A full recovery in international travel may take years: Booking.com’s Ritu Mehrotra

Last month the government announced a slew of measures to boost the tourism sector, including free visas for tourists and loans to government-registered tour operators. How will all this help revive the sector?

The government plays a very important role in terms of infusing optimism. So, it was very heartening to see these measures. As we move further, a strong partnership between governments and the travel industry is essential in order to spur travel and tourism industry growth.

If you also look at what’s happening globally, governments and organisations have all come together to explore scalable ways to infuse demand. This is a time when everybody has to come together to look at an industrywide approach rather than one piece at a time.

What more can the government do?

A lot has happened already. In the middle of the pandemic, I think what the government was able to come up with is commendable. We can draw from other countries as well. For example, giving tax credits to infuse tourism, or giving user-side incentives are some of the things that could be looked at.

Have travellers come out of hiding? What does the festive season and year-end look like?

We have seen pent-up demand in recent times and whenever consumers saw an opportunity to travel they did so immediately. Ahead of the festive holidays as lockdown restrictions gradually ease, if there is no third wave of COVID, activities will slowly begin to normalise.

We’re seeing an increase in travel optimism, with travellers starting to plan their next trip. Also, if we see data on our platform, the top searched Indian destinations between August and November have been Delhi, Mumbai and Bangalore. We see a lot of stay-cations and then there are leisure destinations, like Jaipur, Pune, Lonawala and Ahmedabad.

So, unless there is a lockdown, people want to travel, meet loved ones and go out to explore the world. And unless there is another wave of COVID-19, this is not going to slow down and things are only going to accelerate.

What percentage of the travel industry is likely to have recovered by the next quarter if there is a third wave and if there is no third wave?

It’s difficult to say because things change pretty much on a weekly basis. But there are certain things that will still be top-of-mind for travellers. One of the trends that we see is the growing intent for safe travel and I don’t think that is going away. We are well-positioned for that — at Booking.com we give our users a very detailed description on the cleanliness and hygiene levels at a property.

Another thing we see is that leisure travel is growing, and within leisure travel people are preferring locations that are within drivable distance. These domestic destinations will continue to be in demand for the next few months as has been the case for the last couple of months.

Besides domestic destinations, we’re also seeing an uptake in travel for international destinations in the coming months. If there isn’t a third wave and people are allowed to travel we expect a little bit of an uptick there as well.

Because there is so much uncertainty in the market, it’s also very important to look at flexibility. We see that the partners that offer a flexible cancellation policy have managed to gather more traffic.

By when do you expect international travel to get back to pre-COVID levels?

It’s directly proportional to the number of cases, and where we are in the spectrum, because outbound travel is dependent on visas and flights being operational. And those kinds of things are, again, directly proportional to the number of cases. It’s hard to say.

After the second wave, as you can already see norms are easing and there are bubbles that were created. It will really depend on how we deal with the next wave. International travel is going to take its own time and user confidence is equally important.

We are cautious as we see growth coming back but we also expect a full recovery to take some time. It will not be quarters; it might take years.

Discounts seem to be a big carrot for travel companies to woo back travellers. How steep are the discounts, and what does this mean for margins?

Great prices and overall value will always be the key consideration for users as travel will be dependent not only on the overall economy, but also on consumers’ financial health and confidence, as well as their ability to take the next trip. Value-led travel has become a key driver of travel decisions today.

Wherever it is safe to travel we are reinvesting in incentives for travellers to rebook. We have also recently launched 'Flash Deals', where we offer a minimum 30 percent discount across participating properties to make travellers’ wishlist a reality.

With regard to your question on margins, if I look at the impact of COVID on the industry, these are times when we are infusing travel and it is important for us to have benefits for customers. Our partners have also been very forthcoming in order to help us offer that to our customers.

If you look at hotels, they are still spending a lot just to maintain properties. So, it is important to build confidence at this time. Maybe our bottomlines will be hit, but it’s really a battle of occupancy versus average daily rates.

Till when do you expect the discounts being offered by the travel and tourism industry to continue?

I don’t know the answer because a lot of things are still changing and moving parts. As I said, value will continue to be a very important part. Value in the form of either discounts or more giveaways has always been a part of the industry.

