Jeffery Boyd – Executive Chairman of the Board Glenn Fogel – Chief Executive Officer and President Daniel Finnegan – Chief Financial Officer and Chief Accounting Officer

Mark Mahaney – RBC Capital Markets Justin Post – Bank of America Douglas Anmuth – JPMorgan Lloyd Walmsley – Deutsche Bank Brian Nowak – Morgan Stanley Eric Sheridan – UBS Mark May – Citi Paul Bieber – Credit Suisse Chris Merwin – Barclays Naved Khan – Cantor Fitzgerald Scott Devitt – Stifel Tom White – Macquarie Mike Olson – Piper Jaffray Peter Stabler – Wells Fargo Brian Fitzgerald – Jefferies Justin Patterson – Raymond James Brad Erickson – Pacific Crest Kevin Kopelman – Cowen and Company

Welcome to The Priceline Group’s Fourth Quarter 2016 Conference Call. The Priceline Group would like to remind everyone that this call may contain forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual results may differ materially from those expressed, implied or forecasted in any such forward-looking statements, expressions of future goals or expectations and similar expressions reflecting something other than historical fact are intended to identify forward-looking statements. For a list of factors that could cause the Group’s actual results to differ materially from those described in the forward-looking statements, please refer to the Safe Harbor statement at the end of the group’s earnings press release, as well as the Group’s most recent filings with the Securities and Exchange Commission. Unless required by law, The Priceline Group undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events, or otherwise. A copy of the Group’s earnings press release together with an accompanying financial and statistical supplement is available in the For Investors section of The Priceline Group’s website, www.pricelinegroup.com. And now I’d like to introduce The Priceline Group’s speakers for this afternoon, Jeffery Boyd, Glenn Fogel and Daniel Finnegan. Go ahead, gentlemen.

Thank you very much, and welcome to The Priceline Group’s fourth quarter conference call. I’m joined by Group’s CEO, Glenn Fogel; and Group’s CFO, Dan Finnegan. I will make some brief opening remarks, Glenn will provide a business update and Dan will give the detailed financial review. The Group performed well in the fourth quarter with both room night growth and earnings exceeding our expectations. This is a fitting conclusion to a strong year with the benefits of favorable industry dynamics, the scale of our accommodations business and solid execution by our teams allowed us to record impressive organic growth with attractive margins. At the same time, our brand’s made substantial investments in marketing, supply, content and product innovation to position the business for continued growth. As we look forward we will continue to pursue the strategy of driving growth and attractive margins, while investing for the future. I would like to thank my colleagues around the world for their support during my tenure as interim CEO and congratulate Glenn on his appointment as Group’s CEO. I will now turn the call over to Glenn for the business update.

Thanks Jeff. And I and the entire company want to thank you for the leadership you provided over the last eight months as interim CEO. It’s an exciting time to become The Priceline Group’s CEO and I look forward to working with the talented leadership teams at our brands. I’m pleased to say that the company is performing well and is in a strong competitive position. We have substantial momentum as we execute against a very large market opportunity. I am happy with the progress our brands made last year and even more thrilled about the groundwork we’re laying for continued growth in the future. Now I’m going to talk a little bit about our individual brands. Booking.com executed another strong year in 2016 with accelerating room nights and gross bookings growth. Booking.com held over 289,000 properties over the last year, an increase of 33% driving real choice for its customers. Booking.com now has over 1,155,000 hotels, apartments, homes and other places to stay in over 220 countries and territories across the globe, and the platform includes approximately 591,000 instantly bookable vacation rental properties, that is a 49% year-over-year growth rate. Booking.com properties represent a combined total of approximately 25 million potentially bookable roams. Of this total, 17.2 million are within our traditional hotel partners and 7.8 million are bookable rooms or units in homes, apartment, villas, and other places to stay. We continue to expand aggressively into the alternative accommodations market, and we believe we offer more choices on an instantly bookable, no fee basis than anyone else. For our priceline.com brand 2016 was a year of investment. With the new leadership team in place, Priceline made progress rebuilding its technology platform and completely overhaul in the front end consumer experience on both desktop and mobile. These fundamental changes have enabled us to increase our experiment philosophy and introduce new features more rapidly. Also we’re excited about our expanded best deal brand campaign, which started in February. This consumer value proposition is an important evolution of the priceline.com band and we look forward to it contributing to the future growth. KAYAK recorded another solid year for the Group, posting good, top, and bottom line growth. We are positive about KAYAK’s prospects as it remains the only true multi-product global meta-search platform today. KAYAK furthered its global footprint this year, expanding into APAC and Latin America, and we recently signed a definitive agreement to acquire the Momondo Group, a leading European travel meta-engine to enhance KAYAK’s position in the European market. We are pleased with the Agoda’s performance in 2016, posting solid growth and profitability; despite operating in a challenging market, where aggressive discounting is prevalent. The team executed well in mobile and made smart investments in pricing strategies, user improvements and brand advertising campaigns in target markets. And in 2017 the Agoda team looks forward to continue to build a very strong global merchant supply. Rentalcars.com executed exceptionally well in 2016 and delivered a very good year despite the turmoil and impact of the Brexit booked. Rentalcars.com made some key metrics in 2016, which included growing its mobile mix, increasing its share of direct business, improving the customer experience and growing the number of suppliers on the platform. These achievements will continue to pay dividend for the business in 2017 and beyond. OpenTable achieved several important milestones this year, which we believe positions our company for a long-term sustainable growth. The company launched its global platform in October, which enables diners to search and book any restaurant in any of its domains. We believe this is a fundamental first step in providing a truly integrated global platform. The OpenTable network continues to grow in 2016 with over 40,000 restaurants utilizing its online reservation system. As we look forward to the balance of 2017 and beyond, The Priceline Group will continue to follow the strategy that has made us successful. Our supply chains will continue to aggressively add suppliers to our network, giving our customers more and more choice. Our front end customer service and IT teams will continue to innovate and work hard to expand our lead as the best place for customers to book. Our marketing teams will bring more customers to our desktop and mobile sites and promote our mobile apps while optimizing our return on investment in order to deliver profitable top line growth with market leading markets. In summary, I would like to thank my colleagues for delivering another great year. Their hard work and passion is the foundation upon which our business has been built. I will now turn the call over to Dan for the detailed financial review.

