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Business News/ Companies / People/  Visa-free travel best way to draw tourists: Booking Holdings CEO
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Visa-free travel best way to draw tourists: Booking Holdings CEO

Booking Holdings CEO, Glenn D. Fogel, highlights the importance of visa-free access for boosting tourism. He also discusses the impact of the pandemic on business travel and the potential for sustainable travel.

Glenn D. Fogel, chief executive, Booking Holdings.Premium
Glenn D. Fogel, chief executive, Booking Holdings.

New Delhi: The Indian travel industry is gaining momentum globally, with countries announcing visa-free arrivals for Indian passport holders. It is expected to boost outbound travel from the second-largest travel market. Since a survey by Booking.com revealed that Indians plan to travel more in the months to come, the firm is actively deploying resources in India and investing $250 million to establish a data centre in Bengaluru. In an interview, Glenn D. Fogel, the chief executive of Dutch travel major Booking Holdings, said India was a focus country, irrespective of China’s presence. It also operates Agoda for selling hotels across Asia, Kayak for flight monitoring, and Priceline US. Edited excerpts:

With a few nations allowing visa-free access to tourists from India, is the global standing of the Indian passport strengthening?

It is one of the best ways to get people to visit your country. I applaud the governments that decided to do this. Going visa-free is a great idea. I wish more countries do it. Any place where the friction of travel is reduced is great for increasing the number of travellers. For example, right now, if you’re an Indian traveller, and you want to get a visa for go the US, the wait time is absurd. While the US government is continuing to talk about the effort they are making to reduce the backlog globally, it’s terrible. So, when a country decides to go visa free, it’s great. China also made similar announcement.

Two years ago, you’d said that business travel would never be the same following covid. What is the state of business travel now?

We don’t know yet how it’s going to end, but I believe over time, the percentage of travel for business will be lower than pre-pandemic because people learned to do things remotely. Different regions have had different recoveries at different times when it comes to working from office. For example, in the US, there are still many people, especially “knowledge workers", who don’t want to be in office. In Europe, the percentage of people who want to go to office, and are in office, is far higher. All this will impact how business travel shapes up. When people can do a lot of work remotely, CFOs start saying they don’t need to send a person on a trip as virtual communication, like Zoom, is less costly. But if they travel, it better be for more than just one meeting.

Is there a way to ascertain if people are taking more business or leisure trips now?

We can see the number of nights occupied in hotels and at the occupancy rates globally. Typically, there is always a dip on some nights of a week versus weekends. But now it is much steadier throughout the week. That’s because people are doing this “bleisure" type of work (b+leisure).

How are hotels performing globally?

ADRs or average daily rates of accommodations is up on an average. However, we are not concerned about any shortage in demand. In fact, our surveys for India show that people are going to travel more.

Does China’s absence in the global travel market help India become more important to companies such as yours?

China’s performance does not determine how important India is. India is always important and we should do everything to build our business here, as we know it now has the largest population globally. The economy is booming. When people gain wealth, they want to travel. All these are tailwinds for a company who wants to do well in an industry. Travel has great opportunities, great possibilities in India, and we want to be a part of it. That’s why we have a lot of offices and we’re continuing to add more. We will continue to market, like we did for the ICC Men’s Cricket World Cup.

So, how did China impact Booking Holdings?

China has been an area where, unfortunately the pandemic came to visit very early, locked the country down and went away only after a long time. Travel is still far below where it was pre-pandemic for the outbound business and the inbound business. Outbound is where we did most of our business. The smallest part of our business was the domestic Chinese business, which is the area that currently has come back the most is ahead and doing well there. It’s going to be some time before outbound Chinese drivers get up to the level, they were in 2019 but it is continuing to grow. China’s a tough business though competitive, with lots of strong players. It’s not easy, but we have a very good value proposition.

Sustainable travel is the buzzword. But do people really want to travel sustainably?

In fact on our surveys it is a very high number of people saying they want to travel more sustainably, But your point is a good one. Because we’ve experimented where we tried to ask if the traveler would be willing to pay more for a carbon offset, not many want to do it.

How are alternate accommodations doing for you?

Wonderful. About 33% of our total accommodation nights booked in the third quarter, were made up of alternative accommodations. A lot of people talk about one of our competitors in that area of alternative accommodations, but they don’t recognize how incredibly large our alternative accommodation business is.

Your business Booking.com is having issues with the European Commission because they are alleging it’s becoming a gateway. Can you explain what is happening on that front?

The European Commission has come out with certain types regulations. One of them is called the DMA, which deals with large companies that are considered by them to be ‘gatekeepers’. I disagree with the way they define it. We have a very small percentage of the total global travel industry which is about $3 trillion. Last year we did in the neighborhood of $120 billion. Analysts have a projection of $150 billion for us this year. That’s 5%. We shouldn’t be regulated differently than our competitors, solely because we’re doing a good job. To me that seems wrong. But we will follow the law. We know that hotels are doing well around the world and so are airlines. But is there any price rationalisation expected in airlines any time soon?

Airline prices are very, very competitive. The market for tickets is very transparent. The prices are up not because of greed by the airlines but because of demand. The structure of an airline, like a hotel, is that when you have an empty seat, and the plane takes off, it means there is zero revenue. But if somebody fills that seat, almost all the money from that revenue is going to go to the bottom line of the business. This is because they have very high operating leverages like the lease on the plane, fixed costs like salaries of pilots and flight attendants etc. There are very few variable costs for airlines and that’s why it’s very important to fill that seat.

What you’re saying then is that airlines are not profitable?

For people who say, ‘Oh, these airlines are so greedy’, have no concept of economics and understanding of the industry. If they really were so greedy, their annual reports would show profitability. But in the US, for example, the lifetime earnings of the airline industry are negative. They’ve actually lost money. People who are more emotional are looking at what the price they see today, versus maybe what it was some time ago. These people should also look at how profitable airlines are versus some other industries where there is some serious greed going on.

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ABOUT THE AUTHOR
Varuni Khosla
Varuni Khosla is a journalist with close to 14 years of experience in writing business news stories for mainstream newspaper companies like Mint and The Economic Times. She reports and writes on luxury and lifestyle brands, hospitality and tourism news, the business of sports, the business of advertising and marketing and alcohol brands.
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Published: 30 Nov 2023, 11:29 PM IST
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