In an interaction with ET’s Samidha Sharma, Booking Holdings, president & chief executive Glenn D Fogel talks about his business, the pandemic driving growth for alternative accommodation, why it will take a long time for the travel industry to recover, and his own experience as a Covid-19 patient. Edited excerpts:
We are hosting the ET Global Business Summit virtually for the first time, which means no airline travel and no hotel bookings and no dining out. This severely hits all of your businesses whether it’s Priceline, Agoda, OpenTable or Booking.com. How have you navigated through this unprecedented situation even as you tested positive for Covid-19 early on in the pandemic?
It’s a very difficult time for everybody. Nobody has been able to escape the problems of this pandemic and my family and I, we all came down with the virus. But, fortunately, we recovered very quickly. But I know so many people personally who have had such terrible times with this illness.
While dealing with the fear of your own personal health and your family’s health, we were also dealing with the lives and the health of 27,000 employees of the Booking Holdings organisation — it’s very difficult. But you have to react and have to take the necessary steps to try to make sure that you do everything possible to preserve what we had created over 20 years.
The travel and hospitality sector has seen massive job losses. How are you keeping your folks motivated? What is bringing them back to work at a time like this?
We have taken every single step we can to try and preserve as much employment as possible. Of course, the travel industry has been hit more than any industry around the world. We had to restructure the organisation and unfortunately about 25% of our employees will have to go on to do other things.
It’s so sad but the thing that touched me was the morale of the people. Everybody recognises this is what we have to do to preserve and have a company going forward. But I know there is a future for all of us. This pandemic will end at some point. Economies will come back. Jobs will be there. And we will get through this.
You recently spoke to Skift in an interview and said Covid-19 had no redeeming value but that your company will coincidentally be well-placed for the recovery, thanks to new consumer awareness for alternative lodging. Can you tell us about the changes in consumer behaviour due to the pandemic?
We are seeing changes happen already. The first thing we have noticed is, people don’t want to go anywhere. You want to hunker down where you live. Be safe. But when restrictions started lifting, people said, okay I can go somewhere. So many people said I don’t want to go to a place with a big lobby.
I’m going to go to an alternative accommodation which is a home. Something on a beach or in the mountains, and a tremendous number of people chose that. In our second quarter, we had over 40% of our new bookings for people who wanted alternative accommodation, which is maybe twice of where it was earlier.
And you think this change is here to stay? And what does it mean for hotels?
When next year and the year after, people think of travelling, they are going to think of not only hotels but can say I had a good time in that private accommodation; that will be part of that their consideration set. What that means is supply will increase tremendously in the alternative accommodation space. We were in a good position because we have both. We have almost 7 million listings that are alternative accommodation. If you are a hotelier, you are worse off because now there is also alternative accommodation. That’s a big issue.
In terms of recovery patterns, where does India stack up?
There is a correlation between how bad the infection rates are, and how severe the government restrictions on travel are. I can tell you without looking at news items, how many restrictions are in place, and how the virus is because I will look at how our bookings are doing. And India unfortunately has been having a hard time. Compared to some other places. We need a vaccine. Then we will all be able to get back to normal.
You are looking at a pile of data across all your brands which run through travel, hotels, restaurants. What are you seeing in terms of revival? Is there any timeline that you see for some sort of normalcy to come back in the kind of business that you are in?
We will not get to the 2019 level in the travel and hospitality sector for the next three years. This is going to take years. It is all dependent on when we get vaccines and its distribution. But governments can play a part. They can help accelerate the recovery. When things are safer, when there is a vaccine, all the governments around the world, can if they want to, and they should, help to bring back the tourism and hospitality business.
Some governments are doing it. Japan is relatively safe, with low infection rates and the government has put together a programme that is helping to bring back tourism and travel. We are participating in this. Thailand has very low infection rates and we are working with them. I urge every government to put specific programmes in place so that when it’s safe to travel, that money can be put to work and we can revive the travel industry faster.
What more can we expect in terms of the government’s involvement in bringing back this sector. Whether it is more sops or policy changes? What do you expect? And what is the overall industry expectation?
A lot of different industries pleading with governments for help but for the travel industry, a third of a billion jobs around the world are associated with travel and tourism as of 2019. Of course, it is much lower now. Some of the predictions are that the industry may lose anywhere between 100 million to 200 million jobs around the world, which is unbelievable.
In India, I know that the tourism industry and the government have been working together. I have been to India many times. It is such a perfect place for people to go to travel to. It is an opportunity for economic growth. A lot of times people are not thinking of India when they say where they should go, but they should because it is a great place. The online travel agencies can offer a great deal of help in bringing travel and tourism to India. I would really like to work more closely with the Indian government.
How will business travel fundamentally change after the pandemic? We have all gotten used to work from home, remote working and companies and businesses are looking to save on costs. That is a big part of your business. How do you see that changing?
There is going to be a lot less travel for business in the future. A lot of revenue was coming from the high-end business travellers especially for the five star hotels, first class airline tickets. What’s going to happen is these hoteliers who used to depend on business, now they need more leisure players and there’s a lot more empty supply now.
All those seats on planes that aren’t being filled by business people. We are much more leisure than business, we are in a perfect position to help out those suppliers growing that leisure demand, help them do well even though the industry has changed.
What do you make of Airbnb planning to go public at a time like this?
I think it’s great for them. If you want to go public, go public. Be a public CEO. But no one’s gonna say oh now I’m going to use Airbnb because it is public, or somebody is going to say I’m not going to use it…no consumer cares. It’s purely a financial transaction that will help some people who have been holding that stock for a very long time and not been able to sell.
They’ll be able to sell and get some profits. Great for them. It may bring more capital into Airbnb but it’s not like they are hurting for capital right now. They raised a lot of money during the crisis and they are well positioned.
I don’t think it’s going to make much of a difference at all. I think we will be very strong competitors together, we will still hopefully be able to convince consumers why it’s better to come to Booking.com. I don’t think the Airbnb IPO is going to make any bit of difference to that.
What has been your biggest learning in the last six months having been in an industry which has been hit the hardest?
It is one of those lessons that you learn over and over again. When things get really, really bad, it is about reminding yourself that the most critical things are your own health, your family’s health, your friend’s health and if everybody’s okay, then all your other issues are relatively small in comparison. All pandemics do end. I don’t know for how long this one’s going to go on for. I don’t know whether we are going to have an announcement in the next month or two, that says there is an effective vaccine and then it will take time to roll out. Maybe it will take longer. I do not know. Five years from now, when I look back to today, I’m going to say it was a terrible, terrible thing. I’m so glad it’s gone. And we will be living our lives not that differently than before.