Thanks, Glenn. I’ll discuss operating results and cash flows for the quarter and then provide guidance for the first quarter of 2017. All growth rates referenced in my comments are relative to the prior year comparable period unless otherwise indicated. I highlight that as we discussed the last couple of quarters the non-GAAP figures for our Q4 results and Q1 forecast includes stock-based compensation and do not reflect the reduction to income tax expense related to available NOLs. Q4 was a solid close to a very good year for The Priceline Group, with acceleration in Q4 room night growth to 31% compared to 29% in Q3. The 31% room night growth rate is the highest quarterly room night growth we have achieved since the first quarter of 2014. For full year 2016, room night growth of 29% accelerated by 380 bps compared to 2015, and represents a year in which we believe we grew our market share in U.S. and internationally through outstanding organic execution by our brands. Performance was strong across each of our key geographic regions and this momentum has carried over into Q1 as I will discuss in a moment when we get to guidance. Rental car day growth also accelerated to 14% in Q4 compared to 13% in Q3. Average daily rates for accommodations or ADRs, were down slightly for Q4 versus prior year on a constant currency basis for the consolidated group, which was slightly below our forecast. Foreign exchange rates unfavorably impacted growth rates expressed in U.S. dollars for our Q4 as compared to prior year and to our forecast. Q4 gross bookings grew by 26% expressed in U.S. dollars and grew by about 28% on a constant currency basis compared to prior year. The difference between constant currency gross bookings growth and room night growth is due to a decline in airline ticket gross bookings, relatively slower growth for rental car gross bookings and slightly lower accommodation ADRs. Gross profit for the quarter for Priceline Group was $2.3 billion and grew by 21% in U.S. dollars and by about 24% on a constant currency basis compared to prior year. Gross profit as a percentage of gross bookings for Q4 is 58 bps lower than prior year Q4. The decrease is due import to book versus day time lag with accelerating gross bookings growth in Q4, and an expanding booking window. Other contributing factors for the variance are discounted closed user group rates, business mix, and the level of accommodation participation in preferred placement and commission override programs. We believe that our commission rates are defensible over the long-term based upon the significant values delivered to our travel partners at relatively low distribution costs. Our international operations generated gross profit of $2 billion, which grew by 23% in U.S. dollars and by about 26% on a constant currency basis compared to prior year. Gross profit for our U.S. operations amounted to $293 million, which grew about 9% compared to the prior year. Advertising and other revenue, which is mainly comprised of non-intercompany revenues for KAYAK and OpenTable, grew by 12% in Q4 compared to the prior year. GAAP operating income grew by 20% and GAAP operating margin decreased by 29 bps compared to Q4 last year due to performance advertising, partially offset by leverage in brand advertising and non-ad operating expenses. Performance advertising deleverage was impacted by lower advertising ROIs and increase in share of business coming through performance advertising channels and acceleration in gross booking growth that will partly benefit gross profit in subsequent quarters when travel takes place. That results in more performance advertising expense in Q4. Adjusted EBITDA for Q4 amounted to $869 million, which exceeded the top end of our guidance range of $795 million and grew by 22% versus prior year. EBITDA margin performance was better than our forecast due mainly to gross profit growth and advertising efficiency that exceeded our forecast. GAAP net income grew by 34% and fully diluted EPS increased by 35%, including increased interest expense from our bond offerings and the beneficial impact of lower share count resulting from stock repurchases. Non-GAAP net income per share was $14.21, up 32% versus the prior year, exceeding our guidance for the quarter and FactSet consensus of $12.89. For full year 2016 adjusted EBITDA of $4.1 billion grew by 19% and represents a 40% EBITDA margin. I’d like to thank our people around the world for their talents and hard wok to deliver such strong performance from both the top line and bottom line perspective. In terms of cash flow we generated $1.1 billion of cash from operations during fourth quarter 2016, which is an increase of about 26%. For the full year we generated operating cash flow of $3.9 billion and spent $268 million on CapEx and land use rights which means about 35% of our gross profit converted into free cash flow. During the year we purchased 763,000 shares of our common stock or $1 billion. Our Board recently gave us a new authorization to repurchase up to 2 billion of our common stock, which increases our total open stock repurchase authorization to about $4 billion. We expect to execute this program consistent with the pattern we have established over the last few years, returning capital to our shareholders at pace we think makes sense based upon the price which our stock is trading, liquidity available in U.S. without incurring sizable incremental tax friction and potential other uses for such capital. We are hopeful that the new U.S. administration’s promised tax reform will give us future access to our