Q1 2020 Earnings Call
[music].
Welcome to the booking holdings first quarter Twentytwenty conference call.
King Holdings would like to remind everyone that this call may contain forward looking statement.
Are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of nights team 95.
These forward looking statements are not guarantees of future performance and are subject to certain risks uncertainties assumptions.
Difficult to predict.
Therefore, actual results may differ materially from those expressed or implied or forecasted in any such forward looking statement.
Expression.
Sure goals expectations, and similar expressions, reflecting something other than historical facts are intended to identify forward looking statements.
Well at least the factors that could cause to be booking holdings actual results to differ materially from those describing the forward looking statement.
Please refer to the Safe Harbor statement at the end up the booking holdings earnings press release as well as booking holding most recent filings with the Securities and Exchange Commission.
Unless required by law looking holdings undertakes no obligation to update publicly any forward looking statements, whether as a result of a new information future events or otherwise.
A copy of booking holdings earnings release press release, together with an accompanying financial and statistical supplement is available in the four investor section a booking holdings website.
Www Dot booking holdings Dot com.
And now I'd like to introduce cooking holdings speakers for this afternoon.
<unk> and David Gordon. Please go ahead.
Biking, and welcome to booking holdings first quarter Conference call I'm joined this afternoon bar CFO It would go.
We're living in difficult times since our last call.
Great Coburn line has grown exponentially.
I am certain key turmoil and too many people tragedy all over the world what started as a reasonable.
We had hoped would be can take would fall to pass them all the new borrowers as like Sars for each one anymore.
It's growing into a global pandemic.
Precedented proportions we.
We joined the global community yards that I've, just terrific suffering a loss of life and recognize the tremendous economic tone on so many people in so many countries.
This viruses rep, having industries across the world and this is without a doubt the biggest disruption modern global travel the world has ever seen.
Billions of people have been under stay at home orders and there have been and continued to be closures of borders government enforced travel restrictions and strict guidelines regarding social distances.
These actions have profoundly affected our industry in every corner of disorder.
While our Q1 reported room nights declined 43% year over year, we did not see the viruses school negative force on our business until mid to late March. So the 43% decline does not truly reflect the state of our business nor the travel industry today.
In March our reported room nights declined over 100%, meaning we received more cancellations during that month and new book.
Looking at things a different way, our newly book room nights, which exclude the impact of cancellations were down over 60% year over year in March down over 85% in April.
This gives you a clear indication of how much our business is currently impacted by this crisis.
That being said well the virus impact on travel is unprecedented I am confident that this crisis will eventually end and people will travel again.
Travel is fundamental to who we are well it may take some time to returned to pre cobot 19 levels, we will get there eventually and that we'd expect travel to continue to grow thereafter.
So what are we doing that was we wait for effective treatments for a successful vaccine.
During the first quarter when it became clear the virus impact was going to be more significant than anyone initially anticipated. We quickly developed a series of plans to help us navigate through these challenging times will stabilize the business from the immediate shocked at the crisis to.
Optimize the business would be expected decrease in travel demand over the next few years can three positioned the business to capture travel demand when it returns. So we can emerge from this crisis Armstrong flooring and extends our leadership position.
As we entered the stabilization phase at the beginning of the crisis, our employees health and safety was a top priority, but all we have although we have a few offices currently open in Asia. The vast majority Brown employees are now working from home, including our customer service teams, which is no small accomplishment considering the technology requirements.
And the huge increase in change requests and cancellations that we experienced.
I'm very proud of our teams and pleased to say, but we are functioning well in this new distributed environment.
Another immediate priority was helping our customers and our supply partners for a number weeks, we were fielding a significantly higher number of daily inbound calls than we typically receive.
For our customers. This entailed supporting they sought refunds for bookings that were no longer possible due to government regulations were made request to modify their travel plans.
Our partners many of whom do not have the ability to process such a large volume of customer service calls, we supported them by handle the unprecedented level of cancellations and deep modifications request.
