Duff on Hospitality Law

Below is an abbreviated version of this week’s OTA &Travel Distribution Update. Enjoy.

Booking Holdings Feels "Full Impact" of Coronavirus as Gross Bookings Plunge 91 Percent in Q2 2020
Aug 6, 2020 via Phocus Wire
Booking Holdings’ gross travel bookings plummeted 91 percent to $2.1 billion in the second quarter of 2020 as the company felt the “full impact” of COVID-19, said President and CEO Glenn Fogel.

This week’s Update takes a deep dive into all things Expedia, and includes several stories regarding Expedia’s recent disastrous quarterly earnings release, an actual copy of the release as well as a copy of a complaint recently filed in Washington state against Expedia that raises some interesting questions for Expedia and other travel intermediaries. Enjoy.

Expedia’s Recent Quarterly Earnings Release Reflects Current Travel Industry Misery
(“Abysmal April pulls Expedia Group down to record lows in second quarter,” Jul 31, 2020 via PhocusWire)
Where to start…Here are my key takeaways from Expedia’s second-quarter earnings report:

• • “Worst quarter the travel industry has seen in modern history.” Peter Kern, Expedia CEO
  • 82 percent decline year over year in overall revenue ($3.2 billion to $566 million), with lodging revenue declining 78 percent
  • 90 percent decline year over year in gross bookings
  • 91 percent decline year over year in media and advertising revenues (Trivago and Expedia Group Media Solutions)
  • Company-wide selling and marketing expenses in the second quarter dropped from $1.6 billion to $296 million
  • April was the low point (cancellations exceeding bookings), but May and June have seen modest increases in bookings (and cancellations have stabilized).
  • Drive-to destinations are the first to return
  • Vrbo has become Expedia Group’s pandemic bright spot with daily rates continuing to increase (yes, increase) and the overwhelming majority (experts speculate as high as 83 percent) of bookings coming through organic (less expensive) sources. Dare we say that Vrbo is engaged in its own form of direct booking program…
  • Although Expedia’s $275 million industry recovery program has been rolled out to partners in 80 countries, no information was given on the number of partners that have actually enrolled in the program and/or how much of the $275 million has actually been distributed.

It was a relatively quiet week for the distribution industry. Enjoy.

Family Travel Club Launched in the Midst of a Pandemic
(“Online Family Travel Club Launched by Wall Street Journal Alums Unbowed by Pandemic,”
Jul 20, 2020 via Skift Travel News) (subscription may be required)
This past week saw the launch of The Expedition, a subscription-based online travel platform focused on families. Founded by two former newspaper and magazine editors (Wall Street Journal, Travel + Leisure and TIME), the newly launched platform will feature travel content and discounted services and products, and provide subscribers an interactive network of travel industry professionals and travelers focused exclusively on family travel. 

It was a relatively quiet week on the distribution front. This past week, Airbnb garnered a lot of attention from the usual suspects and the not so usual…Enjoy. 

Tripadvisor Continues Its Rapid Evolution
(“Tripadvisor Is a Media Business So Why Did It Unload These 8 Brands? Jul 17, 2020 via Skift Travel News) (subscription may be required)
Over the past weeks, we’ve featured stories on Tripadvisor’s many staff reductions, financial re-structuring, focus on quality over quantity and now, the disposition of eight of its media companies.With little fanfare, Tripadvisor announced this past week that it had disposed of Smarter Travel, Airfarewatchdog, BookingBuddy, OneTime, Oyster.com, Family Vacation Critic, What to Pack and Holiday Watchdog. All eight companies were acquired by travel marketing company, Hopjump.The sale is seen as part of Tripadvisor’s broader media shift that includes, among other things, a focus on B2B advertising and the advertising of products and services outside of travel.

Several themes emerged in this week’s stories, including the bullish return of short-term rentals and the continued direct booking efforts by airlines and the metasearch sites seeking to serve them. Enjoy. 

