Booking Holdings CEO and President Glenn Fogel sat down with Yahoo Finance reporter Sibile Marcellus to chat about how the COVID-19 pandemic is rapidly morphing the travel industry, and how the company is adjusting to consumer and business demands.
- Glenn Fogel has been the CEO of Booking Holdings since 2017. He's held various top management positions with Booking Holdings for the past 20 years. Fogel runs a world leader in travel services with brands like booking.com, Priceline, Kayak, OpenTable, and rentalcars.com. 844 million room nights were booked across Booking Holdings in 2019. But this year, the company faced the biggest challenge yet, the COVID-19 pandemic.
SIBILE MARCELLUS: Welcome back to Yahoo Finance's All Markets Summit. I'm Sibile Marcellus. Glenn Fogel, it's great to have you on.
GLENN FOGEL: Well, thank you so much for having me.
SIBILE MARCELLUS: So the coronavirus pandemic has plunged the US into an economic crisis. Airline passenger volume has dropped nearly 70% compared to last year. In the second quarter, at your company Booking Holdings, you saw bookings drop 91%, revenue fall 84%. But you have taken steps to mitigate those losses, such as raising $4 billion in debt from investors and laying off roughly 4,000 employees globally. Now, have those measures helped? Or are you still in crisis mode?
GLENN FOGEL: Well, first of all, it's tragic what's happening right now. I mean, forget about the financial thing. Let's just talk about how sad it is. The number of people who have died, the number of people who are very ill, and that's just tragic to begin with.
Then you get into the financial health. And certainly, many companies are hurting. And ours is hurting definitely because of what's happened with this pandemic. Travel's getting hit the most.
Now, the action we're taking have certainly helped and will help us get through this. But we all need a lot more than just us cutting costs. We need, obviously, a vaccine first. That's what we all need, so people feel safe to travel. Also, therapeutics, so if you got sick, you felt you'd get better. That's important. So once people feel safe, then we need government. We need money from governments to help prime the pump in travel and help bring back this great industry.
SIBILE MARCELLUS: And as you were talking there about the personal aspect, obviously, of the pandemic, before we dig into all the financials, so I know that you actually-- as your company was dealing with this massive financial shock from the coronavirus shutdown down in mid-March, you actually got infected with the coronavirus. So you were dealing with 101 degree fever and a headache. Tell us about that experience.
GLENN FOGEL: Yeah. It was at the very early part of the infection in the US. This was in March. And I live in the New York area where it was the hotspot that started off the infections in the US. And I was concerned.
But fortunately, it was a very, very mild thing for me and my family. My entire family, my wife, my children, we all became infected. But fortunately, it was relatively mild for us. And I was feeling better in just a couple of days.
And now we've given plasma. Hopefully that's helping people. We don't know. But hopefully it is. But I'll tell you, it's a scary thing. And I just-- when I see people without masks, when I see people not being socially distant, I just-- I'm saying, why are you doing that? What's the downside? How bad is it if you wear a mask, right?
Just even if you don't believe that it's helpful, there's no downside. There's only potential upside. So if we all did this, if we all did this, maybe we would be like in places like Japan where they do it, and the infection rate is very, very low. Maybe in Thailand where they wear masks, and the infection rate is very, very low. Think about it. Something as simple as wearing masks, maintaining social distance, how many people would be alive right now?
SIBILE MARCELLUS: Absolutely. Those are very important steps people need to take to not just protect themselves but to protect others. Now, President Trump says that we're rounding the corner when it comes to the pandemic. What do you think that means for the travel industry?
GLENN FOGEL: Well, I can't really answer for what the president meant by that. But I will say we do read news about how more and more progress is being made on the vaccines, which, as I mentioned, is, without doubt, the most important thing in recovery for travel will be the feeling that you can travel safely. So as soon as that comes around, I believe we will get recovery.
That being said, it's going to take a long time. Even after a vaccine is said that it's safe to use and it's effective, it's going to take time to get that distributed for people to take it. So we always say the recovery for travel is not going to be in quarters. It's going to be in years.