international cash and cash flows with little or no additional U.S. tax cost. We also have access to U.S. liquidity in debt markets at attractive rates while remaining committed to a strong balance sheet and our investment grade credit rating. Our cash and investments amounted to $13.9 billion at December 31, 2016, with about $1.3 billion of that balance in the U.S. We recently announced the acquisition of the Momondo Group for $555 million subject to regulatory review which we hope will be completed later this year. We are excited to add this leading European meta-search business to our KAYAK portfolio. We intend to use international cash for the purchase at closing and we expect the acquisition to be modestly accreted to our non-GAAP EPS in the first year after close. We will not comment further regarding our post-close strategy pending regulatory approval. Now for Q1 guidance. Q1 is off to a solid start with gross bookings continuing to grow nicely across our key geographic regions despite a year-over-year room night growth comp about 400 bps more difficult than Q4. We estimate that the shift of Easter into Q2 has a slightly beneficial impact on Q1 gross bookings growth with an offsetting negative impact of Q2 gross bookings growth. The Q1 impact is offset by prior year Q1 including an extra day for the leap year. For Q1 guidance we are forecasting book room nights to grow by 20% to 25% and total gross bookings to grow by 17% to 22% in U.S. dollars and by 19% to 24% on our constant currency basis. Our Q1 forecast assumes that constant currency accommodation ADRs for the consolidated group will be up by about 1% compared to the prior year period. The strength in gross bookings comes with associated performance advertising expenses, which pressures Q1 earnings growth and margins, because the ad expenses recognized as incurred, but a meaningful portion of these bookings won’t be recognized as revenue until travel occurs in Q2, Q3 and beyond due to the normal seasonality of our business. The shift of Easter from Q1 last year to Q2 this year will also negatively impact our Q1 gross profit, operating profit, EBITDA, net income and operating margins and we will benefit those metrics in Q2 in both cases compared to the prior year. Therefore for Q1, we expect the gross profit to grow more slowly than gross bookings, due principally to the dynamics of book versus day timing I just mentioned and to a lesser extent the other factors that impact the gross margins for Q4. We forecast gross profits grow by 9.5% to 14.5% in U.S. dollars and by 11% to 16% on a constant currency basis. GAAP operating margins express the GAAP operating income as a percentage of gross profit are expected to be lower than prior year Q1 by about 540 bps, due largely to the seasonal timing issues I just discussed, which creates more deleverage in the performance advertising line. Our Q1 forecast assumes that the long-term trend of year-over-year pressure on performance marketing ROIs will continue. But to a slightly lesser degree than experienced in the last couple of quarters and that paid channel growth will continue to be strong. We expect the pressure on performance advertising efficiency over the first half of 2017 to be slightly favorable what we experienced over the second half of 2016. Our forecast assumes further deterioration in ROIs over the balance of the quarter to provide us with flexibility in a dynamic market to follow our consistent approach of generating gross bookings at reasonable ROIs. Non-ad OpEx and brand advertising are also forecast that the pressure Q1 margins as we invest in our brands in advance of peak travel season and comp against a relatively later rollout of brand advertising campaigns last year. We continue to expect to have leverage in non-ad OpEx and brand advertising over the long-term. Q1 adjusted EBITDA is expected to range between $550 million and $580 million which at the midpoint about 7% versus prior year. EBITDA growth and margins are impacted by the same factors I just discussed for GAAP operating profit. We forecast GAAP EPS between $7.50 and $7.90 per share for Q1, which at the midpoint is up by about 3% versus prior year. Our EPS guidance assumes a fully diluted share count of 50 million shares based upon yesterday’s closing stock price and reflects the beneficial impact of the common stock repurchases we have made to date. We’re forecasting Q1 non-GAAP fully diluted EPS of approximately $8.25 to $8.65 per share which at the midpoint is down about 8% versus prior year. Our forecasted non-GAAP income tax rate is about 19% for Q1 and 18% for the full year. The difference between our GAAP and non-GAAP results is driven by non-GAAP adjustments that are detailed in our earnings release. Our Q1 forecast is based upon recent foreign exchange rates and assumes that our growth rate in U.S. dollars will be negatively impacted by foreign exchange rate fluctuations. I highlight that the basket of foreign currency in which we transact weakened on a weighted-average basis by about 2% versus the U.S. dollar. Since we reported our earnings last quarter and most analysts plan to update their forecast. Consistent with past practice, we have hedge contract in place to substantially shield our first quarter EBITDA, net earnings from any further fluctuation in the euro, British pound, and various other currencies versus the dollar between now and the end of the quarter. Our forecast does not assume any significant change in macroeconomic conditions in general or in the travel market in particular. We will now take your questions.

