Russia-Ukraine conflict won’t impact summer travel, Booking Holdings CEO says

Booking Holdings CEO Glenn Fogel joins Yahoo Finance Live to discuss the outlook for the travel sector as the Russia-Ukraine crisis intensifies.

Video Transcript

AKIKO FUJITA: Welcome back to Yahoo Finance Live. We do have an update from the White House. The president was scheduled to address the Russian invasion of Ukraine at 12:30 today. That now has been moved to 1:30 PM. We are expecting the White House to announce additional sanctions against Russia. And of course, we know that the president has been in calls with leaders, particularly over in Europe, but we should say globally, throughout the morning, with that emergency meeting with G7 leaders this morning.

We also know the president spoke with Ukrainian president Volodymyr Zelenskyy. So now the White House is saying that the president will address the country at 1:30 PM Eastern. 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 been taking a toll across the board today in the equity space, including the travel sector. We've got hotels, cruise lines, travel, planning stocks all taking a hit following the attacks.

Joining us now to discuss the impact on the sector, we've got Glenn Fogel, Booking Holdings CEO. And Glenn, we were talking in the break here. I know you don't have significant exposure to Eastern Europe compared to Western Europe broadly. But any time you've got a country that closes their civilian airspace, you've got attacks that are happening, I'd imagine it would give a lot of travelers some pause on whether, in fact, they want to be flying right now. What do you anticipate the impact to be, at least specifically to Bookings?

GLENN FOGEL: Well, first, thanks for having me. And I just want to say how tragic this terrible situation is. And first in our thoughts always is the people and not the business. That being said, you mentioned about people being hesitant perhaps 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 right now around the world. 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 a summer holiday. I don't think it's going to stop, let's say, the person from London who wants to go to the Greek Isles in the summer. People are going to do their summer travel, absolutely. There's demand that's just pent-up from two years of a pandemic. And then the pandemic is going away. And that's going to release that latent demand. And we're going to see it coming in the summer, albeit it will be sad when we're reading about these terrible things in the Ukraine.

BRIAN CHEUNG: Glenn, it's Brian Cheung here. And you did note know on the earnings call that Russia and Ukraine represent a, quote, very low single digit percentage of your total gross bookings. But I guess maybe if we just zoom out, in addition to the concerns that people already had about the virus itself, it being a continued point of concern in other countries, are you seeing cancelation trends that kind of reflect just the broad nervousness by which people who do want to travel, but want to have the flexibility to maybe get out of that travel plan if things get out of control, or they get a little bit more concerned, is that a trend that you expect to see in 2022?

GLENN FOGEL: Well, again, it all depends on events. And certainly some people will react right away to news they read, but most people because of the flexibility that we offer our consumers, particularly in our accommodations product where you can freely cancel up to about when you're going to show up, people are going to pretty much, I believe, will just let it go for a while and see how things play out.

Certainly, we're in a very inflationary situation right now. And people know that having bought something right now, they'd be concerned about canceling it now and then possibly having to rebook it at a higher price down the road. So I think you are going to be hesitant about getting rid of any travel reservations that they've already made because they'll want to make sure that they've gotten the best price.

AKIKO FUJITA: Glenn, let's talk about the outlook as we look ahead to the summer travel season. It certainly feels like a lot of travelers are booking in advance. They're a little more comfortable, at least with where things stand in this pandemic. Where are you seeing the biggest demand right now?

GLENN FOGEL: Well, definitely we talked last night in the US, but we're seeing our numbers in the US for the summer travel, it looks good compared to 2019. We were ahead of the gross bookings we had at the same time for the summer in America for '20 versus 2019. Same thing in Europe. So we are seeing people who want to travel in the summer, and they're getting that early booking done right now, knowing that the potential for higher prices down the road.

BRIAN CHEUNG: Glenn, we've been hearing a lot anecdotally on the macro scale about the high savings that people had as a result of the pretty dramatic stimulus that we got here in the United States. When we talk about the American traveler, is there any sense that that's slowing down, that people have burnt through their savings and already gone on an extravagant vacation that maybe will take a little bit out of the budget for the later parts of 2022 or 2023?

GLENN FOGEL: No, I don't think so. I think that people have an incredible demand, as I've been saying. They want to go travel. They haven't traveled for two years the way they would like to travel. Sure, maybe they took a local trip. Maybe they took a trip to see family and stuff internally domestically. But then you want to go to place they've always wanted to go. The Americans who normally would have gone to Paris, would have gone to London, they are going to want to go this summer. And they're going to go, assuming that there isn't any significant change in the health situation in Western Europe.

AKIKO FUJITA: On that front, you mentioned the demand that you're seeing domestically. I wonder how much more of an increase you're likely to see in cross-border travel. To your point, things have started to calm down. We had the UK, for example, lifting the mask mandates on mass transit. We've seen an easing in terms of quarantine requirements. How big of a catalyst has that been in terms of getting travelers to look internationally again?

GLENN FOGEL: Absolutely. The way our business works is when restrictions on international travel go down, demand then flows through and gets into bookings. We've seen that throughout the world. And for example, you may have seen some pictures of Australia finally opening up, let tourists come back, how happy it was for people to actually go to Australia again. And we're seeing it throughout the world as the rate of the virus infections go down, as people feel safer, as governments feel safer.

Let people come and travel. That's helping bring back international travel. Historically, we've been about a 50-50 international, domestic business. And of course, because of the pandemic, our international travel suffered greatly. But now we're beginning to see it come back, and we're almost up to-- we're about 40% into the historical 50-50. But it's certainly moving more towards the historical norm.

BRIAN CHEUNG: Glenn Fogel, CEO of Booking Holdings, thanks so much for stopping by Yahoo Finance this afternoon.