, and the sale of its Stuart Weitzman brand, Tapestry is betting on Coach's momentum to fuel its next phase of growth. As luxury retailers compete for younger consumers in an uncertain economy, Tapestry CFO and COO Scott Rowe says the key is winning Gen Z, investing in brand engagement, and using AI-driven insights to stay ahead of changing consumer behavior.

How Coach's Parent Company Keeps Winning Gen Z 

Booking a trip and buying a home rank among the most emotionally loaded decisions a person makes. For decades, the travel and real estate industries have relied on the human touch to close deals. Now AI is rewriting the rules. Glenn Fogel runs one of the world's largest travel marketplaces; Ryan Serhant is rebuilding the real estate brokerage from the ground up with AI. Do intelligent machines promise to amplify the expert human sat the center...or simply replace them?

Glenn Fogel, President and CEO, Booking Holdings; Booking.com 
Ryan Serhant, Founder and CEO, SERHANT. 
Allie Garfinkle, Senior Writer, Fortune

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