Online travel giants see European recovery but highlight Delta worries

Sunset beach at Cala d´Hort on Ibiza
Sunset beach at Cala d´Hort on Ibiza. (Juergen Sack/Getty Images)

Insight Comment
European travel reopening has buoyed the big online travel giants but just as they were looking to celebrate, Delta arrived. Are we back into the realms of uncertainty or heading towards the end of the pandemic?

The relaxation of travel restrictions across Europe helped the word’s biggest online travel platforms improve their performances with executives expressing optimism about the market.

Both Booking Holdings and Expedia Group managed to cut their operating losses in the second quarter of the year, Booking by 88% to $56 million and Expedia by 84% to $132 million.

Part of the reason for the change in fortunes was the improvement in conditions in Europe, a key market for both companies.

“Compared with 2019, Q2 room nights were down 26%, which was significantly better than the 43% decline we previously reported for the month of April and a 54% decline in Q1,” Glenn Fogel, Booking Holdings CEO, said on an earning call last week.

“The acceleration in the second quarter was primarily driven by domestic and international booking trends in Europe, following a ramp up in vaccination rates and the relaxation of many travel restrictions in the region.”

Most of the growth is coming from intra-European travel rather than long-haul bookings.

Expedia, on the other hand, said that while revenue in the EMEA region had “improved” in Q2, most of the turnaround was as a result of domestic travel, which CEO Peter Kern said “obviously favors some of the other players”. Kern was speaking on an earnings call a day after Booking reported its results.

One significant problem for the entire travel and hospitality industry is the arrival and spread of the Delta Covid-19 variant.

“We are, of course, closely monitoring the impact of the Delta variant on the rising Covid case counts around the world as well as some newly imposed travel restrictions, which have led to a modest pullback in our booking trends in the month of July relative to June. However, the July booking trends were improved from our full Q2 results,” Fogel said.

“While the rise of the Delta variant demonstrates the volatility and uncertainty around the exact timing and shape of the recovery for travel, we remain confident that we will eventually see a strong recovery in travel demand globally. 

“The sharp return to growth initially in the U.S and then in the European markets that we have witnessed this year shows us clearly that leisure travelers are eager to get back to booking trips on our platform when restrictions are lifted and customers are able to travel.”

Expedia’s Kern had similar feeling about Delta.

“July has been impacted somewhat by Delta and the Delta variant and we've seen some backward movement in July. But in general, still relatively stronger performance compared to earlier parts of Covid,” he said.