Thank you, sir. [Operator Instructions] Our first question comes from the line of Mark Mahaney of RBC Capital Markets. Your line is open.

Great. Two questions please. Dan you talked about the seeing long-term, that long-term trended performance market and deleverage, seeing it less than you have in the past. So any thoughts on why that is, do you think that there’s for some reason less competitive intensity. What would be causing that? And then Glenn, if I could ask you. You talked about one of the three priorities being growing the supply base and is that something you think you can continue to do largely organically. Are there other options for doing that and I’m sorry – I’m going to layer in a third question which is do you think there’s enough brand awareness of the advantage the size you have in instantly bookable non-traditional alternative accommodations or is that potential area of growth of marketing spend for you in the future? Thank you.

So Mark, on the first part the trend for deleverage and performance advertising, we’re pleased to see a little bit of an improvement in that trend thus far into Q1 and forecasted for the remainder of the quarter. It’s a function I think of all the good things our brand teams do – continuously adding to the supply available on our websites to give our customers more choice, continuous improvement in conversion. And then also just discipline that the marketing teams employ in these markets to try and bring us good top line growth at a very strong ROIs and profitability. And I think just all those things converging has been helpful for us. The comp, it was difficult for the back half but it’s also difficult for the first half of the year. So I think it’s really more a function of those things that our brand teams are doing. In terms of competitive intensity just who are listening to the calls from some of the other place – in this space of anything they appear to be as competitive or even more competitive that they have been in the past. So I wouldn’t attribute the slight favorability in trends to competitor dynamics.

And Mark, thanks for the call. I think those are two quick questions. And the first one about growing supply and the question can we do it organically or not. As I made the comment a few moments ago about last year being able to add 289,000 properties it was an increase of 33% that was all organic. We believe that we can continue to grow the supply greatly organically. And I’ll just make the point that we look many, many times about ways to add to it inorganically through some type of acquisition. One on the critical things is very important is, when you go out and you buy a company that has some supply approximately you may not have, you have to think about the way their systems work and help easier, they are going to be – to bring in that supply into our system or the amount of distraction make it worst and just go ahead in getting those properties our own. So if you see in the history of our company, we haven’t done a lot of going out recently in getting supply inorganically. So I think that’s the part we’re going to go with. In terms of your question about the brand advantage of the instantly bookable vacation rental product and I will add to the fact, I’ll repeat to think about no feed at the traveler. You may have a point there and I may take this to the marketing people afterwards because I believe we have the absolute best product in that space out there right now. And we definitely believe that this is where we can drive very hard and it’s going to provide a good growth area for us in the future. Thanks for the call, good question.

Thanks, Glenn.

So do we have the next question?

Our next question comes from Justin Post of Bank of America. Your line is open.

Great, thanks. Glenn, congratulations on the job. You’re inheriting a pretty well-oiled machine, but just wondering if you have any thoughts about changes, the strategic direction or the M&A appetite of the company. And then one for you Dan. It looks like you’re bookings guidance and your room nights is very robust in Q1, but earnings and EBITDA a little bit below Street expectations. Can you help us at all understand how much gross profit might be pushed out into 2Q relative to last year due to Easter or any other factors? Thank you.

Thanks for that question and it doesn’t surprise me that that question would be asked. I’ve been in the company now 17 years and started out in corporate development, M&A, either on strategy title sometime later. And I worked with all the CEOs very closely on our strategy. So what I would say is, well, my title has changed and the role has changed, but the company strategy has absolutely not changed. The strategy that we’ve employed over the last 17 years has been very successful for us, and we’re going to continue going forward the same way. And that’s using incredibly talented people who are able to come up with very innovative ideas and implement them to make sure that we’re accomplishing our mission which is to help people experience the world. In terms of M&A specifically, I think we’ve done a very good job of that in the past. We look at a lot of, lot of potential deals but we’re careful about it. We understand the risk and we try to be prudent. So that have done in the past, I expect this is how we’re going to do it going forward.

And Justin, in terms of a top line versus bottom line growth for Q1 forecast, I think you nailed it well. We’re pleased with the top line strength in our forecast, growth that the business has delivered thus far in the quarter. And that strength in top line, pressures the bottom line in the first quarter, we get the gross bookings, we incur the advertising expense, but a significant portion of them are going to check out in Q2 and Q3 and even beyond when travel occurs. I guess the easiest thing I could point to for you is the differential in growth rate between gross bookings and gross profit. Eventually, I would expect those gross bookings to turn into gross profit. We last year gave you an estimate on what we taught the Easter impact was we quantified it at $40 million. We haven’t done a new estimate on that, we figured we’d let that one to stand. So that gives you some sense of what the user impact was in last year benefits Q1. And we would expect strong gross bookings performance in Q1 will benefit Q2 and Q3 to a large extent as well.

Okay. Thank you.

You’re welcome.

Thank you. Your next question comes from Douglas Anmuth of JPMorgan. Your line is open.

Great. Thanks for taking the question. Glenn, I just wanted to ask you about your views on meta. I mean, you obviously talked a lot about how the business is kind of increasingly shifting toward performance spend and we’ve seen that obviously over the last few years, we can see it in some other companies numbers as well. So, I guess the question is with KAYAK which you acquired a few years ago and then recently with Momondo, I mean, do you really – can you make this a much bigger push within sight of within Priceline just given how much you’re spending outside currently? Thanks.

That’s also a very good question. And I think it’s very obvious that consumers – more and more consumers are liking the meta experience. And our goal is to have the service that the customer wants. We don’t force customers how to enter and do their travel search. People who want to use meta, we want to make sure we’re providing the best meta which we think we are doing. So I think in terms of answering your question, we believe that it can become a much bigger business, but this is in meantime a much more by what the consumer want, not that what we want. Is that helpful?

It is. Thank you.

Thank you. Your next question comes from Lloyd Walmsley of Deutsche Bank. Your line is open.

Thanks. Two, if I can. First, if you can just give us a sense for where you’re seeing the most strength in the room night growth particularly in the first quarter where you’re clearly growing nicely in the face of tough comps. Do you feel like the macro environment is improving or there any particular geographies you’d call out or product types you’d call out is driving that supply? And then I guess a related follow-up, if I can. Can you just give us a sense for volume growth out of some key marketing channels or do you feel like core search continues to provide nice growth? And are you seeing a ramp in ad channels like Facebook or they starting to become more meaningful? Anything you could share there would be appreciated.

Yes. Why don’t you, Dan?