If I was to especially talk about India, the overall value has been a very important part of not just travel, but overall spends of the user. So, I wouldn’t say discounting will go away completely, but the face of it might change over time. You may see more value additions come into play or repeat travel may start getting incentives .

As long as the industry partners are okay to not cannibalise their bottomlines and continue to build the business and grow, there is still a lot of upside from that perspective. And we have to ensure that more and more travellers come into this ambit of travelling more.

How would you compare the discounts currently being offered against pre-COVID levels?

If we are talking about a 30 percent discount right now, it may have been around 10, 15, 20 percent in the pre-COVID period. But this 30 percent does not stay forever; it is based on a certain cycle and then it subsides. Even additional features like pick-up and drop were not being offered earlier, and may not be offered after COVID-19 subsides.

The COVID-19 pandemic has given rise to a new market in the tourism industry in the form of out-of-station remote-working facilities. Are you looking to invest and expand into that segment as well?

Absolutely. Booking.com has around 880,000 listings on offer. And of these, 140,000 listings are alternative accommodation. We classify alternative accommodation as anything that is not a hotel. So, it could mean homes, holiday homes, villas, beach homes, boathouses, etc.

We saw that after the first wave of COVID-19, there were two very pronounced trends. Number one, a lot of people wanted to be in these kinds of places — alternative accommodation — because of social distancing and also for having their own personalised spots.

The second thing we saw was that while the booking window of customers shrank, the stay window actually went up. So, people are looking at weekly/monthly rates because now that you’re working from home, you can work from anywhere.

At Booking.com we were very nimble at the time, and quickly launched weekly/monthly dates across the spectrum. A large portion of our bookings started to come from those kinds of actions.

At the moment, there are close to 10 online travel players in India. What would you say is your market share in the industry, and how do you expect this to pan out in the next few years?

I won’t comment on the competition. All I can say is that we are a very meaningful player in the market, and that is also visible from the property count we have to offer. Also, we are extremely proud to bring the largest number of inbound travellers to India.

Companies that will be there over time are the ones that have had great depth in user preferences. We are a very wholesome platform and we don’t specialise in one side or the other. We actually give a lot of choice to travellers. We have a customer service in 43 languages, and that’s a big add-on, even to our partners.

What impact has COVID had on your financials? Are you looking at some form of fundraising to recover from the aftermath of the pandemic?

Being a global company and having the scale and size that we do, we are in a relatively comfortable space at the moment. Globally, Booking.com offers more than 28.4 million total reported accommodation listings, including more than 6.6 million listings of homes, apartments and other unique places to stay.

Our Q2 ending balance was higher than the adjusted Q1 balance primarily due to operating cash flows of $1.2 billion and a $0.5 million unrealised gain on long-term investments

Booking.com’s Q1 ending balance benefited from the timing of the $2 billion raised in the Eurobond offering that we completed in March. Of the $16.1 billion of cash and investments at the end of Q2, $4.3 billion was related to long-term strategic investments and $11.7 billion was cash and short-term investments.

We ended the quarter with about $12.3 billion in debt, which is about $3.6 billion higher than our pre-pandemic levels. We have a $1 billion convertible note maturing in Q3.

What kind of long-term impact has COVID-19 had on the travel industry?

One of the things that I absolutely see would be more technology adoption. If you look at the overall digital spectrum from e-commerce to travel, we see a lot of uptake when it comes to adopting technology.

Adoption of technology for transparency, for a better price, for a choice, for ease... People have started to look at those and I don’t think any country has gone back when it comes to adoption of technology.

And if I were to look at our industry in particular, in the short term, safety standardisation and cleanliness will be very important for travellers. Unless things change drastically, domestic travel will continue to be this way.

One more important thing that I’m very passionate about is sustainability. We’re really proud that we’ve run multiple programmes to promote sustainability because we feel that tourism can only grow if it is done sustainably.

We run a programme called Booking booster, wherein we give a non-equity grant to tourism companies that are working on tourism sustainably. So, there is a company called the Great Himalayan expedition, which is electrifying villages in the Leh-Ladakh area. We had given them a non-equity grant of 400,000 euros a couple of years back to strengthen the business.

There’s another company called NotOnMap, which is working on building businesses in alternative accommodation properties in smaller areas in Himachal Pradesh. In 2019, Booking.com gave NotOnMap a grant of 250,000 euros as part of the Booking Booster Programme.