When the coronavirus began to circulate around the world, it brought travel to a near stand-still.
For travel companies like Booking Holdings — the company that operates Kayak, Priceline, Booking.com, Rentalcars.com, OpenTable, and Agoda — it was a crisis.
Booking Holdings saw the worst effects of the pandemic in the most recent quarter, reporting in August that gross bookings fell by 91%. Revenue fell 84% from the same period last year to $630 million.
Business Insider spoke to Booking Holdings CEO Glenn Fogel about what he thinks needs to happen to save the travel industry, what it was like to lead the company while contracting COVID-19 himself, and why he's not too worried about competing with Airbnb as it prepares to go public.
Editor's note: This interview has been edited for length and clarity.
I'm wondering if we can talk a little bit about how summer looked in terms of how the industry has recovered, if it has at all.
I think we all see the same numbers and we hear the same stories in the news, and the fact is that the pandemic has not left. In fact, in many parts of the world, it is the second wave, and that is detrimental to travel. People are nervous about traveling because of the pandemic. Even more so, when different governments around the world put up new types of restrictions or put back up restrictions, obviously it's negative for travel. So we are probably one of the very hardest hit industries by the pandemic. And until we get a vaccine or effective treatments, we are going to continue to have significantly decreased travel.
In the summer, a lot of people were traveling or doing shorter trips to make the most of going outside and getting out where they can. How did that show up in industry trends?
In the Northern Hemisphere it was summer, and after a very hard spring of lockdowns in many parts of the world, as soon as those lockdowns were lifted, people wanted to get out traveling. They did that very locally at first and then gradually expanded where they were willing to go a little bit, but it was still very much a domestic event. A huge number of countries either completely prohibit or have some sort of partial ban on people coming for tourism, and that of course has an impact on travel, even if people felt safe again.
Looking forward to winter and temperatures getting a little colder, do you think that's going to erase any progress that has been made?
There's always a seasonality to travel. Many times at this time of year, you begin to have a pickup in business travel that slacked off during the very high leisure months of July and August. Obviously that's not happening because there's basically no travel, but even more so, you have a case where businesses in general now are rethinking how much travel does one need to do, really. And we're definitely ourselves looking at that. I'm sure many other companies will, too. That's going to be a damper on business travel for some time going forward, even after we get a vaccine or therapeutic solution.
We are primarily a leisure travel company. So while it's unfortunate for the industry to have business travel diminished, actually there is a silver lining for us in this situation because you'll end up with more empty seats on planes. You'll end up with more empty rooms in hotels. And what that then means is that the suppliers, the airlines and the hotels, will then work more closely with us because we'll be able to bring them the leisure business that they need and want. Nobody wants to do well because of a terrible event like this at all, but we will be better off than most companies that have a larger percentage of the business coming from business travel.
You have almost everyone working from home right now. Do you have a timeline for when you'd want to bring more people back into the office?
Yes. When it's safe.
We have somewhere in the neighborhood of 300 offices around the world for all of our different brands. Depending on which part of the world you're in and what the events are there, there can be some that are open and there could be many more that are not. Unfortunately, just recently, we had opened two offices in Amsterdam, and now because of the resurgence of the virus in the Netherlands and in Amsterdam in particular, we have now had to close those offices again. That's always something that's unfortunate, and it's hard on people. It becomes a little bit of a yo-yo.
Generally speaking, we really want to wait, make sure that it really is a safe environment for people to return to the office. Given that we're able to work okay remotely, we'll keep that going for some time.
How do you think the work-from-home dynamic has affected how the company is run and your management style?
I'm a people person. You can get a lot done on a video communications tool, but it's not the same as actually being with somebody. I do know, though, that we have been effective so far and people are putting in the extra effort to make sure this thing works out. But, I am greatly sympathetic to the people who are struggling with this because, for example, if you don't have a place to set aside to work, and you're in a small area with other people in a family, that can be very problematic. Then on top of that issue, just trying to create that line between work and non-work, particularly if you have a family with smaller children because small children don't necessarily respect the line between work and non-work.
You said in earnings back in August that Booking would have to lay off a significant number of people, up to 25% of Booking.com's workforce. Is there an update there?