Sure, Glenn. Hey Lloyd, so I said in the prepared remarks that the strength in room night growth is across all our few geographic regions, I would say it’s across all channels. I did make the point that paid channels are growing faster than direct at the moment. And I don’t think that’s a surprising trend given that the strength in top line that we are seeing with acceleration over the last few quarters. I think anytime we see that kind of health in the top line growth, it’s largely due to new customers coming to the franchise. And hopefully we will be able to repeat the trend that we’ve seen in the past by winning them over to become loyal customers in the future. So we’re pleased across geographies, across channels. From a macro perspective, the reported results and forecast that we have is strong, and I’d say that, what we saw from other players in our space and the large chains from a RevPAR perspective leads us to conclude that the macro is healthy, particularly in travel. And then in volume growth, the paid channels are growing faster than direct. So we’re pleased with the work our brand teams and our marketing teams are doing to continue to drive strong growth, but it was a very good profitability. We do care about our margins. We do care about bottom line growth and I think that the teams are striking a good balance between the two. Core search is still an important part, PPC and Google is our biggest advertising channel. So we’re pleased with the results we’re seeing there.

All right. Thanks guys.

You’re welcome.

Thank you. Your next question comes from Brian Nowak of Morgan Stanley. Your question, please.

Thanks for taking my questions, I have two. The first one to go back to your last comments on paid growing faster than direct, guess I’d be curious to know, is that true generally across all your markets, you’re including the more mature European markets. And if that’s true in Europe is there any anecdotes or examples you can give us of how you’re still finding ways to grow even faster paid traffic and even your more mature markets to be really helpful. And the secondly, just to go at your prepared remarks. You mentioned some commission overrides. What are those and how should we think about that for 2017? Thanks.

I’m not going to get too much into paid growth rates by market. And that could have some competitors sensitivity to it how progress so we are in one market versus another. Can you assume that in the markets we’ve been longer the brand is better known and we typically get more direct traffic without going to specific growth rate to market by market. And commission overrides are a tool that Booking.com makes available to our supply parkers, whereby they can ratchet up the commission rate that they pay us in order to improve their ranking and drive more business in their website. And when the travel macro is healthy and the hotels and properties are successful in filling their rooms, without pinpoint machine, we actually particularly see them not use those to the same extend, I think that’s what’s driving the trend over the last couple of quarters.

Okay, great. Thanks.

You’re welcome.

Thank you. Your next question comes from Eric Sheridan of UBS. Your line is open.

Thanks so much for taking the question. Maybe two if I can. One, on the shared accommodation piece of the business, what to understand a little bit of the strategic decision to switch decommission or deemphasize the villas.com brand and sort of we incorporate all of the inventory at Booking.com. Just wondering still a bit how you felt that positioned you strategically for the medium- and long-term. And then second on the brand advertising piece, you talked before about pushing it in branded which are the return you’ve gotten. Any color you could give us there about when you have pushed in on brand advertising spend, what does done for traffic or what does done to remarketing would be helpful. Thank you so much.

I’ll do the first one and I’ll let Dan take the second one. About villas.com, this is a good example to show how innovative and how the people at Booking.com are able to come up with new ideas, experiment, put something out into the marketplace, see if it works not, see how well it’s working; and if it’s not working, then more than wanting to pull it done and change it around, and that’s really an example of villas.com. It was an idea to help us in that non-hotel accommodations area, we put it out there, we experiment, we optimized; and sometimes the customer prefers to have all its inventory in one place on Booking.com and that’s where we should spend our time, energy, effect in optimizing that and so that’s what they did. It’s one of those things that just shows, I just love the way that the people throughout our organization do is that they’re not – there are willing to – let’s say it doesn’t work put it down, let’s move on to something else that will work. And I’m very pleased with the way we’re making progress with that product and I think we’re seeing some substantial growth.

And on the brand advertising side, Eric, we think it’s important to the long-term health of our brand to support them and advertise them in various markets around the world. Typically when you make a push it maybe ROI negative in the beginning, we’re pleased with the continuous improvement and sophistication at each of our brands to really look at the analytical metrics as they roll out new campaigns to be able to understand the impact of this, and hold back if they feel the creative isn’t working and roll out with different creative, they are testing creator running it in digital channels that fairly low cost for rolling it out in major campaigns on television. So I think we’re improving now. We’ve done a good job in the past and we will continue to support our clients in brand advertising in the future.

Thank you.

You’re welcome.

Thank you. Our next question comes from Mark May of Citi. Your line is open.

Thanks for taking my questions. I just want to circle back on the comment that you made earlier about paid channels growing faster than direct right now. That’s being driven more by changes in consumer behavior you mentioned greater use that I would include social greater use of search on mobile et cetera or is that being driven more by your own marketing efforts that’s driving it out? And then secondly, I think a year ago, you made some efforts to – that has help to grow your merchant business. Just wondering how sustainable do you think the accelerate growth that you seen in that channel over the last few quarters? Thanks.

