Booking Holdings’ business model is undergoing a major structural shift through an accelerated transition from the classic agency model to the merchant model, whereby the platform collects payments directly from customers. In the first quarter of 2026, this strategy generated Merchant model revenues of EUR 3.21 billion (up 26.7% year-on-year), while deferred funds payable to suppliers reached EUR 7.11 billion, providing the group with massive liquidity at the expense of hoteliers’ cash flow.
According to Booking Holdings’ financial reports, Agency model revenues decreased by 2.3% to EUR 1.33 billion, marking the gradual phasing out of the old system where guests paid directly at the property. Currently, the Merchant model represents 66.8% of total revenue (compared to 61.3% in the previous year) and approximately 72% of the group’s total bookings, up five percentage points over the last 12 months.
The deferred Merchant booking balance increased to EUR 7.11 billion as of March 31, 2026, compared to EUR 5.98 billion in the same period of the previous year. During the investor conference call in April, the Chief Financial Officer noted that out of the free cash flow of approximately EUR 2.69 billion for that quarter, about EUR 1.65 billion stemmed from working capital changes, primarily generated by the growth of this balance.
The mechanism allows Booking to retain funds collected from tourists until after the stay is completed, with payments released to properties on a daily, weekly, or monthly basis, plus bank processing times. Third-party estimates place the platform’s processing fees between 1.1% and 3.1%. Although refusing processing through the platform is technically possible, it results in a downgrade in search rankings and, consequently, a drop in bookings. In light of direct recommendations made by artificial intelligence agents, payment infrastructure remains the only commercial layer immune to the disappearance of traditional search listings, making the payment schedule the primary commercial clause subject to renegotiation by hoteliers.
Frequently Asked Questions
What is the main difference between Booking’s Merchant and Agency models?
Under the Agency model, guests pay directly at the property upon arrival, whereas under the Merchant model, Booking collects payments upfront from customers and remits funds to hoteliers after the stay is completed.
How does the Merchant model affect hoteliers’ cash flow?
Because Booking holds customer payments until after completion of the stay, hoteliers face delayed access to cash flow while Booking accumulates significant liquidity from deferred supplier funds.
Can hoteliers opt out of Booking’s payment processing platform?
While opting out is technically possible, doing so often results in a lower search ranking on the platform, leading to reduced visibility and fewer overall bookings.