Despite posting positive metrics for the first nine months of fiscal year 2020, eDreams Odigeo is raising the alarm over the rise of the COVID-19 coronavirus.
In a call to discuss earnings, eDreams CEO Dana Dunne says that before the outbreak of COVID-19, the company was “seeing solid high single-digit growth rates for bookings.
“After the outbreak, increasing concerns about coronavirus have inevitably resulted in a slowing of demand,” says Dunne.
The online travel agency reports an 8% year-over-year increase in global bookings during the week of January 16. Bookings in China, which represents 1% of eDreams business, fell by 28% in that period.
“Despite solid high single-digit growth rates for bookings in January, we now clearly see an impact from coronavirus,” says Dunne.
“February has been characterized by increasing concerns about the coronavirus outbreak, which has inevitably resulted in an industry-wide slowdown of demand.”
From February 22 to February 25, bookings declined 12% year-over-year. This includes a 35% drop in Italy and a 92% drop in China.
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Undeterred by the financial disruption, Dunne touts the company’s “resilient business model.”
“The majority of our costs are variable,” says Dunne. “That means around 80% of our costs are variable - so if we don't generate bookings, we also don't spend money in marketing, fraud, merchant costs, etc.”
Dunne says the company’s diversification in destinations, cash on hand and room for growth are reasons to be optimistic during this time.
Financial growth
The Barcelona, Spain-based company reports a 5% year-on-year increase in bookings to 8.3 million in the first nine months of fiscal year 2020.
eDreams grew its revenue margin by 8% to €412.9 million in the period and adjusted EBITDA soared by 10% to €86.8 million.
Subscriptions for Prime increased from 110,000 to 499,000 – a 28% jump from the previous quarter.
As of February 23, the total number of Prime subscriptions reached 555,497.
In the face of growth during this period, the company is adjusting its expectations for the total fiscal year due to COVID-19.
The company estimates total bookings for the fiscal year to be up 1% year-on-year to 11.3 million, revenue margin up 4% to €552 million and adjusted EBITDA up 9% to €130 million.
“Without coronavirus, we were expected to end the year with a booking and revenue margin within guidance and adjusted EBITDA above guidance,” says Dunne.