But I'll tell you, part of the length of this recovery is going to be determined by governments and how fast and how willing are they willing to step up and help the people who've been so terribly hurt, the literally millions and millions of people who've lost their jobs. And these are people at the entry level of the economic ladder, who are just coming in. These are the people who really need that help. And I urge all of the governments around the world but particularly my government in the United States to please get together. Come up with a way to provide help to this industry.
SIBILE MARCELLUS: Now, what kind of concrete steps would you like the White House and Congress to come up with to help the travel industry? They obviously did the Paycheck Protection Program for small businesses as a part of the CARES Act. Did that help the travel industry? Or is a lot more money needed? And if so, how much?
GLENN FOGEL: Well, I think a lot more is needed. Of course, you still see-- look what we just saw recently. How many people are being let go by the airlines right now? And yes, you furlough someone. Maybe you bring them back down the road.
But the fact is the longer it waits, the harder it is to bring people back. Maybe they're not available. Takes longer to restart the industry. That's important in the short run.
But in the long run, what it is is when it is safe to travel, when people feel safe, that's when the government can really help by offering up tax credits or incentives to get people traveling. We're dealing with that right now in Japan, for example, where the government of Japan is providing money to help stimulate travel. Thailand same thing. Doing that in other parts of the world. So a targeted program that makes it cheaper for people to travel, giving that incentive, that tax break to go travel, that'll get them going.
SIBILE MARCELLUS: Right. Definitely, tax break as a part of the steps that will definitely help. But given that there's an election, it's about a week away. It's unlikely that we're going to get more government help. So let's talk about what's been working for the travel industry, some of the positive trends. For example, alternative accommodation bookings. I saw that has actually increased significantly at your company. So tell me about that.
GLENN FOGEL: No, that is an interesting phenomena. So we all know, over time, more and more people are looking at using what we call an alternative accommodation, a home, for example, rather than a hotel. And that trend has been happening more and more and more. But this pandemic has just done a step functional change.
In the second quarter, more than 40% of our new bookings were going to that alternate accommodations. That's about twice what it was a year earlier. Clearly, people said they want to go to a place where there aren't other people they have to worry about. Instead of getting into a crowded lobby or a crowded elevator, you're going to a home. You don't have to worry about anybody else. Safety again very important.
In addition, people were very hyper local because no one's getting on a plane. So you're going on a holiday somewhere you can drive too. So it's very close. Those are some of the trends we saw. And I expect this to continue for some time.
SIBILE MARCELLUS: And let's get into some of the safety measures because we're seeing a trend where people are traveling closer to home. They may prefer to stay at a stranger's house versus spending the night at a hotel. How has that impacted hotels that you also, obviously, work with?
GLENN FOGEL: Well, obviously, it certainly hurts in terms of demand. When you increase supply that much, all of a sudden, where people-- let's say before there was any of this alternative accommodations, where would you go? You have to go to a hotel. You don't have a lot of choice.
Now there's a lot more choice. So the hotels have to step it up and make it so that it is safe to go to a hotel and people feel that it's safe. So you'll see the hotels are advertising how they're doing different types of cleanliness and things to make sure that there's no infection there. And it's putting up space in the lobby, so nobody gets too close, and plastic shields in front of the lobby, all sorts of things to make it safer.
And what we're doing is we're helping the hotels by having them give us all the information, all the steps they're taking to make that hotel safe, and we're putting it on the website in the description of those hotels. So people know, this hotel is doing all these great things to be safe. I feel safer going there. It's good for everybody.
SIBILE MARCELLUS: And what about people's homes? How are you handling that? Can it get kind of sticky points there when you're telling someone maybe they should clean up their homes for safety issues with the pandemic?
GLENN FOGEL: You know, it's interesting. Because before we started seeing the data right when the pandemic really started, I wasn't sure which way it was going to go. Would people say, well, I'd rather go to a hotel even though there are lots of people because I feel safer that they're going to do industrial strength cleaning, or I feel better about the home because fewer people? But how well are they really cleaning it? What was the last person in there or not?
