Worldwide: In its latest earnings call for 2020 Q3, Booking Holding senior executives are predicting a second dip in cancellation rates in November and December before a U-shaped recovery [rather than the deep V shape seen earlier in the year] until Spring 2021.
The company is forecasting a loss in the fourth quarter despite seeing improved results in Q3 of this year, as Covid infections surge around the world and respective governments impose new restrictions on domestic and international travel.
While Booking announced global trends had improved between April and July, analysts had noted a flattening of those trends in August and September, which is expected to decelerate for the rest of the year.
The earnings call also highlighted that alternative accommodations accounted for one-third of the company’s new bookings in Q3 and around 40 per cent in Q2, and growth in the segment [low double digits] was still significantly above that of Booking’s core business [low single digits]. With a reported 6.5 million alternative types of lodging listed on its platforms, though, the increase in the proportion of guests booking such accommodation slowed in September and October.
Booking set out plans to build out its currently “under-penetrated” inventory of individual homes in the United States to ensure it was offering its customers “what they want, when they want it”.
Other key insights from the call included:
- Global booked room nights [net of cancellations] were down 70 per cent year-on-year in the last seven days, compared to October [down 58 per cent ] and Q3 [down 43 per cent].
- North America improved through Q3 and showed the most moderate year-on-year declines of all regions but slowed into October. Europe began slowing in Q3 and declined more in October and November, while Asia remained relatively stable.
- Newly booked domestic room nights grew in Q3 and declined in October. Q3 newly booked domestic alternative accommodations grew low-double-digits, while core accommodations [hotels] grew low-single-digits, before both reverted to year-on-year declines in October.
- The mix of alternative accommodations has slowed. Alternative accommodations represented one-third of newly booked room nights in Q3, compared to 40 per cent in Q2 and 25 per cent in 2019.
- Q3 average daily rate [ADR] was down eight per cent, ahead of Q2 [down 35 per cent].
Looking forward, Booking Holdings management predicted that the eventual recovery could end up looking more U-shaped than V-shaped [last seen in the summer] up until Spring next year.
David Goulden, executive vice president and chief financial officer [CFO] at Booking, said: “Unfortunately, as we moved into September, we saw Covid case counts climbing higher in many European countries, and governments beginning to respond with the imposition of travel restrictions. This difficult pattern continued throughout the month of October, leading to a further slowdown in bookings in Europe.
“In October, we also saw a slowdown in North America, while the room night decline in Asia remained consistent with Q3. And as a result, global newly booked room nights through October were down about 50 per cent year-over-year and reported room nights for October were down about 58 per cent.
“Over the last seven days through yesterday, these trends have further deteriorated with newly booked room nights declining about 58 per cent year-over-year and reported room nights declining about 70 per cent year-on-year. This is the global average, and in Europe, these decline rates are much higher.
“These recent trends are a reminder that this is a fragile recovery and that we’re now seeing a second dip in our business driven by Covid.
“We believe that the recent increase in Covid cases in Europe and the US, coupled with cold weather and travel restrictions in these geographies, will result — likely result in the second dip being U-shaped and lasting until the early spring of 2021,” he added.
