Booking Holdings CEO says the future of cheap flights is uncertain: ‘That’s like trying to predict the weather’

Fogel presides over all of the travel company’s massive brands, including Priceline, Booking.com, Kayak, Agoda, and OpenTable, among others. With a market cap of $172 billion, Booking Holdings reported more than $21 billion in revenue last year (a 25% increase from the year prior). It’s currently No. 190 on the Fortune 500, the seventh fastest-growing company, and one of the World’s Most Admired Companies. 

In an interview with Fortune, Fogel details what the rise of generative AI could mean for travelers, how he’s battling Airbnb, and his best travel tip. This interview is the first in a new series of conversations with Fortune 500 CEOs.

The following has been condensed and lightly edited for clarity.

With budget carrier Spirit Airlines filing for bankruptcy and other airlines focusing on premium customers, will budget travel survive? Are cheap flights going away?

The price of an airline ticket is the same as anything else: It’s supply and demand. That’s how it works. When there’s high demand and there’s not enough supply, prices go up. Spirit has not gone away. It filed for Chapter 11, and it is flying completely normally. The only change is the equity holders seem to have taken a bit of a hit, and I don’t know how the debt will be treated in the bank. That’s why there are bankruptcy courts. They’ll work it out. 

What matters for the price of the airline ticket is, does the supply go away or not? Not allowing Spirit to merge with JetBlue was an interesting thing. There are many smart people who have different opinions about that. I don’t have an opinion myself, but there’s certainly some people who believe that if they had let them merge, it would’ve been a better thing for the industry. And there are people who say that, no, it was good not to let them merge, because that would decrease the supply, decrease the competitiveness. Obviously the decision was they didn’t want them to merge because they thought it would decrease supply, but so far that hasn’t happened. 

So back to your basic question of will inexpensive tickets go away or not. That’s sort of like trying to predict the weather. We’ll see.

I have never used a travel agent in my entire life. I don’t think most people in my demographic (millennials) have. But with AI, there seems to be a window to bring back the travel agent virtually. How might that work? How could AI help solve travel problems in the future?

People who have had the pleasure of using a human travel agent actually remember that it was a really good experience, because you’d talk to a person who knew you. She knew what you liked; she knew what you could afford. She had a good indication of what kind of family activities would work or not work, and she’d give you a few choices. Eventually, she’d come up with something, and there would be one price, and you’d give her money.

And then if anything went wrong at all, you would call her, and she would fix it magically, right? We want that back, only we want it better. And why do we want it better? Because, yeah, the travel agent knew you kind of, but the [online] database with all the previous things you’ve done knows you much, much better. And the permutations of what the possibilities are, done through computer technology, through the digital revolution that we’ve all gone through over the last 20 years, can provide a much better service. Today, we should be able to foresee problems before they happen and offer a way to change it beforehand.

When you are at your destination, you are not talking to your travel agent about what you should do today. But with mobile technology, you have a travel agent in your pocket or pocketbook that can easily be telling you, “Here’s some good things to do right now.” Tie it together with technology, bring in AI, make it so it’s verbal (which we have just done at Priceline with OpenAI, to do a voice action communication back and forth)—it would be like you’re talking to a human being, and it’d be a much better experience. 

Can you give us an example?

So if you go to Amsterdam and you say, “I’ve got to take that boat ride on the canal,” you don’t want to prepurchase it without knowing what the weather is. Doing it when it’s sunny is very different from doing it when it’s cloudy and rainy. Using all the technological abilities we have, we can make sure that your itinerary is flexible, and we will help arrange it. So it maximizes the value to you. 

And what’s really good is it’s not just us and you. There’s also the partner side, the supplier side. See, what they want is incremental demand. What they want is to be able to get more customers. Working with them, they’re willing to give us special prices. Let’s say [a traveler] comes to New York, and there are lines outside the Empire State Building. We could be setting up a special line to go through to skip the line, or offering a lower price, et cetera. These are the things that, in the future, we will all love—the fact that technology has made it so much better and given you more value.

Today, many banks and concert ticket websites like Ticketmaster allow you to also book hotels and other travel arrangements. Do you feel that pressure on your business from non-travel companies?

Travel’s always been an extremely competitive business. Always. Everybody’s always trying to come up with more revenue streams. 

The banks, for example, are definitely getting more and more into trying to provide a travel service. So you’ll see that JPMorgan has and Bank of America has, and we compete along with other people to be the partner with them. We all win in those types of things. So I don’t see it as a pressure. I see it as an opportunity for us to make sure that we are reaching out to consumers who would prefer to do that than to come to our site directly. I’d rather get a rev-share deal with a bank than get no revenue from that customer who has made their choice that they would like to book that way. 

