Booking.com revenue dropped by 3 billion dollars
The online travel platform has released their financials for the the second quarter over the year and has shown the impact of the pandemic in a very measurable way
On August 6th 2020, the company has released their numbers and you can click here to look up for the source.
The company has reported a drop in revenue for the 2nd quarter of the year 2020 from 3.85 billion dollars to 0.63 billion dollars. The +80% in bookings is coming obviously from the travel restrictions from all the governments around the world trying to contain the virus and it doesn’t seem that the next quarters will not show any signs of improvement anytime soon.
With a second wave hitting Europe this fall, Northern and Southern Americas experiencing a death toll over 1,000 daily consistently the past couple months, it is very unlikely to hope any recovery in the tourism industry.
What did Booking.com do to deal with the situation?
When we look at the P&L of the company we can notice a couple things that helped to maintain a relatively positive outlook.
We can see that the company has usually spent around 30% of its revenue on marketing and kept that ratio accordingly with the drop. Hence, the marketing expenditures dropped by 1 billion dollars in the second quarter of the year
The second measure from the management was apparently to lay off some staff as the personel line has gone from 619 million dollars to 452 million dollars year over year for the second quarter of the year. According to CNBC, the management has laid off up to 25% of its workforce.
These measures were not enough though to keep the operating income positive and Booking.com reported a loss of 484 million dollars during the 2nd quarter of 2020.
When we look at the balance sheet, the company has issued some long term debt and the cash on hand of the company has gone up to over 10 billion dollars.
With a 258 million dollars net cash burn for the first 6 months of the year 2020, the company can still meet all the financial obligations and remain strong during that period of high uncertainty for several quarters. The main question is how long the situation will hold and affect the market in the coming years.
When will the travel industry recover?
The main issue is to look at when governments will ease up on letting people travel around the world again like before. The current situation doesn’t give much hope as some countries like Australia is not likely to open its borders until late 2021.
In Vietnam, the travel restrictions has led to a dramatic drop in tourism. The industry is severely impacted with millions of tourism unable to fly over and enjoy the sightseeing, many businesses are shutting down.
With a successful management of the virus containment, the country is not going to take any risks to let the virus spread like in other parts of the world. That also means that the travel restrictions is likely to remain the same and many businesses won’t survive this year.
The recovery shall take years according to the CEO of Booking.com when asked on CNBC on May 2020
Hopefully, governments around the world will be able to get their act together and contain the virus within the next coming months and ease up on travel restrictions, we wish Booking a strong recovery in the coming years.