Lobby group calls for OTA bailout help in line with airlines and hotels

Paul Stevens Paul Stevens Uploaded 03 April 2020

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Europe: Travel tech lobby group EU Travel Tech has appealed for the European Commission to offer equivalent bailout support to its OTA and global distribution system members in line with the help being offered to airlines and hotels.

The group, formerly known as the European Technology and Travel Service Organisation, called on the Commission and member states to provide “efficient and immediate support to those key players in the travel and tourism industry” and to consider the “whole leisure and business travel ecosystem” in the same way it will provide a bailout to airlines and hotels when the time comes.

It added that bailout support was essential to its members, which include brands such as Booking.com, Expedia Group, Skyscanner, Tripadvisor, Amadeus, Travelport and eDreams ODIGEO, since the Covid-19 global outbreak represented an “exceptional challenge across our society and economy”.

In a statement, EU Travel Tech secretary general Emmanuel Mounier said: “Governments have rightly recognised that travel and tourism is being hit hard by the COVID-19 pandemic.

“Our members support efforts to back airlines, hotels and other suppliers. However, it is of utmost importance that the European Commission and member states include exceptional measures to assist the whole industry.

“This means policies that support the entire travel ecosystem, including travel agents [online and offline], technology solutions providers such as global distribution systems, travel platforms for accommodation, metasearch and travel management companies,” he added.

In a follow up statement, the group said its member brands were “providing information and adapting the way they do business with their suppliers, big and small, be it hotels, short-term rental hosts, airlines, restaurants, bus companies and tourist guides".

It said: “It is key to ensure that any economic relief package prepared for travel suppliers also considers independent entities in the wider travel ecosystem that support a fully functioning travel marketplace.

“Unlike other industries and digital platforms which are able to carry on their business, the impact on EU Travel Tech members is likely to be tremendous. Due to the increasing travel restrictions and lock-down measures, travel and accommodation bookings are already significantly impacted,” it added.

The consequences of the pandemic have been felt hard by a number of the travel booking brands who are seeking the bailout.

One notable example is Booking Holdings, the parent company of OTAs including Booking.com, Priceline, Kayak and Agoda, which has seen its share price decline steeply by 37 per cent since the early peak of the outbreak, according to business and investment trends website Visual Capitalist.

Meanwhile, Expedia, the world’s largest online travel agency by bookings, has seen a similar standstill in its bookings and on 31 March, its stock price plummeted to $56.27 per share, a 57 per cent drop from $131 six months ago.

Just over a month after interim CEO Barry Diller labelled Expedia as a “bloated organisation” in a fourth quarter earnings call, it was revealed that the company had tapped its largely untapped $1.9 billion credit facility to provide near-term liquidity in March. Its long-term debt in 2019 was estimated at $4.18 billion, up from $3.71 billion in 2018.

Speaking to Forbes, Morningstar senior equity analyst Dan Wasiolek predicted that Diller may be prepared to save the company by selling it at the right price and touted Google, Amazon, Alibaba, Costco and Facebook as potential buyers which could have a “meaningful impact on Expedia’s growth”.

Expedia Group announced in February that it was cutting 3,000 jobs while Booking Holdings, which employs 27,000 members of staff, has initiated a hiring freeze, cut non-essential travel, cancelled internal events and halted its marketing spending.

Booking Holdings CEO Glenn Fogel, who revealed he had tested positive for coronavirus in a financial filing on Wednesday, predicted that travel would not return to a sense of normality until at least 2021.

He told CNBC: “We all hope that’s the case but it’s going to take time. It’s not going to be happening this year.”

In a market where 70 per cent of reservations are made through Booking.com and Expedia, hotels are reportedly still paying commissions ranging between 15 and 25 per cent and this pandemic will only serve to highlight the imbalance of the market further as small and independent hotels fight to keep operating. According to Tata Graham Crocombe, founder of hospitable.tech.ai, it indicates the vulnerability the industry has to shocks in the market.

Likewise, the global aviation industry is being severely impacted with the Transport Security Association reporting that global air passengers are down by 85 per cent on figures from the same time a year ago.

Figures from EU Travel Tech also revealed the following:

  • 81 million hotel nights in Europe would not happen without OTAs
  • 12 per cent of the revenues of the European independent hotel industry are generated by metasearch
  • Some of its members have reported air bookings dropping by up to 90 per cent since the coronavirus outbreak and restrictions on mobility were implemented
  • 50 per cent of air travel worldwide and an estimated 30 per cent of rail travel in Europe is being booked via third parties

For more information, visit the EU Travel Tech website here.

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