We've unfortunately had to adjust the workforce for some time. We have several companies in our Booking Holdings organization and all the companies — Kayak, Priceline, OpenTable, and Agoda — have all gone through their restructurings, and Booking.com was the last brand that is going through it. We are in the midst of it. We have done our wave one notification and we are in the process of discussing with our local employee organizations. It will take some time to get through all of this, and it's something that management and the workers' representatives have to have discussions about.
It's been an unbelievably tough time for the industry as a whole. As far as help for the hospitality industry, in your opinion, what else needs to be done to spark a turnaround?
We really would appreciate if the governments around the world would continue to focus on helping the hospitality and tourism industry. Some of the governments around the world are doing so already. We're working with the Japanese government on a program that makes it cheaper for people there to book travel, and working with the government in Thailand and working with the government in Italy. This can be in tax credits, these can be in coupons — lots of different ways that governments are putting money to work, to help restart and rebuild the travel industry.
Now in the States, there is the RESTAURANTS Act out that's over $100 billion proposed. And there are lots of discussions with the current stimulus and different legislation that's proposed and the Democrats and Republicans continue to discuss.
What would be very helpful would be some type of direct stimulus to the travel industry in the form of a tax credit or a coupon program. It would be extremely helpful in sort of priming the pump to get the travel industry going again. The travel industry has a huge number of jobs that are currently at risk and many people laid off, and they may never come back if we can't get the industry going again. Of course, we'd like that only when it is safe to travel.
You've been at Booking for more than 20 years now, so you've seen how the travel industry has weathered several different crises. How does this particular crisis, with the fear of traveling, compare to how the industry fared after 9/11?
Each crisis, when you're in the middle of it, you're at first afraid that travel is never going to come back. Is this going to be something that's going to go on forever? And when will it stop? But after you've been through a few of these, you realize it's always going to come back. People want to travel. After 9/11 — I lived in New York at the time, in Manhattan — I remember the incredible fear and people wondering what's going to happen next. People said, "I'm never going to get on a plane ever again." But it wasn't that long before people started traveling again. Yes, there were changes. The security was much stronger. New machines came in the airports to try and scan people to see whether or not someone would be carrying something that could be dangerous on their person. And then people felt better and safer to travel more and more.
That is, I think, a good analogy for today. Things will be a little different. Hopefully there'll be new technology so it will make everyone feel safer about travel, in terms of being infected. But I think people just have an innate desire to travel. We're gonna take a little bit of time, but I assure you travel in a few years will be bigger than it was before this terrible epidemic.
I read that you were diagnosed with COVID back in March. One, I hope you're feeling better. What was that time like for you, having to navigate a company through this crisis, while you and your family were dealing with it yourself on a very personal level?
I became ill towards the end of March. My wife was ill first. My children both also contracted the virus. We were very, very fortunate. None of us had severe, debilitating symptoms. I had a fever for two days. I had a headache for one night. I only went to get tested because my wife, who had more severe symptoms — still not severe, but more severe than me — called her doctor who had a drive-through testing unit. And then that doctor was kind enough to let me come in, even though I wasn't his patient, and our kids. If you recall, back at that time it was a big delay to get results. I actually felt much better by the time the results came back and said that I actually had the virus. The one good thing though, knowing that we had the virus, in a few weeks, we were able to go over to the blood center and they took plasma from us to be used to potentially help others, using the antibodies. So at least we felt we were contributing, hopefully, to someone else.
I didn't feel scared or ill, but when I announced it to people and, you know, we had 27,000 employees, I got a lot of notes and emails from people who also had it or were afraid to let anybody know because they were afraid of any stigma. Again, this was in the early part of the pandemic in the US and Western Europe. They felt more open about discussing that they had it, and it also, I think, helped reassure them that somebody could have it and not end up in the hospital.
I think in the end, it's one of those things where you just feel so lucky. Because I do know somebody who was not nearly as lucky as my family was. And you're just thankful when things are good because someday they may not be so good.
Absolutely. As a company leader, knowing that everyone's dealing with a lot right now, how are you thinking about that in your approach to leading and communicating with employees?
I think you've got to communicate more than you ever did before because people are nervous. They're worried about the future. You try and be as open and as candid as you can be, because people want the truth and they want to know what's happening. Even if you don't know what's going to happen, be honest and candid and say that I'm not sure yet, we're working on it, we'll come back to you as soon as we know. We've tried to do that, try and tell everybody, look, we've tried to do everything we could to preserve as many jobs as we can. We're doing everything that is possible to make sure that our organization is well-positioned for the future. It's one of those things that at least people know that you care. Because I do.
