Despegar has put various cost measures in place as it navigates its way through the COVID-19 crisis.
Announcing results for the first quarter of 2020, the Argentina-based online travel agency says the benefit of a cost-savings program, which began in Q1 2019 on top of further measures in the first two months of 2020, prior to the virus, was already showing.
As a result of these measures, Despegar says structural costs are down 16% compared to Q4 of 2019.
For Q1 2020, the company saw a 32% decline in gross bookings year-on-year to $790 million, with revenues down by 43% to $76.1 million.
Total transactions declined 23% in Q1 as packages, hotels and other travel products declined by 28% and air transactions fell 20%.
Despegar says that excluding extraordinary cancellations due to COVID-19, revenues would have declined 33% to $88.6 million.
Commenting on COVID-19 crisis, CEO Damian Scokin says the company has “the foundation in place to emerge from it leaner and stronger ever.”
He adds that the Despegar’s strong brand recognition in the region puts it in a good position to capture the shift from offline to online that will result from the coronavirus crisis.
In addition to the 2019 cost-saving measures, the executive committee, board of directors and senior management have halved their salaries and middle management level employees have taken a 25% pay cut.
A hiring freeze is also in place on top of a reduction in the workforce, reduced working hours and unpaid leave in some locations.
The company says that structural costs should be 45% lower by Q3 2020, compared to the end of 2019, based on a scenario where the company makes no money.
Despegar also says it has cash to get through the current crisis with $226 million at the end of Q1 2020.
The company is also renegotiating the terms of its acquisition of Mexico’s Best Day Travel Group, which it announced it was buying in January of this year for $136 million.
The proposal is to postpone cash outlays related to the deal for two years but it may not go ahead if an agreement cannot be reached.
Despegar also says it is working on its inventory to be able to take advantage of any recovery of domestic travel first.