Looking ahead, we'll be working with our travel partners to create plans to stimulate travelers to book again want to this crisis is behind US we know how critical it would be the bring demand for our supply partners in a cost effective way.
Also as part of our stabilization plan, we took immediate steps to conserve cash increased liquidity, such as halting stock buybacks dramatically reducing marketing spend worldwide.
Turning nonessential costs implementing a general hiring freeze and reducing executive compensation with our brand Ceos and all I foregoing salaries. During this crisis and the other senior managers throughout the company voluntarily reducing their he salaries and our board of directors for going their cash piece.
Condition in reducing costs, we bolstered our liquidity by raising over $4 billion in debt.
These measures have enabled us to have some fishing liquidity to whether a long period of significantly reduced travel demand and have the necessary resources to invest in securing demand when people are ready to travel again.
We'd now be gone transponder execute our optimize planning, which we will adapt to the new reality that assumes he will be likely be years not quarters before we witnessed a full recovery of global travel demand.
We believe that I do a vaccine or effective treatment is needed before people feel fully comfortable traveling the way they did before the pandemic start.
And even after a vaccine or treatments declared safe and effective.
We believe it may be some time before there's sufficient quantity and distribution to them to give people and governments confidence for people to travel freely.
Furthermore, as an creek cobot 19 days, so I will be dependent on overall economy consumers financial healthy after having gone through its very deep recession and consumers confidence in their own economic futures.
These results, we expect travel to fully recover leader there. Many other industries. However, when travel demand does start to recover we believe there will be attractive growth opportunities.
We are in the process of assessing the cost structure of our entire company developing plans to align it with expected market demand as part of these efforts. We're also evaluating our strategic initiatives and the timing of significant expenditures, we intend to continue to invest in our key projects such as payments and the connected trip.
That we believe will position us well for the future.
We're also reexamining all areas of the company to see where can we reduce or delay costs where possible.
Fortunately, our financial our financial strength allows us to make strategic decisions pointed towards the long term interest of the business.
We recently completed a strategic evaluation will open table and kayak announcing last week, a serious batches to reduce operating costs.
Unfortunately this included the decision to lay off and furlough some employees as a principal during this crisis, we have not reach first for employee reductions to lower costs.
But after making adjustments and other operating expense areas. We made the tough decision to ensure the size and scope of our business is proportional to the new realities of the travel market.
We're now working with the other brands to examine their cost structures and we'd be thoughtful and deliberate in our evaluations.
I mean attempt to minimize the impact our employees drays difficult times, we had been evaluating and employing various governmental financial support programs booking dotcom recently announced that it would participate in the employee April offered by the United Kingdom and were able to place employees on furlough, there, which has a needle employees tourist.
We have a significant portion of their full time south.
We have also apply to the dotcom government 15 eat under their recently and not be program to support employment in the Netherlands.
This program provides functions to Dutch companies impacted by this crisis in covers a portion of employee salaries for a three month period with the requirement that companies, which received this aid maintain employment during the time ages provider.
These programs along with all the other steps we have taken will help us support employees and maintain jobs as we continued to fully evaluate the operating environment.
We will continue to look at other available options that might help us mitigate near term head count reductions during this period of significantly reduced revenue.
The actions, we're taking our stabilization optimization phase are being done so that we can capitalize quickly and efficiently on travel demand when it becomes safe for people to travel again.
We want to emerge from this crisis and a strong organization that is equipped to deliver for customers and our partners well capitalized and in a position increase our market share when the world is ready to travel again.
On a smaller but somewhat positive note we are seeing some stability in our newly booked room night growth trends. We hope that this is the beginning of the road back to recovery, but it's simply too early to say with certainty.
Some governments have seen progress eliminating or reducing pandemic. They have slowly begun to reopen in their economies and we have seen new bookings primarily for domestic travel although still at very low levels.
Or many of these reservations may ultimately be cancelled, but we believe it does show that travel for essential business and personal reasons. We're slowly return at society makes progress against the pandemic is travel returns, we expect to see improvement in our revenue.