Before the pandemic hit and you would prepare for worst-case scenarios, was this something that would cross Booking's mind as an event that would need to be prepared for?
Don't forget — I've been here 21 years. This isn't the first time I've seen a pandemic. SARS was a very scary event, and we have operations in Asia. I was traveling, actually, during SARS. I was on a plane once to Australia, it was me and just a few other people. It was weird. And if you look at our risk factors in our publicly filed documents, we list pandemic as a risk factor.
It was good that we were able to act very rapidly. We have a half dozen offices in China and one of the first things we did in January, long before there was a lot of Western news about this, we asked all of our Chinese colleagues who were scheduled to come to an annual meeting in Amsterdam not to come, because we didn't want to risk spreading what potentially was a problem.
We also quickly shut down and had people in our different offices not going to work. Our IT people and so many other people were so effective in getting us throughout the world working from home quickly. If somebody had come to me and said, Glenn, I think we're going to have 27,000 people working from home, like in a couple of weeks, I'd say, what are you crazy? I'd say, we'd have to have a study. We'd have to talk about this, we'd take years. But when the crisis happened, people acted.
At that time, we were getting customer service contacts in record numbers because everybody wanted to cancel or change their reservations, or just be reassured that it's okay to travel. So it's pretty remarkable what the team did, but I can't thank them enough.
You'll have a customer call us and say that they were going to Italy. And they heard that Italy is shut down and they want to cancel or they can't go. So you want to talk to the hotel, but the hotel is shut down and there's nobody there you can talk to. Then what we do is we refund that customer and hopefully be able to get the money back later from the hotel.
That was tens of millions of dollars that we handed out to customers that we were not legally obligated to hand out to them, but we did it because it's the right thing to do, even though we knew and still know we're not necessarily going to get all that money back because some of those hotels are going to go bankrupt and they are never going to be able to repay us.
As far as how the industry is changing going forward, Airbnb has been in the news now that they're planning to go public. How are you thinking about that competition and making sure that Booking is positioned well?
One of the interesting things that's happened because of this COVID crisis is it's really accelerated what was a long-term trend of people being more interested in what we call alternative accommodations, and that could be a home, condo, an apartment, instead of a standard hotel. We certainly have a very big part of the business. We have 6.7 million listings in our alternative accommodations area. When the lockdowns were dropped and people wanted to travel, a lot of them felt that they wanted to go to a home or an apartment or something on the beach. They felt perhaps that if you went to a big hotel, you hung out in the lobby or you're getting on an elevator, it wasn't as safe.
We saw a large increase in demand for alternative accommodations in the second quarter — 40% of our bookings were in the form of alternative accommodations, which was a significant increase compared to the year earlier. The question that's interesting going forward is, will the acceleration of this trend continue, level off, or will some of the people who this year decided to take an alternative accommodation next year go back to hotels? We're almost indifferent because we have the largest amount of both types of products. We have the largest amount of hotels and alternative accommodations of anybody.
Airbnb is a great competitor. When a customer comes to us, many times, they're not sure yet where they want to stay. By coming to us, they're able to see the largest selection of all the different properties, get all the reviews, read all the content about it, see all the different prices and then decide which one to go to. From our point of view, this just makes our site that much more valuable. And of course we think the way we do it is better than anybody, because unlike some of our competitors, we do not charge a traveler fee at the end. You know what the price is up front. The second thing is it's always instant confirmation with us. You're not going to have to go back and forth with the owner, negotiating. You get it right away, which we think is a much better way to do it.
Is there anything else you want to share with us?
We're not a company where we could come forward and help build ventilators, and we couldn't come forward and help make a vaccine, but we do what we can to be helpful. I was very pleased by our people at OpenTable. We were able to take our restaurant reservation service and give it away to pharmacies, supermarkets, etc., to try and spread out. You could reserve a time to do shopping, to make sure there weren't too many people in the stores.
Then they took it and they offered it up to two colleges to use in their dining halls to spread out the students there. I do like the fact that we're doing what we can to be helpful here.
I think what will be really helpful is that vaccine, and I'm really hopeful that comes sooner rather than later, and gets distributed as best as possible so we can all go back to what we love doing, which is traveling freely and without worry.