Booking has best-in-class margins (driven primarily by marketing efficiency), a proven management team, and a multi-year strategy to drive EPS growth through flights/payments growth, the analyst adds.

Devitt is also upbeat about BKNG's U.S. expansion (where the company is gaining share) and APAC, where the travel recovery is ongoing.

The analyst forecasts long-term margins to trend toward 35%+ with excess cash allocated to buybacks. 

On the flip side, the analyst projects the company to face the most challenging comps in 2024 after outperforming its peers in 2023. Due to this dynamic, Bookings GBV and room nights growth will lag peers in 2024. 

Airbnb, Inc. (NASDAQ:ABNB) is the dominant platform for alternative accommodations, with 7+ million active listings and 4+ million hosts, according to the analyst. 

The analyst maintained a Neutral rating on ABNB with a price target of $135.

Management's frequent and targeted investments in the product suite for guests and hosts should continue to support the company's value proposition, the analyst writes. 

That said, competitors, including Booking, are investing in building alternative accommodation inventory and awareness in key markets, including the U.S., which may limit the upside to future growth.

Further, short-term rentals already account for ~14.6% of U.S. total lodging nights, per estimates from STR and AirDNA, and the industry may be nearing maturity with growth in room nights that more closely align with the broader industry.

Expedia Group, Inc. (NASDAQ:EXPE) is a leading online travel agency globally with a diverse product offering spanning multiple brands, geographies, and travel services, the analyst writes.

The company has shifted its focus to acquiring higher LTV customers and is coming out of a transitional period after consolidating its core brands onto a unified tech-stack to unlock operating efficiencies, Devitt writes.

While comp dynamics favor Expedia relative to Booking in 2024, it will prove difficult to sustainably regain market share following the significantly higher growth at Booking and Airbnb over the pandemic - period and changes particularly to Booking's business (flights/payments) that allow it to compete more directly with Expedia in the U.S., the analyst writes. 

The analyst reiterated a Neutral rating on EXPE, raising the price target from $115 to $130.

Price Action: BKNG shares are trading lower by 0.76% to $3,539.69, while ABNB shares are down 1.54% to $136.59, and EXPE shares are trading lower by 0.56% to $152.28 on the last check Wednesday.