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Booking Holdings CEO and President Glenn Fogel sits down with Yahoo Finance Live to talk about the state of the travel industry amid its quarterly earnings beat and late-pandemic recovery.
- Bookings Holdings posting better than expected second quarter earnings, bolstered by a sharp recovery in the travel industry. You can see shares only down about 9/10 of a percent after the company issued a more cautious outlook for the third quarter. Joining us to discuss more, CEO Glenn Fogel. Glenn, great to have you on the program this afternoon. Give us a little bit of a breakdown because it seems like we don't know with the large parts of Asia still closed and Europe possibly going into recession what the travel outlook is going to look like.
GLENN FOGEL: Thanks for having me, and yes, we did have a great second quarter. And we've talked about how third quarter is looking good, ahead of where we were in 2019. And we're talking about record revenue for third quarter. And we even went forward and said, hey, fourth quarter, looking at what we have on the books right now, more bookings, looking about 15% better than they were in 2019 this time.
Now, that's in euros term. And when you translate that back to dollars, given the exchange rate, that will reduce the number again. But the fact is people like travel. People are traveling. And we expect in the long run people to continue to travel. But we understand there are some macro concerns right now in the immediate time.
- And you showed 246 million room nights booked, surpassing 2019 levels. I want to get back to that record you're predicting for Q3. Brian mentioned some of the headwinds. But let's add on the European airports are a complete disaster at the moment. Seven of them have more than 40% of their flights delayed, recessionary fears. Are you seeing any travel demand pullback next quarter?
GLENN FOGEL: Well, look, there's no doubt when people say things like chaos at the airports and all sorts of stories about it, and I've been traveling an awful lot. I've been to Europe, many times in the last couple of months. And yeah, sometimes there are crowds, no doubt about that. Sometimes planes have been canceled, no doubt about that.
But it makes it though there's just complete pandemonium at the airports, and that is absolutely not true. If it was true, we wouldn't have hit that record announcement that we're talking about, hopefully for the third quarter. So yes, there are some issues. And it may be deterring-- that kind of media coverage may be deterring some people from traveling.
Now, there's also the issue of May was so strong, maybe it brought forward some of the travel that one normally would have thought would happen in July, and it moved into May because people, as soon as Omicron went down, people just said, I'm going now. And they want to get going. Lots of things that possibly could be impacting an unusual movement in terms of where usually July usually is a very, very, very strong month compared to May may be a little different this time.
But that's almost irrelevant to me, in terms of the long term picture, which is that travel will continue to grow. It will continue to increase in the long run. And our job is to not worry so much about the macro, but for us to build better products, better services, so that we'll get more share of the growing industry.
- Just to be clear, I'm curious what we're getting wrong. You're talking about record cancellations, record delays, record loss bags, passenger caps in one of the busiest airports on the planet, Heathrow. What is the media getting wrong?
GLENN FOGEL: Well, my thing is, again, these are all true statements. But what percentage of planes are actually canceled? You're talking a low, single digit number of flights that are canceled. Yes, it's horrible. And I've had flights canceled myself. And boy, is it annoying, and you're angry, and you're like, this is crazy. Why? And it's something that absolutely everybody wants to reduce.
But my point is, if 90 something percent of the planes are taking off and arriving OK, 90 whatever it is, depends on your global number you want to use, that's a huge number. It is frustrating. And if you have to arrive at the airport three hours before takeoff to make sure that you don't have any stress going through security, that is annoying. You would prefer not to have to such a time.
But my point out, it makes it as though there's just complete, chaos pandemonium. I have not experienced that, though I have experienced delays and cancellations. And I've been doing a lot of travel over the last couple of months.
- So Glenn, I mean, look, everyone's getting fired up here. So on that point, though, right, does that mean that you're seeing a lot of people on your platform booking the cancelable fares for hotels or for flights? Is that good for your margins? Is that bad for your margins? What type of trends are you seeing on that?
GLENN FOGEL: Usually when you buy something that is cancelable, it's more expensive. So people make tradeoffs, say, look, I'll go with a noncancelable, and then I don't-- necessarily, I'm not going to be able to cancel if I want to, but I am going to get the lower price.
On the other hand, what people also do, we offer insurance, so travel insurance, so that you can buy something and feel safe that if something were to go wrong-- well, let's say you got sick and you want to cancel, but you bought a noncancelable ticket, if you are sick, you can use this insurance and get your money back. And that's the product that we do offer to people.
So there are lots of options that consumers can use in case they have an issue of traveling. Now, if a plane doesn't take off, it's canceled, you get your refund, absolutely. That's not a question at all. So that's not something that people should be concerned about.
- Right. Well, I find myself booking more cancelable fares. But I want to shift gears to just another side of your business. You mentioned on the call, you've seen a large sequential net increase in alternative accommodation properties. That's a big focus as you try to take on the likes of Airbnb, which just reported. Are you seeing the growth you want in that side of the business?
GLENN FOGEL: Well, look, I believe this is an important part of our business, and it's a strategic priority. And we've been building on it for some time, I was very pleased to announce in the quarter that almost a third of our business, 32% of our business in the quarter, was done in this alternative accommodation area. And that's something that we've been working on for some time.
And I was also pleased to see that an area where we underindex significantly in the US, that that is increasing, so glad to see that. And I think this is a change that's going to go on for some time because people got used during the pandemic to try something that didn't have a big crowd.
And that means maybe renting a house or an apartment or a villa and staying away from where you may be somewhat ill at ease because of a large number of people, like a lobby in a hotel. So the fact that people now have tried the alternative accommodations, it's always going to be in their consideration set when they look at where they're going to go next. And there are definitely uses for both products. That's why we offer both on our site.
- All right, Glenn Fogel, Bookings Holdings CEO. Thanks so much for stopping by this afternoon, really appreciate it.
GLENN FOGEL: Thank you.