Booking Holdings CEO Says Travel Recovery Will Take Years, Not Quarters
Booking Holdings, the world’s largest online travel company, continues to feel the weight of the pandemic, warning investors Thursday (Nov. 5) that the outbreak’s current U.S. and European surge will make it very challenging to break even this year. But the company also said that it continues to innovate with things like an in-house “seamless payments network.”
“Although the progress we are seeing leaves me optimistic on the long-term outlook for our industry, I continue to recognize that it will likely be years — and not quarters — before the travel market returns to pre-COVID volumes,” Booking Holdings CEO Glenn Fogel said on the company’s third quarter earnings call.
Booking Holdings, parent company of Booking.com, Kayak, Priceline, OpenTable and other online-reservation brands, said gross bookings fell 47 percent in the third quarter from year-ago levels. However, at least that marked an improvement from the 91 percent drop the company reported in the second quarter at the height of pandemic closures.
And Fogel, who recovered from COVID-19 himself earlier this year, said Booking Holdings’ plans to reduce costs and align with expected market demand over the next few quarters have begun to pay off. He said the company should complete a program to reduce headcount 25 percent at Booking.com by Dec. 31, saving as much as $300 million annually.
Still, Chief Financial Officer David Goulden said that “this is a fragile recovery, [and] we’re now seeing a second dip in our business driven by COVID. We believe that the recent increase in COVID cases in Europe and the U.S., coupled with cold weather and travel restrictions in these geographies, will likely result in the second dip being U-shaped and lasting until the early spring of 2021.”
Boosting Flights and Payments
Although the pandemic is expected to disrupt the travel business until a vaccine is widely available, Fogel said he still has a “strong belief that people have an innate desire to travel.”
To that point, the company is positioning itself to capture more business as demand returns. Management said it is continuing to build toward a long-term vision of a connected-trips, seamless multi-product offering. Executives said that would improve customer experience on Booking Holdings’ platforms, driving loyalty and frequency over time.
Fogel said the company is also refining a recently launched U.S. flight product on Booking.com. He said flights are a key component of the connected trip, and the company sees that as an obvious opportunity to remove friction in the booking process for customers.
As part of that frictionless experience, the company is also continuing to develop its own “seamless payments network,” which it intends to extend to more of its supply partners.
“We strongly believe that developing these payment capabilities has valuable benefits to both our bookers and supply partners, including potential lower payment costs for suppliers,” Fogel said.
EU Digital Gatekeepers Act
Fogel also cautioned investors that the company is closely following the progress of the European Union’s Digital Services Act. That’s a new regulatory framework that would designate certain large online entities like Booking.com as “gatekeepers,” with the aim of ensuring markets remain fair and competitive.
Because the criteria for being a gatekeeper and the associated rules and regulations are still in development, Fogel said the potential impact on Booking Holdings is difficult to estimate.
“There have been questions and speculation that Booking.com may be one of the designated gatekeepers, which we firmly believe would be incorrect for a number of reasons,” Fogel said.
He said that’s mainly because the European accommodations market is very open and competitive, and consumers and accommodation providers have multiple online and offline choices for bookings. Fogel said the company would provide updates on the legislation as developments occur.
All in, Booking Holdings reported that Q3 net income totaled $801 million, down 59 percent from a year earlier. Total revenues fell 48 percent to $2.6 billion.