ChinaTravelNews, Ritesh Gupta – The significance of China in the global travel business has swelled. Not just because of the size of the overall domestic, inbound and outbound business, but also for the way the nation is trying to come out of the crisis situation.
Assessing the current situation and where China stands by looking at every quarter, Booking Holdings’ CEO Glenn Fogel said, “China is going to be a locomotive for the travel train.”
“Over the (course of) next several decades we all know that the growth in travel will come from China,” said Fogel, during a pre-recorded online interaction with TravelDaily’s CEO Charlie Li ahead of the 2020 TravelDaily Conference. He also complimented China the way it has handled the pandemic, putting life and work back on track.
Fogel delved deep into various aspects – expectations from vaccine, recovery in this sector, travel products and the role of partners in China in the overall vision of delivering a Connected Trip experience.
Asia – an early ray of hope
Fogel, who himself got infected in the early stages of the pandemic in March, described the state of affairs as a “terrible” and admitted that he hasn’t started traveling yet. “No travel of any kind.”
Reminiscing a pleasant memory at the time when he fell ill and recovered, he shared that Jane Sun, CEO, Trip.com Group extended a helping hand via a call and was aware of the overall shaky condition of the area in and around New York City. He said Jane empathized about the same, for instance, lack of protective clothing for doctors and not enough masks at that time. “How wonderful that was of Jane to reach out like that,” thanked Fogel, who shared that he did donate plasma after his recovery. “But all of us know we need a vaccine to be effective to overcome this issue.”
Fogel also added that vaccination for everyone will take time, and “it is not like a light bulb where we just flick a switch and all of a sudden all travel comes back.” He said, “It'll come back when people feel it's safe to travel and the governments convey the same - so people can go from country to country.”
As of now Asia is providing hope.
“Many of the offices in Asia have re-opened,” mentioned Fogel. Acknowledging positive signs coming from China, he said, “The Agoda office has been open for a long time. They had good business, but it’s all domestic business.” The office in the U. S. is yet to be operational since the spring, he shared. In Europe, some offices did open but had to close down again.
Coping with crisis
COVID-19 testing before flights, plans for a contactless journey, to quarantine on arrival or not…the travel industry is trying to act fast on various counts in order to bring in some degree of normality. Even as the industry is anxiously looking at progress being made with Covid-19 vaccine and how the same can uplift travel, the industry knows that a massive number of jobs remain at risk.
As recently indicated by the World Travel & Tourism Council (WTTC), 174m jobs could be lost in 2020 if barriers to global travel remain in place.
Also, the financial performance of some of the biggest travel companies remains adversely impacted and is waiting for certain signs of rebound.
In case of Booking Holdings, according to its latest financial data for the third quarter, travel bookings decreased 47% and room nights booked decreased 43% over a year ago.
Acknowledging the precarious situation, Fogel said, “We definitely have suffered from it. (As the quarterly performance indicates) our company…we have absolutely been hurt.” He said, “But by taking a lot of measures from the beginning – saving money, cutting cost, raising new money…(by doing all that) ensuring that we can get through this terrible crisis…thinking of the future its going okay.”
Tilt towards alternative accommodation option?
Booking.com's alternative accommodation segment accounted for one-third of all new bookings in Q3.
Assessing the pattern around this style of accommodation vs. traditional hotels, Fogel said it was interesting when the pandemic first started and he wasn't certain about the response from the travelers.
“…would people say I'm only going to stay in a hotel because I think it may be safer because they'll do (high-level) cleaning and disinfecting…they'll do it professionally they'll make sure everything is clean and safe or will people say I don't want to be in a hotel because I'm concerned there'll be a lot of people there - there'll be people in elevators, in the lobby and I'm going to get an alternative accommodation... a home far from the city where no one else is there I'll be safe that way,” explained Fogel.
So there was suspense around how travelers would go about their accommodation-related plans.
“We now know from the data that a lot of people decided they wanted to stay in an alternative accommodation, a home to be safer and we saw that in the numbers. Now here's the interesting thing though. In the second quarter the sheer number of people who wanted a home instead of a hotel was much higher than it was a year earlier but in the third quarter that difference got smaller showing that people were feeling safer or they just weren't as concerned and were willing to spend more time in hotels so it'll be interesting in the future when things are all back to normal is the share between alternative accommodations and hotels go back to the way it was before the pandemic or now that people have tried out a home and said I like staying in a home now. Will they consider a home when they're thinking about where to stay in their next holiday and I think they will. So I think what has happened is the pandemic brought forward a trend that was happening anyway which is more and more people were interested in alternative accommodations and I think that's a sign that it's becoming a much more mature business –the alternative accommodation business,” mentioned Fogel.
Many governments around the world are poised to tighten and clarify regulations for short-term rental of residential property. As to what to expect, Fogel stated that there are a lot of issues regarding short-term rentals. The group does consider the role of various stakeholders in the business and the overall scenario how the same is going to impact the society at large.