Sure, Mark. So the paid channels growing faster, the time will tell how successful we are in converting those new customers that we found into loyal customers that come back to us directly. But our track record in the past has been good in that regard. We’ve seen good growth in repeat rates, we saw a positive trends in terms of direct to the channel for business before a good period of time there until we saw a such strong acceleration in top line growth. And I’m not surprised to see some pressure on direct share when you’ve got that kind of growth. It’s likely that it’s going to new customers coming to the franchise. So we’re hopeful and we’ll track that and hopefully we will have some good news to report to you some point in the future in that regard. And then our merchant business is driven by a couple of different factors. So Booking.com has been entirely an agency business, since it was founded and over the past year has added the ability to process transactions on a merchant basis. They’ve done that for a number of reasons but one of the principal ones was, they were getting into more vacation rentals, a portion of these properties don’t have the ability to charge credit cards. And so that would create a complexity for our guest that’s checking into one of these properties and have come with a pile of cash to pay. And so we charge the customer’s credit card and then we remit payment to the property. So it’s really just a facilitate business and that’s driven some faster growth in our merchant gross bookings. Interestingly at the same time Agoda which is – has only been principally a merchant business, and that has good growth rates for us over the past several quarters has been adding more and more agency capability by using inventory that they share from Booking.com. And so I wouldn’t focus so much on is merchant growing faster agency but more of how is the total doing. In different as to – that means by which the customer wants the book if they want to have us to charge their credit card or they want to book agency and pay at the hotel. We’re okay, either way and so that’s what’s impacting the growth from quarter-to-quarter with the merchant rate.

Thank you. Our next question comes from Paul Bieber of Credit Suisse. Your line is open.

Thank you for taking my question and congratulations Glenn on becoming the CEO. When we think about the growth opportunities for Priceline globally what are the geographies where you feel there is the largest opportunities to gain incremental market share over the coming year?

Thanks, Paul. There is certainly are some areas where we know we should be able to go in and get some more share where we think its important area to be. We want to be careful with that because I certainly don’t want to give our competitors a roadmap until where we’re going to put our emphasis. But I will talk about some of its, there is well known, I’m not give you that we believe over the next decades China will continue to be one of the largest opportunities for travel growth. And we’ve done a lot of effort over the last, I’ve been seeing China for 30 years now. I started going to China when it first came to Priceline to help make sure that we are part of that market. We’re going to continue to do it. We do it in number of different ways, we have a partnership with Ctrip but we also have two great companies that are operating in China, we have Booking.com is there and we have Agoda in there. And we operate for all different areas we are doing the outcome business. That meaning Chinese people want to try outside and we have a great advantage because of the breadth of our properties. We’ve got a great inbound business because we have been an incredible customer base. We have who want to go and visit China and then there’s the domestic business, which is not as big for us but we’re growing nicely there. So if you’re asking me to give you one area which I think everybody knows is important for travel, China is it. Now we also want to look, where there is some big markets that – we are the biggest player in the world, whether call it big market but we’re not number, I’ll point out the U.S. We are not number one in the U.S. would that give us more intension to try harder and make a bigger and make more share here. And so we’ll keep working on that. Is that helpful?

Very helpful. Thank you very much.

Thank you. Our next question comes from Chris Merwin of Barclays. Your line is open.

All right, thank you. Do you think that the growth in alternative accommodations has the potential to change the margin structure of the business overtime and I guess in another words do you finding that younger cohorts of travelers looking to book alternative accommodations or coming to you via direct mobile channels. And is that helping with advertising efficiency or do you think if alternatives as yet another source of supply that should drive demand through traditional paid channels? Thanks.

So I think its more to the latter, Chris. So the alternative accommodations have financial metrics similar to the rest of our business in terms of ADR and take rate. One area that the margin can be negatively impacted for that business is just because the properties are less efficient and that they’re smaller they may only be single unit properties. The touch rate for our supply teams and for our customer service teams also given just the unique nature of some of these properties and could be a higher level questions for guests that are looking to stay in one of them. It can create and has created a modest level of pressure in our non-ad OpEx. Our teams continue to work on ways to make the business as efficient as possible enabling these properties to sign themselves up, build their own content, trying to continue to make our website more and more attuned to these differences for this type of business. So the customers can help themselves in terms of questions they may have from a customer service perspective. But in terms of advertising which is by far away our biggest expense. I wouldn’t foresee any significant difference for this business relative to our hotel and other accommodation business.

Okay, thank you.

You’re welcome.

Thank you. Our next question comes from Naved Khan of Cantor Fitzgerald. Your line is open.

Yes. Hi, thank you very much. Can you touch upon mobile? Where are you now in terms of the share of bookings coming from mobile versus desktop? And then I’ll then I had a question on Momondo.

We’ll take the first one first. And we’re not going to disclose exactly where we are in terms of mobile versus any of the other was people book. But we will say that we know how incredibly important mobile is to the business. So as I pointed out earlier about another question about we know where the customers are. And we believe that customers are going to continue to want to use mobile they use it throughout their lives, throughout whatever they want to, they are continue to use it for travel. Now we believe we have a great advantage because of our scale and the number of technologies that we have in there. We can develop new ways to use mobile, new ways to optimize experiment to make sure that the best process, the best service for our customers. This is a great advantage for us and if you’re a small player or you are small supplier partner, we’re providing a great benefit to these small supplier partners because they can’t develop these mobile applications or do these developments quickly as we can. So it’s an advantage for us in that area. And your second question?

Actually, just on mobile, just to touch up on the conversion rates there. Are you able to sort of drive significant improvement there, because obviously you’re getting more efficiency in the marketing channel. So is that – should we then take that to understand that in the mobile convergence that actually doing quite well and maybe the gap between mobile and desktop is narrowing nicely?

Well, I’ll give my comments and see if Dan wants to add anything. But I think one has to be very, very careful about trying to figure out internal risk, it’s more better or worse for us in terms of health of the business or not. We continue to try and do the best we can to make sure that the customer is getting what they want and converting as fast as possible. But don’t forget, many, many consumers are going back and forth, back and forth; they looked on mobile, then they go home and use their desktop. To try and get these attributes if you really what is the right calculation, we believe it’s a difficult, difficult thing. And Dan, you want to add anything to that?