But you’d still rather have me go to your site.

Oh, of course. The same way Delta Air Lines would very much like somebody to go directly to Delta.com and not go to us first. Nobody likes paying for marketing. Nobody. We don’t like it. We pay billions to market our company. I would love it if everybody would just come to us directly. Unfortunately, we can’t get everybody to come directly, therefore we spend money on marketing.

Speaking of your earnings, I know that you saw significant growth in the alternative accommodation space. Can you talk to us a little bit about that and how you’re standing out from the Airbnbs of the world?

We’re growing faster. We grew 14% [in room-night growth] last quarter, and Airbnb grew 8%. So it’s a nice growth for us compared to theirs. There’s no silver bullet. It’s just providing a good service, continuing to improve the product.

Now we do have a slight advantage. We offer both hotels and homes on the same site. We think that is a big advantage because people have different needs at different times, but they don’t really know that until they start looking through it all. 

I still think our product has areas that need significant improvement, and we need more supply that we don’t have in certain areas. So, for example, if you right now said, “I need a house for a week in July in East Hampton, and I would like to be within a mile of the beach,” you’re not going to have a lot of choices from us. That’s something we need to have a handle on. 

But I say that’s upside for us. So when we start filling out this area of supply that we don’t have enough of—and I can think of a lot of places in the U.S. where we do not have enough supply—when we get that in, they’ll make us just that much better off, that much more powerful. 

“Look at the companies that did not change, that should have changed and weren’t willing to do it.”

Glenn Fogel on the importance of flexibility for business leaders.

A few weeks ago, Booking Holdings announced that it’s undergoing a reorganization plan. Can you elaborate a bit more on what this means for the company and employees?

We are always trying to make sure we are looking to the future of the company. We want to make sure we put our resources in the right place, and we always want to make sure that we look to the long term. 

People see something like that, and they think things like, “The company’s not doing well.” Well, let’s just talk about our numbers. I mean, our stock hit a new record right now, this very moment. Last year, we did over $150 billion of travel [bookings]. And if you look at the consensus analyst reports—not me—we’re going to do well over $160 billion this year.

Another thing people will sometimes say is that, “Oh, they’re doing it because they want to make more profits.” That also is not right. The world is changing very, very quickly, very dramatically. Can you read anything in the media and not see generative AI? That’s a scenario where you’ve got to put resources into it; you’ve got to reallocate from where you are and make sure that you are doing things in that area. 

Change is difficult, and certainly if you are involved in a restructuring that negatively impacts your life, that is a sad event. That is unfortunate, that is bad. And any company that does such a thing needs to make sure they do it in a fair way that treats people with respect and the appropriate amount of compensation so they can go on and find new employment somewhere. But to not do that is actually bad leadership.

Look at the companies that did not change, that should have changed and weren’t willing to do it. So I ask you, do you have a Nokia phone? Well, where’s Nokia’s phone business now? Did you ever have a BlackBerry? Where are they? Ever rent a video from Blockbuster? Of course. Where are they? 

All those companies, at one time, owned their market. They were the biggest and best. They were not willing when they were strong to make the appropriate changes to continue to move on more. 

What’s your top travel hack or travel tip for us?

I have never checked luggage. Ever. 

How and why?

The why is easy. One, you don’t have to wait for it to come off into the carousel. Two, it never gets lost—ever. Three, you don’t really need that many things. Did you ever notice that no matter how big the piece of luggage you have, it will always be filled up? Did you ever notice you go on a trip, and you didn’t actually wear everything?

All the time.

Yeah. See, you don’t need what you think you do.

Do you have one career-defining moment that you think catapulted you on a track to be CEO?

Well, I wouldn’t be CEO if the former CEO wasn’t fired. That’s defining, but I had nothing to do with it.

I really believe so much of life is due to things that you have no control over. I find it interesting when I talk with some people or you read about people who say, “Yeah, yeah, of course there is some luck in it, but a lot of it was me.” Yes, you have a lot of agency over your own control and trying to prove yourself and prepare yourself for opportunities. But much of your life is going to be determined by things you have zero control over. 

And I think it’s good if people would think about that a little bit, and recognize when things aren’t working so well for somebody, and understand that maybe it was just, “This happened instead of that.” And that’s why that person’s there and you’re here. I think there’s not enough humbleness.