“…so it's not just us and the people who own the short-term rental property and it's not just the traveler who may want to avail the option (for staying). We always have to think about the other people too people who live in the community… the governments and we also have to think about things like sustainability (for instance, making optimal use of resources or infrastructure so that there is a balance),” he said. Fogel added that the governments have a big role to play in making sure that there's balance between the needs of travelers and of those who own the properties and want to make money from it and have bought it with the understanding they would be able to rent it out. “Of course you have to think though to people who live in the community and all those things and I really look forward to always working with government so we are partners and not in conflict with anyone,” he said.
Impact on business travel
Talking about the impact on business travel, travel executives forecast a permanent reduction in business travel due to Covid-19 - of around 15%. Fogel said with everyone learning to interact online and adjusting to the work-from-home environment over the past few months, it would mean that certain meetings/ one-to-one interactions possibly are going to be avoided. Referring to a conference like one being hosted by TravelDaily China in Shanghai, he said it makes sense to fly and attend the same considering various factors. He said the spend associated with business travel, be it for staying in a five-star hotel or first class airline tickets – is going to come down, and affect the “economics for a lot of the high-end parts of travel”.
“…I don't think we're going to go back to the way we used to do things flying all over the world for short-term meetings one-on-one…I think that's going to be a much smaller part of the travel business,” said Fogel, who also mentioned that the way airlines used to invest or incur expenditure a certain segment of travelers, for instance at the airport, is expected to come under scrutiny.
There have been plans to use technology and data to work out a complete itinerary in one booking. Fogel mentioned that concepts like packaging aren’t new, but people are still “very frustrated when they try and set up their travel (the entire itinerary). It remains a time consuming exercise. “…and then when you're doing it if anything goes wrong you end up talking to lots of different people to try and get things fixed. Wouldn't it be wonderful if there's one place that knows you so well that it offers you up all the things you wanted to do and it gives it to you based on what you've done in the past?” mentioned Fogel. The entire planning, buying and the real consumption would be based on preferences already known, be it for an individual or the entire family. Suppliers, too, would benefit in a big way.
And if something goes wrong, this can be pre-empted and a consumer can be contacted via a call, email or even WeChat, he said, referring to the significance of making the journey frictionless in a real sense, counting on artificial intelligence, personal details such as payment-related ones etc. He mentioned that various established players including Trip.com, Expedia etc. have been focusing on the same. So via the Connected Trip offering, the vision is to it streamline every aspect of a trip.
For the same, he also said that the plan is count on synergy or competency of a particular business within the group to ensure there is optimal use of resources. “…the lead brand for us is booking.com” and that is the leading this concept. “But of course we always want all of our brands to work together,” he said. Referring to the expertise of priceline.com in flights, he said, “Booking.com has just started to do flights but we're doing it in a way to make sure we're using all the knowledge and the back end infrastructure of priceline.com and therefore we're not rebuilding stuff that we already have.”
And all of this is vital for a group that serves customers from all over the world. Referring to the significance of investments made in China and ongoing association with Trip.com, Didi and Meituan, he said all of this is critical for a Connected Trip-related experience. He said when a traveler visits China from Europe, in case they are looking for a ground transportation, the Uber experience that they are used to needs to be replicated even though the same brand won’t be there to serve them the way it does outside China. “We want to make sure that the person right away has the same experience of being able to just with one click get ground transportation,” said Fogel. “We believe that by doing these partnerships (in China) we can help accelerate things that we couldn't do on our own or we can have access to a customer base that we wouldn't be able to get easily on our own.”
Biggest say in travel
Evaluating the prowess of Google, Amazon, Facebook, Trip.com and Airbnb, these companies are entrenched in the travel sector in different ways, but what stands out among these entities is they all have “great people, have lots of capital, have scientific knowledge and have a big customer base now some (have) bigger than others so everyone is big.” He also pointed out that competition helps drive innovation and makes the service/ offering better. He also added that possibly the biggest competitor of all – someone with new ideas and technology avails loads of capital available – might crop up soon.
More travel than 2019
Fogel has witnessed many crisis during his more than two-decade long association with this industry. He remains positive and acknowledged that there have been instances in the past where reactions have been extremely negative only to witness the opposite in no time. “It's an interesting difference between different cultures and different things in the world. Sometimes in the US people have a very short-term view of the world and that can be very unfortunate,” said Fogel, referring to the “9/11” tragedy when people said they won’t fly again and in six months were they were back taking flights! Similar things had happened with the dot-com bubble in 2000 and the financial crisis in 2008. “I have learned that the world doesn't end, you have to think about the long-term.”
“This pandemic will end and we will come out of it. We will have more travel in the future than there was in 2019. No certainty when this will happen, but it will happen,” concluded Fogel.