Vrbo Hitting Its Stride
(“Vacation Rental Brand Vrbo Emerges as Expedia Star With Pandemic-Era Bookings,” Jul 6, 2020 via Skift Travel News (subscription may be required); “Expedia’s Vrbo vacation rental business sees ‘significant’ growth as travel giant aims to cut costs,” Jul 6, 2020 via GeekWire)
For several weeks now, we have featured stories on the purported v-shaped recovery of the short-term vacation rental market. Does such a recovery represent a short-lived phenomenon or a seismic shift in travelers’ accommodation preferences in the post-COVID world? It is probably too early to tell, but Expedia’s announcement this past week only adds to the debate. Last Monday, Expedia reported that its rental platform Vrbo had increased its gross bookings year-over-year in the months of May and June. Expedia attributes Vrbo’s success to the platform’s largely whole-home inventory in drive-to destinations, which only months earlier had been viewed by many in the industry as a weakness. Vrbo’s success took place a month before Expedia began consolidating its two major rental platforms – Vrbo and Homeaway. Despite Vrbo’s success, gross bookings across the Expedia family of brands were down 45 percent in June (which is an improvement over the 85 percent decline experienced in March and April). 

Perhaps it was Canada Day or the Fourth of July holiday weekend, but last week was relatively quiet in the distribution world. Enjoy.

Radisson Partners With Hotelbeds
(“Radisson Hotel Group Partners With Hotelbeds,” Jun 29, 2020 via Hotel Business)
Last week, Hotelbeds announced that it had entered into a preferred partnership with Radisson Hotel Group through which Hotelbeds will distribute “preferential” or “special” rates and inventory of 1,100 Radisson hotels through Hotelbeds’ network of 60,000 trade-connected wholesale and retail (travel agency) channels. Hotelbeds has been actively promoting this “full-service” intermediary role for some time now, particularly following Marriott’s announcement regarding its new Expedia partnership.

In this week’s OTA & Travel Distribution Update, we cover TripAdvisor’s busy week, including the announcement about its new travel advisor referral service, Reco. Enjoy.

Say Goodbye to HomeAway
(“Expedia Group to Retire HomeAway U.S. Brand,” Jun 24, 2020 via Hotel Business – News)
Recently, Expedia announced that it was consolidating its short-term rental brands HomeAway and VRBO. Starting next month, users of the HomeAway website will be re-directed to VRBO, and users of the HomeAway mobile application will be directed to download and use the VRBO application. With the consolidation, Expedia will now focus its efforts and resources on a single short-term rental brand. The consolidation makes good on commitments made earlier this year by Barry Diller and others as part of the Expedia senior management overhaul.

Not a moment too soon, Seattle’s Office of Labor Standards on Tuesday provided mandatory employee notice posters for hotel worker protections that take effect Wednesday, July 1. Seattle hotels must post these notices immediately.

Four sweeping new ordinances affect Seattle hotels with 60 or more guest rooms. The ordinances require panic buttons for employees, set maximum housekeeping workloads, require larger hotels to fund employee healthcare coverage, and offer employees greater job security. (Read Foster Garvey’s prior coverage of these ordinances.)

This week’s Update contains a number of stories on the growing significance of metasearch, particularly as properties compete for the attention of even fewer travelers. However, we begin this week’s Update with a story on EDreams, which has been successfully growing its subscription-based travel model. Enjoy.

EDreams Subscription Model Adds Hotels
(“EDreams Now Has a Half Million Paying Travel Subscribers,” Jun 17, 2020 via Skift Travel News)
Since November, EDreams’ Odigeo has added 50,000 members to its subscription services, bringing its total membership to close to 500,000. Although the Barcelona-based online travel agency began with flights only, the service has now expanded to include hotels (adding 2.1 million hotels since November). For those of you unfamiliar with the service, EDreams’ two brands – Edreams Opodo and GO Voyages – offer members travel discounts in exchange for their annual membership fees. Faced with the pandemic’s many challenges, EDreams is currently running a promotion offering new members a free six-month trial subscription. It will be interesting to see whether this service (or others like it) gains enough traction to warrant parties’ re-examination of existing rate parity commitments and their limited exceptions.

After weeks of Updates detailing the disastrous effects of COVID-19 on the lodging industry, this week’s Update includes stories on (potential) signs of an industry recovery. I hope you enjoy.

Despegar Presses Ahead with Planned Best Day Purchase
(“Despegar Agrees to Revised Terms in Acquisition of Best Day Travel Group,” Jun 11, 2020 via Business Wire Mergers & Acquisition News)
Following its mid-April announcement that it was re-evaluating the previously announced purchase of Mexican distributor Best Day, this past week, Despegar announced that it was moving ahead under newly negotiated terms, including a revised purchase price and payment terms. With its purchase of Best Day, Despegar will further solidify its position as the leading Latin American online distributor.