Despite both revenue and bookings dropping more sharply in Q4 of 2020 than in the prior quarter, Booking Holdings president and CEO Glenn Fogel focused on the positive to open his call sharing the results with analysts.
Noting that 2020 brought the “biggest disruption to modern global travel the world has ever seen,” Fogel continues: “However, travelers still booked 355 million room nights through our platforms during 2020, and we remained profitable by generating approximately $880 million in adjusted EBITDA. Delivering these results during this unprecedented year and unpredictable year is a credit to our team’s relentless efforts to deliver the best value and service to our travel customers and to our supply partners while all the time remaining incredibly focused on operating efficiently.”
Considering those full-year 2020 figures in relation to 2019, of course, paints a less rosy picture. Room nights dropped nearly 58% – down from 844 million in the prior year – and adjusted EBITDA dropped 85%.
Gross travel bookings for the year were valued at $35.4 billion, a 63% decrease compared to 2019, and total revenues in 2020 were $6.8 billion, a 55% decrease from the prior year.
Fourth quarter results were also noticeably down compared to Q3 of 2020 – although less sharply than expected, says Fogel.
Total revenue for the fourth quarter was $1.2 billion, a 63% decrease year-over-year and just half the revenue reported for Q3 ($2.6 billion). And adjusted EBITDA for the fourth quarter was a loss of $38 million, compared with adjusted EBITDA of $1.3 billion in Q4 2019.
Marketing expenses were down 61% in the fourth quarter to $386 million from $992 million in Q4 2019. For the full year, marketing expenses came in at $2.2 billion, down from $5 billion in 2019. And the company reduced its staff by about 23% in 2020, resulting in an annualized cost savings of about $370 million in personnel expenses.
Control “what we can control”
With the pace of recovery still uncertain due to new COVID-19 cases, border restrictions and the uneven distribution of vaccines, Fogel says the company is focused on what it can control, guided by three priorities: expanding the payment platform on Booking.com, building the connected trip capabilities and growing market share in the United States.
Fogel says 22% of Booking.com’s gross bookings in 2020 were processed on its integrated payment platform, up from 15% in 2019, and he expects that number to continue to grow.
“It is strategically important as it enables merchandising capabilities that we haven’t had access to historically at Booking.com, but we expect to utilize selectively in the future to help drive growth. In addition, this payment platform is foundational for enabling our connected trip strategy,” he says.
Another priority tied to the connected trip vision is building a “robust flight product” on Booking.com.
“It gives us the ability to engage with flight bookers early in their travel journey and allows an opportunity to cross-sell our accommodations and other products to those bookers,” Fogel says. “In the coming years we expect flights will represent an increasing mix of our overall business, which will help drive incremental revenue and EBITDA dollars.”
Underlying the various elements of the connected trip – products across accommodations, flights, ground transportation, attractions and dining, all connected by the payment network and personalized support – is a goal of driving increased loyalty and frequency.
“Getting people to come back to us directly is a critical strategy going forward,” Fogel says.
And regarding the third priority of capturing more market share in the United States, Fogel says an important part of that will be to build Booking.com’s alternative accommodation business.
“While we have built a large and competitive alternative accommodation business globally, we believe we have a significant opportunity to improve it in the U.S., which will involve product improvements, supply acquisition and raising consume awareness of this type of inventory on Booking.com,” he says.
Fogel says the company needs to grow its supply of single-home properties, and it expects to do that faster and more efficiently by working with professional property management partners.
When asked about the status of the company’s relationship with hotel suppliers – after some criticized Booking Holdings early in the pandemic – Fogel says the company is helping partners in a variety of ways, including providing strategies related to promotions, revenue management and content development.
“I do believe in terms of relationships, certainly as a distributor, when there is less demand, we are more valuable as a partner to them,” he says.
“In the time when there is very, very high occupancy rates, any hotel will say, ‘Well, I don’t need the distributor nearly as much.’ But when they don’t have the high occupancy rate then they start looking for demand. And we have the benefit of being the largest platform for hotel demand in the world.”