After shutting down his platform during the COVID-19 pandemic to focus on core homestays and with his business’ strongest year ever, Airbnb Chief Executive Officer Brian Chesky is looking to sell long-term stays. Relatively inexpensive gimmicks are used – has become a nomad lives on the properties of the site.
Glenn Fogel, chief executive officer of rival Booking Holdings, doesn’t have that luxury. The company has spent heavily on marketing its services and diversifying its business. To his credit, Mr. Fogel has led initiatives such as moving to connected travel, moving to mobile, expanding its airline mix, enhancing customer-service technology, and expanding Booking’s North American hotel presence, which is timely. should pay.
but not now. While Booking has been working hard to grow its US presence in recent years, it is still a European-heavy business with a European identity. (Its namesake platform, Booking.com, is domiciled in the Netherlands, and 87% of Booking’s revenue last year came from businesses outside the US.) Booking did not explicitly say how much of its bookings for the fourth quarter. The percentage was up in Europe, but it said its pre-pandemic international room night mix was over 50%.
The European travel market has recently been engulfed by geopolitical tensions from Omicron and now. Booking said on its fourth-quarter call last week that Russia and Ukraine combined as destination markets represent a very low single-digit percentage of its total gross bookings. Still, Abby Bernstein’s Richard Clarke says Russia’s short- and long-term travel restrictions could have a huge impact on the travel industry. Excluding non-Russians who live there, he says Russia is the fourth largest net spender on outbound travel globally.
Clarke has an underperform rating on Booking’s shares, along with major concerns about the cost of development. Booking said last week it expects marketing as a percentage of gross bookings to be slightly higher compared to 2019 and 2021. Meanwhile, Airbnb said last month it had its strongest fourth quarter ever in terms of adjusted earnings before interest, taxes. , depreciation and amortization, helped by 25% lower marketing spend compared to the fourth quarter of 2019. The company also said that it expects sales and marketing to be flat in 2022 compared to the prior year.
Of course, Airbnb has a substantial amount of European exposure. Europe, the Middle East and Africa represented 31% of its gross booking value in 2021, according to its annual filing. Shares of Booking, Airbnb and Expedia Group are down double digits over the past two weeks, but accommodations certainly have different risk profiles and outlooks. Booking’s shares are currently trading around their pre-pandemic multiplier to more than 5 times the enterprise value to propel the sale – a significant discount to more than 10 times Airbnb’s but a premium compared to Expedia’s 2.8 times. .
Not every analyst is bearish on bookings’ chances of recovery, but most agree that it will take some time for things to get better. In an upgrade note last week, Gordon Haskett’s Robert Molins was clear, however, that war in Ukraine and the high potential for additional Covid-19 case-count surges may limit potential upside revisions. Stifel’s Scott DeWitt, perhaps in his alliteration (and alarming) fourth quarter booking earnings headline, “Rates, ‘Crying, + Russia Roiling Reopening Recovery?
Booking’s chief financial officer David Golden acknowledged last week that “we are still in a potentially volatile environment … especially in Europe,” adding that it will be difficult to predict where the room will be for the rest of the quarter. How will the nights be?
Investors tempted by difficult booking times should postpone check-in times.
This story has been published without modification to the text from a wire agency feed
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