Booking revenue beat estimates on summer lift in travel

Jackie Davalos, Bloomberg News

The logo for Booking Holdings Inc. is displayed on a smartphone in an arranged photograph taken in the Brooklyn borough of New York, U.S., on Sunday, May 10, 2020. In a matter of months, the coronavirus reset the clock on a decades-long aviation boom that's been one of the great cultural and economic phenomena of the postwar world. Photographer: Gabby Jones/Bloomberg , Bloomberg

Booking Holdings Inc. reported quarterly revenue that was better than analysts’ estimates, buoyed by cost-cutting measures and increased summer travel that offered a respite before COVID-19 cases started surging again.

But Chief Executive Officer Glenn Fogel warned that a new wave of the pandemic around the world will continue to weigh on the online travel giant’s prospects.

Revenue fell 48 per cent to US$2.6 billion in the third quarter, the Norwalk, Connecticut-based company said in a statement Thursday. Analysts had projected US$2.54 billion, according to data compiled by Bloomberg. Still, it’s an improvement from the record 84 per cent plunge in the second quarter. Booking reported a 43 per cent fall in the number of room-night reservations compared with a year earlier. Gross travel bookings, which reflect all travel services booked by customers, fell 47 per cent to US$13.4 billion during the period.

“We were pleased to see positive third-quarter results, which we believe benefited greatly from some lifting of government lock-downs and the release of pent-up demand created by the almost complete cessation of travel during parts of the second quarter,” Fogel said in the statement. “However, COVID-19 case counts are now rising steeply in many parts of the world with corresponding increases in lock-downs and re-imposed travel restrictions that will continue to impact travel in the near-term.”

Booking, which runs five major travel brands including Priceline and Kayak, has been hammered by COVID-19’s impact on the industry. To stay afloat, the company cut a quarter of the workforce at its main Booking.com business and slashed advertising spending, in addition to applying for government aid. Competitors including TripAdvisor Inc. and Airbnb Inc. also announced job cuts amid the pandemic’s squeeze on travel.

Booking’s silver lining has been growth in domestic stays. The shift to remote work and a drop-off in business travel has fueled demand for alternative accommodations, or vacation rentals, as travelers opt for nearby “staycations.”

Still, Booking’s significant exposure to overseas markets -- which comprise the vast majority of its revenue -- could weigh on any recovery as European governments reinstate restrictions and curfews amid a second wave of the coronavirus.

The company’s outlook is “less certain amid rising cases” of COVID-19 as it “may hurt near-term travel demand”, according to Bloomberg Intelligence analyst Matthew Martino. Third-quarter profit, excluding some costs, fell 74 per cent to US$504 million or US$12.27 a share. That missed the US$14.58 a share analysts projected, according to data compiled by Bloomberg.

Shares gained 1.7 per cent in extended trading after closing at US$1768.31 in New York. The shares have fallen 14 per cent this year.