Booking.com plans for lay offs after landing $4bn loan

Netherlands: Online travel agent Booking.com has told employees in an internal memo that layoffs from the company are “probable”, just days after the Financial Times reported it had received a $4 billion loan in bonds from investors to fend off severe effects caused by the coronavirus crisis.

In a video conference held with hundreds of employees, Booking.com chief executive Glenn Fogel is believed to have said cost-cutting would likely be necessary across different parts of the company, according to the Financial Times’ report.

The coronavirus continues to place a large unpredictable strain on the travel sector, with job losses and furloughs widespread across booking platforms. One of Booking.com’s key competitors, Expedia Group, has already been forced to make 3000 employees redundant [approximately 12 per cent of its workforce] since the turn of the year as reality bites.

That correlates with the World Travel and Tourism Council’s estimations that Covid-19 could lead to up to 75 million job losses in the travel sector worldwide, in light of lockdowns and restrictions on mobility and air travel.

In a statement provided to Skift, parent company Booking Holdings said: “This pandemic has had an immense impact on many industries, especially the travel industry, which is under unprecedented pressure. We are not immune to this pressure, and as we work to manage costs aggressively, we are also looking at government subsidy efforts as they are being announced across regions.”

Like other booking sites such as Airbnb and Expedia, Booking.com is committing to slash marketing expenditure, executive salaries and hirings for the foreseeable future, as a major cost-cutting exercise and bookings continue to drop to 85 per cent year-on-year in April compared to the same period in 2019.

However, it was boosted last week by the injection of a $4 billion loan, made up of “four tranches of senior notes due between 2025 and 2030”, according to the Financial Times, which should help to alleviate some immediate fears over the company’s future.

In the UK, Booking.com would be eligible to opt its employees into a three-month furlough scheme, in which they would receive 80 per cent of their pay for up to £2,500 per month. In the Netherlands, however, the government’s package allows workers to continue working and receive their full salary for three months.

Booking Holdings said the relief would “support the short-term financial health” of the business for when the travel economy begins to pick up again in due course.

Last week, Airbnb announced it too had secured funding to manage its way through the coronavirus pandemic by raising $1 billion in senior debt, one week after securing the same figure in investment from private equity firms, Silver Lake and Sixth Street Partners.