Russian-Ukrainian conflict won’t impact summer travel, says CEO of Booking Holdings
Booking Holdings CEO Glenn Fogel joins Yahoo Finance Live to discuss the outlook for the travel industry as the Russia-Ukraine crisis escalates.
AKIKO FUJITA: Welcome to Yahoo Finance Live. We have an update from the White House. The president was scheduled to speak about the Russian invasion of Ukraine at 12:30 p.m. today. This has now been moved to 1:30 p.m. We expect the White House to announce additional sanctions against Russia. And of course we know that the president has had calls with leaders, particularly in Europe, but we should say broadly, throughout the morning, with this emergency meeting with G7 leaders this morning.
We also know that the President has spoken with Ukrainian President Volodymyr Zelenskyy. So now the White House says the president will address the country at 1:30 p.m. EST. And we, of course, will bring that to you live right here on Yahoo Finance Live, as soon as the president takes the podium. Well, the Russian invasion of Ukraine has wreaked havoc across the board today in stocks, including the travel sector. We have hotels, cruise lines, travel, planning stocks that were all impacted after the attacks.
We now welcome to discuss the impact on the sector, we have Glenn Fogel, CEO of Booking Holdings. And Glenn, we were talking over the break here. I know you don’t have significant exposure to Eastern Europe compared to Western Europe in general. But any time you have a country closing its civilian airspace, you have attacks happening, I imagine that would give a lot of travelers pause to find out if, in fact, they want to fly right now. What impact do you think this will have, at least specifically on bookings?
GLENN FOGEL: Well, first of all, thank you for inviting me. And I just want to say how tragic this terrible situation is. And the first thing in our thoughts is always the people and not the company. That being said, you mentioned that maybe people are hesitant to travel because of the news. I don’t think it’s going to make a big difference. To be perfectly honest with you, people want to travel the world right now. And yes, people are very sad, as they should be, about this terrible event.
But I don’t think that’s going to stop the American who wants to travel for summer vacation. I don’t think it’s going to stop, say, the person from London who wants to go to the Greek islands in the summer. People are going on their summer trip, absolutely. There is demand that has just been pent up after two years of the pandemic. And then the pandemic goes away. And that will release that latent demand. And we are going to see it happen this summer, although it will be sad when we read these terrible things in Ukraine.
BRIAN CHUNG: Glenn, this is Brian Cheung here. And you noted on the earnings call that Russia and Ukraine are, in quotes, a very low single-digit percentage of your total gross bookings. But I guess if we just zoom out, in addition to the concerns people already had about the virus itself, which is an ongoing area of concern in other countries, do you see trends in ‘cancellation that kind of reflects the great nervousness that people who want to travel, but want to have the option of getting out of that travel plan if things get out of control, or they worry a little more, is- What a trend you expect to see in 2022?
GLENN FOGEL: Well, once again, everything depends on events. And some people will certainly react right away to any news they read, but most people, because of the flexibility we provide to our consumers, especially in our hosting product where you can freely cancel until What time you’re gonna show up, people are pretty much okay, I guess, just gonna let it go for a while and see how things go.
Admittedly, we are currently in a very inflationary situation. And people know that after buying something right now, they would worry about canceling it once in a while and possibly having to book it at a higher price later. So I think you’re going to be hesitant to get rid of travel reservations they’ve already made, because they’ll want to make sure they got the best price.
AKIKO FUJITA: Glenn, let’s talk about the outlook as we look to the summer travel season. It certainly seems like a lot of travelers are booking ahead. They are a little more comfortable, at least with the current situation of this pandemic. Where do you see the greatest demand right now?
GLENN FOGEL: Well we certainly spoke last night in the US but we see our numbers in the US for summer travel it looks good compared to 2019. We were ahead of the gross bookings we had in same time for summer in America for 2020 compared to 2019. Same thing in Europe. So we’re seeing people who want to travel in the summer, and they’re getting that early booking right now, knowing the potential for higher prices down the road.
BRIAN CHUNG: Glenn, we’ve heard a lot anecdotally on a large scale about the high savings that people have had from the pretty dramatic stimulus that we’ve had here in the United States. When we talk about the American traveler, is there a feeling that it’s slowing down, that people have exhausted their savings and are already off on some extravagant vacation that will maybe squeeze the budget a bit for the latter parts of 2022 or 2023?
GLENN FOGEL: No, I do not think so. I think people have incredible demand, as I said. They want to go on a trip. They haven’t traveled for two years as they would like to travel. Sure, maybe they took a local trip. Maybe they took a trip to see family and some upcountry stuff. But then you want to go where they always wanted to go. Americans who normally would have gone to Paris, would have gone to London, they are going to want to go there this summer. And they will leave, assuming there are no significant developments in the health situation in Western Europe.
AKIKO FUJITA: In that regard, you mentioned the demand that you see nationally. I wonder how likely you are to see a further increase in cross-border travel. In your opinion, things have started to calm down. We had the UK, for example, which lifted mask mandates on public transport. We have seen a relaxation in terms of quarantine requirements. To what extent has this been a catalyst to encourage travelers to look internationally again?
GLENN FOGEL: Absoutely. The way our business works is when restrictions on international travel ease, demand then shifts and comes into bookings. We have seen this all over the world. And for example, you may have seen pictures of Australia finally opening up, letting tourists come back, how happy it was for people to go back to Australia. And we’re seeing that around the world as the rate of virus infections come down, as people feel safer, as governments feel safer.
Let people come and travel. This is helping to bring international travel back. Historically, we’ve been pretty much a 50-50 international and national business. And of course, because of the pandemic, our international travels have suffered a lot. But now we’re starting to see it coming back, and we’re almost at — we’re about 40% in the historic 50-50. But it certainly comes closer to the historical norm.
BRIAN CHUNG: Glenn Fogel, CEO of Booking Holdings, thank you very much for dropping by Yahoo Finance this afternoon.