Booking Holdings Q1 gross bookings plummet 51%, total revenue down 19%

Booking Holdings saw its gross travel bookings drop to $12.4 billion in the first quarter of 2020 – still a massive number, but a whopping 51% less than it was one year earlier ($25.4 billion).

Much of that loss came in the category of room nights booked, which were down 43% year-over-year in the first quarter.

But president and CEO Glenn Fogel says that full-quarter figure does not accurately reflect the severity of the impact of COVID-19.

“We did not see the virus’ full negative force on our business until mid- to late-March. So the 43% decline does not truly reflect the state of our business, nor the travel industry today,” he says during a call with analysts to discuss the results.

In March, reported room nights declined more than 100% due to cancellations outpacing new bookings. And newly booked room nights – which exclude the impact of cancellations – were down more than 60% year-over-year in March and down 85% in April. 

“This gives you a clearer indication of how much our business is currently impacted by this crisis,” Fogel says. 

Also impacting the drop in gross travel bookings in the first quarter were declines in car rental days – down 36% in the quarter – and airline tickets, down 8%. 

Total revenue for the company in the first quarter was $2.3 billion, a 19% drop from the first quarter of 2019. The company also reports a net loss in the first quarter of $699 million, compared with net income in the first quarter of 2019 of $765 million. Adjusted EBITDA for the first quarter was $290 million, a 60% decrease versus a year ago.

To deal with the crisis, Fogel says the company has adopted a three-step approach of stabilizing the business, optimizing the business to handle the decrease in demand and positioning the business to capture demand when it returns. 

As part of the stabilization efforts, Fogel says Booking Holdings has halted stock buybacks, dramatically reduced marketing spending – the first quarter figure was $851 million compared to $1.2 billion a year earlier – implemented a hiring freeze and reduced executive compensation. 

Last week the company completed a “strategic evaluation” of Kayak and OpenTable, which led to layoffs and furloughs that CFO David Goulden says cut costs at those brands by about 20%. 

“After making adjustments in other operating expense areas, we made the tough decision to ensure the size and scope of our business is proportionate to the new realities of the travel market,” he says.

“We are now working with the other brands to examine their cost structures and we will be thoughtful and deliberate in our evaluations.” 

The company has also bolstered its financial position by raising $4 billion in debt in early April, which Fogel says gives it “liquidity to weather a long period of significantly reduced travel demand and resources to invest in securing demand when people are ready to travel again.”

But Fogel says he does not see that demand for travel returning to pre-COVID levels any time soon.

“It will likely be years - not quarters - before we witness a full recovery of global travel demand. We believe that either a vaccine or effective treatment is needed before people will feel fully comfortable traveling the way they did before the pandemic started,” he says.

“And even after a vaccine or treatment is declared safe and effective, we believe it may be some time before there is sufficient quantity and distribution of them to give people and governments confidence for people to travel freely.”