I’d just say that only that efficiency has been under pressure for the back half of 2016 and our forecast is for slight improvement going forward. So there’s nothing in there that I would call out specifically related to mobile.

Okay, that’s helpful. And then quickly on Momondo. Can you just sort of talk about how much of the business is flights and how much is hotels and the growth rate in the business today is know as tenure business?

We are currently in the standard regulatory review process, so unfortunately it’s not the right thing for us to comment at all on them right now. But we will say that, after we’ve our closed transactions we will have some more color to give to you. How about that?

Great. Thanks.

Thank you. Our next question comes from Scott Devitt of Stifel. Your line is open.

Thanks for taking my question. There’s been a long history of consolidation in the industry. There’s also been a few inches of unbundling of assets. And just wondering how you think about the advertising funnel as you move up in terms of the assets that you have in place there, the competitive advantage that you have existing versus the value of vertically integrated further up the advertising stack? Thank you.

That’s a great question Scott. There has been a lot of that consolidation up and down and has been unbundling and certainly we’ve seen acquisitions, and we’ve seen people build things organically. Our goal is to provide a great service to two sides of the market. One is the person who’s traveling and the other is to our partner supplier. So on the demand side, obviously we want to try and get that person who’s traveling as quickly as possible, fast as possible, provide them with the content they need. Now we have started our business down at the bottom where we can work right away. And that is a great place to be because that’s where you can make good money. And we also know that by providing more content to help them make their decisions earlier it will help make them more loyal to us, so we build out that too. So as anything we experiment, we test, we optimize, and we see are we getting the returning amount or the amount of money for people – effect that they were putting into supplement, that’s where we’re going to do it going forward. I will say that I think we’re pretty good at it and I’m looking forward to continuing to do it the way they’ve been doing it for 17 years.

Thank you.

Thank you. Our next question comes from Tom White with Macquarie. Your line is open.

Great, thanks for taking the question. I think last quarter you guys talked a little bit about focusing more on affiliate deals or distribution deals as a way to drive growth. Correct me if I’m wrong, but I don’t think you guys have done those – that many of those types of deals in the past. I guess can you maybe just give us some color about how you’re thinking that is changed and how you kind of weigh the benefits of those deals versus having to split the economics. And just curious if this is a channel that will be big enough where it will have some feasible impact on your revenue margins over the next year or two or is it still quite small? Thanks.

Thanks, Tom. And since you referenced remarks made in the last quarter, I’m going to pass this to Dan.

There’s been no big change in our approach to affiliate deals Tom. We’ve been focused on them for a long time now. We have a way of looking at affiliate deals that we want to make sure that we’re getting good branding out of them. And that – it’s a fair share of the economics with affiliate partner. So we typically wouldn’t participate with a quick former type of affiliate that doesn’t really have a brand and they’re just using our content to potentially compete with us in paid advertising channels and take a slice of our economics. But deals that we’ve done with partners like Southwest Airlines we think those are great. That’s a real brand that has customers, and to the extent they’re also looking for a place to stay. We are the perfect partner to help their customer fine in that place to stay. In terms of the economics, I mean we don’t disclose them obviously but there’s been no significant change over the last several years. And that wouldn’t come out of revenue margin just to be clear. Our revenue would be the full amount earned from the hotel and then the amount that we share with the affiliates is recognized as performance marketing.

Got it. Thank you.

You’re welcome.

Thank you. Our next question comes from Mike Olson of Piper Jaffray. Your line is open.

Hey, good afternoon. I had two questions. You mentioned increased discounting Agoda is facing and when this happened in China we saw Ctrip margins get hit pretty hard. How significant is the discounting in Agoda as primary markets and you expect any material impact on Agoda margins as a result of it. And secondly do you consider getting more aggressive with some of the strategies that Priceline.com historically emphasize and essentially go back to the future I guess by putting some more resources into opaque or last minute models like what companies such as Hotel Tonight are experiencing success with? Thanks.

Yes. Let’s talk a little about APAC in general. APAC is a competitive, competitive market and we have a number of people out there who are building their business in ways that they believe that offer a lower price by using their own money to discount is advantageous for them in the long-term. So at that time we have to make decisions whether or not we’re going to match or not and I believe I mentioned, some of very good things that Agoda has been doing is pricing strategies very effective. In regards to the Priceline.com Company, as I mentioned they’ve come out with plan and they really are coming out its consumer value proposition that is really to tell the consumer that we’ve got the best deals now, the details are being provided by the suppliers, we’re not discounting them. That doesn’t necessarily mean that we are hurting our margins at all. In fact it’s a great deal for every – the hotel gets their customers and we get a similar margin that we get anyway. So I don’t think that we should be too concerned about how I think, you really coming out, there is going to be a big hit to margins in the long-term. I don’t think you should be too concerned about that which is I think we’re driving.

Okay. Thanks very much.

Thank you. Our next question comes from Peter Stabler of Wells Fargo. Your line is open.

Thanks for taking the questions, just two quick one. Dan, in your prepared remarks you talked about the expanding booking window. I just wonder, if you could give us a little more color on whether this is a trend you are expect to continue. And then this one is probably the last, but Glenn safe to assume no change in guidance philosophy given your tenure, Dan tenure. Thanks so much.

