US / Netherlands: In the week that online travel agency Booking.com announced a 25 per cent trimming of its global workforce, parent company Booking Holdings has published its highly-anticipated second quarter results leading up to 30 June 2020, which highlight the devastating impact the coronavirus has had on its business.
On the company’s earnings conference call, Booking Holdings CEO and president, Glenn Fogel, said it had felt the “full impact of Covid-19” and revealed that Booking’s gross travel bookings had nosedived by 91 per cent to $2.1 billion in the second quarter.
The slump was also reflected in the news that room nights in the second quarter had declined 87 per cent compared to the equivalent period a year ago. Furthermore, during the early height of the pandemic, April saw the biggest drop in newly booked room nights at 85 per cent.
Fogel also revealed on the call:
- Total revenue for the quarter was $630 million, representing a drop by 84 per cent compared to last year
- Net income decreased from $979 million to $122 million, an 88 per cent drop
- Booking recorded an adjusted EBITDA loss of $376 million, the first time it had produced a quarterly EBITDA loss since 2001
Despite seeing signs of improvement in terms of domestic booking trends in Europe and the United States, Fogel said he did not envisage bookings returning to pre-Covid levels, if at all, unless a vaccine or effective treatment can be found in the meantime.
He said: “We believe it will be years and not quarters before the travel market returns to pre-COVID dollars.”
On domestic booking trends:
Fogel said: “Throughout this initial reopening phase, we have seen new customer booking and travel patterns emerge. In line with our growth in domestic travel, we are seeing that bookers are choosing to stay closer to home and are more interested in less urban areas than pre-Covid.
“The share of these types of bookings on our platform has increased meaningfully this quarter,” he added
On the market share of alternative accommodations:
Fogel said: “We also see that our customers are booking more alternative accommodations than in the past, which often have the benefit of reduced potential interaction with other travellers. In Q2, Booking.com alternative accommodations represented about 40 per cent of all new bookings in the quarter.
“We’ve also seen an increase in travellers booking stays with more flexible cancellation policies due to the uncertain travel environment we currently face. Our platform is well positioned to capture these travel demand patterns due to our very capable marketing teams, global footprint, extensive accommodation choice and diversification of cancellation policy and rate types,” he added.
On the subject of layoffs, the CEO revealed that Booking Holdings brands, KAYAK, OpenTable and Agoda, had seen their headcount reduced by “approximately 22 per cent”, including furloughed employees, in a move that could save the company more than $80 million of annual personnel savings.
At Booking.com, he said the brand was in consultation with work councils and employee representatives, with plans in place to lay off around 25 per cent of its global workforce [approximately 4000-4500 employees] . Such a move would save an estimated $250-$300 million per year for the company and it hopes to complete its announcements on cost reductions to employees by the end of the year.