The travel industry will experience a "volatile" recovery from the coronavirus crisis until a vaccine or treatment can be developed and distributed around the world, according to Booking Holdings CEO Glenn Fogel.
Speaking on the company's most recent financial earnings call Thursday afternoon, Fogel said his company (No. 2 on Travel Weekly's 2020 Power List) felt the full effect of Covid-19 in the second quarter of 2020. Total revenues fell 84% to $630 million, and net income plummeted 88% to $122 million.
Like Expedia (No. 1 on Travel Weekly's 2020 Power List), which earlier reported its Q2 earnings,
Booking Holdings also saw an increase in demand for alternative
accommodations. For its Booking.com brand, alternative accommodations
made up 40% of all new bookings in the second quarter, a higher number
than in the past, according to the CEO.
Like other travel providers, Booking Holdings saw high cancellation rates in March and April, followed by low travel demand, Fogel said. For the first time since 2001, the company took a quarterly loss in earnings before interest, taxes, depreciation and amortization.
Fogel said the company was pleased to see some signs of recovery in certain markets, but "it is impossible to tell how the coming months will unfold."
In fact, some markets that saw recent growth, the U.S. included, have already started to plateau or decline again.
"After a period of relatively steady improvement in many geographis in recent weeks, we are seeing these growth rates worsen in some countries," Fogel said. "We continue to believe that in order to recover to pre-Covid levels, we will need to have a vaccine or effective treatment, which will take time to produce and distribute globally at the scale needed."
Fogel believes a return to pre-Covid-19 travel levels will take "years, and not quarters."
Some new booking patterns did emerge in the second quarter in countries that had previously locked down to control the spread of the virus. Travelers, Fogel said, are more interested in traveling domestically. Their destinations are closer to home and in less urban areas.
Booking Holdings is in the process of right-sizing its business for the expected decrease in travel demand in the coming years. Fogel said that work was completed in the second quarter at its Kayak, OpenTable and Agoda brands, resulting in a workforce reduced by around 22%. That will produce an estimated $80 million in annual savings.
Its flagship Booking.com brand is going through that same process now. Fogel estimated its total workforce will be impacted by about 25%, producing annual personnel savings between $250-$300 million.