Okay. For the expanding booking window that is a phenomena that we’ve observed for a while now Peter. And I would expect that it will continue not knowing any reason why it wouldn’t maybe a change in the macro healthiness of the travel market could have an impact. You’ve seen the last several quarters with pretty healthy ADR. So I think it’s beneficial for people to book in advance. We have a growing numbers of repeat users that are familiar with our model, love the flexibility that it gives them. And so I think as people are more familiar and they use our service a number of times and become direct customers. They’re more comfortable booking in advance. So you have – right now I’d say that should continue going forward.

And in the second question, we put guidance out there because we believe this is what we believe, the guidance – should we put out I don’t know, but I think we’re going to change this.

Thank you.

Thank you. Our next question comes from Brian Fitzgerald of Jefferies. Your line is open.

Thanks guys. Maybe a quick follow-up on social. Anything notable to call out – format specifically with Facebook’s dynamic product ads with travel? And then earlier you said you launched the OpenTable global platform in the quarter at a high level. What’s kind of the next focus for that business specifically? Thanks.

Regarding the Facebook marketing, we look forward to continue to work with Facebook to improve their products, so that we can get the opportunity to put more money to work there. We’re always looking for anybody can help us, bring us more customers with ROIs that produce loyal customers who’ll come back to us directly. It’s still very, very, very early. We’re working hard, we work with them and we’re hoping to have success down the road with them. I can’t promise it will happen or not, but we’re going to work with them and try to make it happen. What was your second question?

Thanks, Glenn, it was on OpenTable you mentioned the global platform launch in the quarter, roll out in the quarter at a high level. What’s the next focus for that business specifically?

Yes. Again, we don’t like talk too much about what we’re planning doing next. But as we’ve said we retooled strategy which is to build the business at a more profitable level, less investment and we’re very hopeful that we are growing out that global platform and be able to bring to our customers what they want, which is namely contact and the ability to get reservations for restaurants throughout the world. Now it’s going to take some time, more time perhaps than we thought originally. But we still believe in the product and we believe that when people are traveling they need a place to eat.

Got it. Thanks, Glenn.

Thank you. Our next question comes from Justin Patterson of Raymond James. Your line is open.

Great thank you very much. I wanted to circle back to vacation rentals. So you got a lot of moment and supply there. Could you talk about the factors driving that and how we should think about supply growth by geography going forward? Thank you.

Well, the factors that drive the growth in supply for us is no different whether it be a vacation rental or regular hotel or rental car or whatever a hotel. But we have people out there who are trying their best to go and make sure that the people will have that supply understand the benefits of our low cost distribution system. And we show them the benefit of general and people say yes, I want to be part of that because I see the incredible number of customers who are coming to our side from around the world in 42 languages who want to find a place to stay or rental a car whatever we offer. So it’s no different at all. Now you’re asking for specific areas whatever, again I want to just make this very, very plain that we believe we need to be everywhere throughout the world. So I’m not going to say we should be more in this place or that place, we want to be everywhere because customers are traveling around the world and the want to stay everywhere and that’s what we’re going to do.

Got it. Thank you.

Thank you. Our next question comes from Brad Erickson of Pacific Crest. Your line is open.

Two quick follow ups. First can you just unpack – are you able to unpack the growth that on room night metric between traditional hotel versus alternative accommodation. And then secondly just curious and it’s about seeing a bit of ROI leverage here on a comparable basis? Just curious how that compares to the alternative and accommodation and what’s contemplated in the forward outlook? Thanks.

That’s Dan.

Yes, Brad. You see the property growth on our website and that’s been driven more by vacation rentals. So you can assume that the vacation rentals are contributing nicely to our room night growth. We don’t split up the growth rate separately but that’s been a nice tailwind to our growth rate for several years now as we’ve continued to have more and more vacation rentals. And it’s certainly something that we expect to continue going forward. In terms of ROI leverage, we’re not going to break that down for you by hotel versus vacation rental. I wouldn’t really think of it that way anyway I mean we’re out there trying to bring customers to our website that are interested in a place to stay in Rome. And maybe they’re thinking they’re going to look for a hotel or two hotel rooms for their family. And then their teams have done such a good job of integrating the vacation rentals into the search results in a very intuitive way that customer may to say, I love this apartment in the heart of Rome is perfect for my family. We don’t need to stay in two separate hotel rooms and the price is great and it’s got a kitchen. So this is what I want. So we’re not really trying to target separately there are some keywords that maybe lend themselves more to the vacation rental space but we look at it from an overall portfolio perspective.

Got it, Thanks.

You’re welcome.

Thank you. Our final question comes from Kevin Kopelman of Cowen and Company. Your line is open.

Hi, thanks a lot and congrats to you, Glenn. Question on KAYAK, you mentioned it’s the only multi-product global meta-search player. Do you see being multi-product as an advantage in meta-search and if so why is that? Thanks.

Yes. I think it is when people become loyal to a particular site that try meta particularly specifically because they are offering great services and it’s one of those things where the people who are great providing for our hotel meta-search or fight one final being able to provide those great ways to go out and see those different places. They will see all that different choices and go easily to be able to actually booking. That’s the advantage. Now clearly we believe that KAYAK is when Momondo, that’s mostly a flight one you seeing that in press and et cetera. But we know that where good in both areas, we are hoping to make sure that we continued to do that.

Thanks, Glenn.

Thank you. At this time, I’d like to turn the call over for any closing remarks. Gentlemen?

Listen, we want to thank everybody for coming on the call. And thank you very much for attending.

Ladies and gentlemen, that does conclude your program. Thank you for your participants and have a wonderful day. You may disconnect your lines at this time.