Travel recovery reflected in Booking and Expedia Group results, European Commission proposes easing of travel restrictions using Digital Certificate – could this be a model for Asia?
I’VE never been a good sailor which is why the best piece of advice I ever got from a friend when out sailing on his yacht in Sydney and I was feeling decidedly seasick was, “Keep your eye on the horizon”.
Even though I’ve been on dry land for the past year and longer, this is the advice I am clinging to this week as we in Asia batten down our hatches again for another wave of restrictions designed to hopefully stem a fresh tide of infections. From Taiwan to Singapore, Thailand to Malaysia, Indonesia to India, whatever domestic travel there was within local borders has slowed down and cross-border travel remains a trickle.
The horizon I am looking towards is the US where I am reading reports of analysts on the first quarter 2021 financial results of two travel giants – Booking Holdings (BKNG) and Expedia Group (EXPE).
While the report analysing BKNG results acknowledged that “travel recovery is going to be very bumpy” it said “the silver lining is there: in the US, where the vaccine rollout is ahead of most other countries, room nights in 1Q were above 1Q19, and the growth accelerated further in April”.
In the first quarter of this year gross travel bookings – the value of bookings for rooms, car rentals and air tickets – were $11.9 billion, a decrease of 4% from the same period in 2020. Total revenue for Q1 was $1.1 billion, a 50% decrease year-over-year. Adjusted EBITDA for the first quarter was a loss of $195 million, compared with adjusted EBITDA of $290 million in Q1 2020.
Room nights booked in the first quarter decreased 20% year-over-year, while air ticket bookings increased 62%.
“We saw encouraging signs of improving booking trends in the first quarter that continued into April with notable strength in the US,” said Glenn Fogel, CEO of Booking Holdings. “While we expect there will be continued volatility in the recovery of global travel demand, our teams across Booking Holdings will continue their hard work to strengthen the positioning of our company and execute against our key strategic priorities.”
One key priority is flights with Fogel saying (see Phocuswire report), “This year we’ll be focused on enabling travellers to book the major elements of their trip in one place on Booking.com. This means we are working to build up our non-accommodation products like flights, ground transportation and attractions by increasing supply as well as exposing more of our customers to these products.”
Analysts, while acknowledging the headwinds, appear to be maintaining their confidence in BKNG, believing “it has the balance sheet and competitive positioning to emerge from the crisis in a position of strength”, said one analyst.
Announcing Expedia Group’s first quarter 2021 financial results, vice chairman and CEO Peter Kern said, “Travel remains a study in contrasts with strong vacation rental growth and demand for domestic travel continuing to drive us forward, while demand for international and business travel and conventional lodging remain challenged.
“Beach and outdoor destinations have shown robust rebounds while major cities remain muted, and some regions have been growing while others remain locked down. As the vaccine rollout continues, we expect to see a now-familiar story play out; domestic and leisure demand lead the recovery. However, as the dire situation in India reminds us, in some markets, things may get worse before they get better.
Expedia Group total revenue in Q1 2021 decreased 44% to $1.2 billion year-over-year, with the group’s retail segment revenue declining 35% and its B2B segment’s revenue decreasing 62%. Adjusted EBITDA for the first quarter of 2021 was a loss of $58 million, a decrease of 24% compared to Q1 2020. For the first quarter of 2021, total gross bookings declined 14% to $15.4 billion.
Added Kern, “For our part, we continue to invest in bolstering our technology platform and in marketing where we can best get ahead of the demand curve. Because the market has clearly shown that when people feel safe to travel, demand comes roaring back.”
Citing signs of optimism in domestic leisure travel trends, an analyst cited that “management is doing a terrific job managing costs, already closing in on achieving just under $1b in run-rate savings”, saying, “we remain constructive on the long-term EXPE online hotels and alternative accommodations penetration story …”
“EXPE continues to invest in technology and marketing to get ahead of the demand curve, because recent trends demonstrate that when people feel safe to travel, demand spikes,” it noted.
The other horizon to look towards to is Europe, where governments are taking action to reopen borders. On May 3, the European Commission proposed that “Member States ease the current restrictions on non-essential travel into the EU to take into account the progress of vaccination campaigns and developments in the epidemiological situation worldwide”.
I recommend you read the report in full but essentially it “proposes that Member States lift restrictions on non-essential travel for vaccinated persons travelling to the EU”.
“Member States should allow travel into the EU of those people who have received, at least 14 days before arrival, the last recommended dose of a vaccine having received marketing authorisation in the EU. Member States could also extend this to those vaccinated with a vaccine having completed the WHO emergency use listing process. In addition, if Member States decide to waive the requirements to present a negative PCR test and/or to undergo quarantine for vaccinated persons on their territory, they should also waive such requirements for vaccinated travellers from outside the EU.”
And “this should be facilitated once the Digital Green Certificate becomes operational, in line with the rules the Commission proposed on 17 March”.
It acknowledges that “the emergence of coronavirus variants of concern calls for continued vigilance” and proposes “proposes a new ‘emergency brake’ mechanism, to be coordinated at EU level and which would limit the risk of such variants entering the EU. This will allow Member States to act quickly and temporarily limit to a strict minimum all travel from affected countries for the time needed to put in place appropriate sanitary measures.”
Could this be a model for ASEAN/Asia to adopt, as vaccinations ramp up across the region?
One thing is clear, something needs to be done at the regional level otherwise, as this article in South China Morning Post says, “As West races back to travel, ‘zero-Covid’ economies like Hong Kong, Singapore and Australia face hermit risk”.
• Featured image credit: zoom-zoom/Getty Images