It turns out people are willing to say, you know, I think they're doing a good job cleaning at the home. And that's why those numbers have gone up. But that being said, if 40% of our new bookings are homes, that means 60% of our new bookings are still hotels. So people still like going to hotels. In fact, more people go to hotels than homes with us right now. So that's, you know, there's obviously room for both. It's really why our site offers both. You make the choice.
SIBILE MARCELLUS: Right. No. For sure. It's up to the customer and the consumers. But also, what we're seeing when it comes to going travel restrictions abroad for Americans who would like to travel internationally, I noticed on the Kayak website, you're actually advertising more road trips and car rentals versus flights. So how has that impacted the business there? And when do you think enthusiasm for air travel will return?
GLENN FOGEL: Well, we definitely did that because people want to travel by car, be safe, and all that. And we're always trying to adjust the company to be what people really want. That's what we did because it was the thing that people wanted.
That being said, it's, how do we get people back into planes? We get people back into planes by making sure it's safe to get on a plane. People will get on. People want to travel. And they want to travel to the places they love to go before on a plane.
But they don't want to do it if they think there's any chance that they're going to get sick. So that's why we really need that effort by all of the players, from the pharmaceuticals who are working so well, so hard on the vaccine, to the airlines to put together all their different protocols to maintain as much safety as is possible. What's really interesting is that air in the plane, it's really safe because the amount of filtration that is done there. A lot of people don't know that. But you're pretty safe with that air in the plane.
But it's perception. And people just don't think, hey, I don't want to get on a plane and have a lot of other people in this long tube. It's unfortunate for the industry. But it's how human beings are.
SIBILE MARCELLUS: For sure. And with all of the uncertainty still out there, it's hard to plan ahead, even if it is a road trip, even if you are traveling locally. So how have you been handling when it comes to customers wanting refunds once they change their mind or they could possibly see that it's an area where there's a spike in coronavirus cases? They no longer want to go there. How do you deal with that from a business standpoint?
GLENN FOGEL: Yeah. No. We definitely noticed that. And we've been talking about that even in our earnings last second quarter where what we call the booking window shrunk dramatically, as people were wanting to wait before they decided to make a choice because they don't want to have that long time between booking and then going.
But even more is so many of our properties offer you up free cancellation. So you book with us. You book at booking.com, and you don't have to worry about whether or not you're going to cancel or not because it's not going to cost you any money. You can wail until the very end to decide whether to go or not.
But I will say that it is one of those areas though that it does cause concern for people. They're just not sure about the new rules are going to come down. Because it's not just whether or not they should travel or not. It's whether the governments want you to travel or not.
And there are issues where you're afraid I'll go on a trip. And all of a sudden, the rules will change. And I'll have to come back. And I'll have 14 days of quarantine or whatever. So it's very complicated.
We're trying to put all that information out on the site. We're working with the European governments to put that information in place that everybody can see it. It's really one of those issues that's keeping people from traveling is the fear that there are other parts of their lives will be impacted by new rules such as quarantines and such.
SIBILE MARCELLUS: Absolutely. And also leadership and CEOs also being impacted by this. So I know that you've been, Glenn, through other crises like 9/11 and the 2008 financial crisis. What is the biggest mistake a CEO can make in dealing with a future that's so uncertain?
GLENN FOGEL: Well, I think one of the mistakes that a lot of people make is not looking beyond the current crisis. And yes, you have to deal with the current crisis immediately. And for example, we have to let people go now. And that's really sad, letting people go.
But we can't not be thinking about, how are we going to develop new products, new services for the future? Because travel will come back. And we need to be prepared. So when it comes back, that we are positioned to take advantage of that return in demand.
So for example, we talked about this thing called the connected trip, making it so much easier for any traveler, everything all in one place connected, instead of having to deal with lots of different services. Well, we're working on that right now. I don't want people to stop working on that right now. I want people to continue to work just as hard now as they were last year. So that when we complete the system, it's ready to rock. And people, when they come back, they can use it right away. I can't just concentrate only on today. I've always got to be looking forward.
SIBILE MARCELLUS: Absolutely. That's definitely the way to do it, look at the present but also plan for the future. Glenn Fogel, CEO of Booking Holdings, it was great to have you on. Thanks so much.
GLENN FOGEL: Well, thank you very much for having me.