We're also prepared for disruption in that progress as relaxation of social distancing in some geographies may lead to a resurgence of infections and reinstatement of government restrictions. Our aim is to optimize the business to participate in the ultimate returned it to me.
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It continues there.
Hello.
Right there.
Hello.
Hello, I saw on the line.
Yes, one moment please.
Thank you.
Oh, operator can you name it.
Yes, I can hear you.
Okay I live online.
Sure.
Thank you.
Thank you Glen and good afternoon.
Operator, I am I right on the line can you confirm that please like in a there. Thank you. Thank you Glenn and a good afternoon I'll review offering result, the first quarter discuss all stabilization initiative to bolster our liquidity provides cologne trends we saw in April.
All growth rates relative to the prior couple period, unless otherwise indicated information regarding reconciliation of non-GAAP to GAAP can be found <unk> earnings release now onto our results for the quarter.
Well the time of a lot of things go on probably 26. The outbreak occur with 19 was largely contained to Asia and we've yet to see a meaningful impact you know business across Europe, and North America as he moved into March the covert outbreak contagious spread throughout Europe, and North America, leading to eventual declaration of a global pandemic implementation of numerous.
Hello restrictions on shelves in place orders.
Not surprisingly, we saw a resulting shop duration of our top line trends in March with significant levels of cancellations on a substantial reduction and the level new bookings.
Although we only felt the forefront of the code 90 pandemic around mid to late March our Q1 results were still significantly negatively impacted.
Our Q1 reported room nights declined 43% before quarter, however that decline exceeded 100% in March we received more cancellations the new bookings in the month.
Our cancellation rate peaked in mid March that'd be steadily improving since then as we work through the way the cancellation of bookings made prior to the imposition restrictions on travel.
Gross bookings declined 51% in Q1, which is a greater declined the reported room nights due to average day rates accommodation is decreasing about 15% year on year on constant currency basis.
Consolidated non-GAAP revenue for the first quarter was $2.3 billion in decreased 21% year on year revenue in the quarter was less negatively impacted the room nights and gross bookings just the fact that many cancellations received in Q1 with a checking that were expected to occur later and they are.
Where especially occur in later quarters.
Adjusted Q on for EBITDA was $290 million, because it's down 60% year on year.
We benefit from having a highly variable cost structure, so nasty declines in periods of low travel demand.
As Glenn noted, we will take you through the actions in reducing others areas or spend that we stabilize and then move to optimize a leaner cost structure with the new demand environment without being said there were some areas of expertise of Oh expense pressure in the quarter related to covert 19 pandemic I'll walk you through.
Marketing expense, which the highly variable expense decreased 29%. Your idea as you saw a significant reduction in demand into paid channels.
In addition, we took actions to substantially reduce our brand marketing spend the response to the debased travel demand.
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We expect our marketing expense will remain significantly below 2019 levels for the remainder of the.
Sales and other expenses increased 75% your idea.
Primarily to 183 million dollar increase in provisions for expected bad that's another <unk> credit losses, resulting from the could not be pandemic.
Excluding the impacts of the increased provision recorded in the quarter sales and other decreased 10% year on year as it is as this expense line is substantially Gravlin nature. For example, we recorded lower expenses associated with payments in Q1. This reduction was partially offset by higher outsource customer service costs as we work through the have you going.
No cancellations received in the quarter.
Personnel expense decreased 3% year over year, primarily due to decreases stock based compensation, which was impacted by reduced branch performance as results of the code 90 pandemic.
Excluding SBC expenses personnel increased 12% year of yet.
Although we have influenced a hiring freeze personnel expense this quarter was impacted by annualize hires that we made last year. We expect the pressure on personnel expense will diminish as we move through the.
<unk> expenses increased 6% year over year, largely driven by higher indirect taxes, including digital service, Texas.
Excluding these indirect taxes June <unk> expense decreased 7% you have yet as we reduced discretionary expenses such as to the expense.
We will see less year over year pressure.
On June eight from digital service taxis once we lap the enactment of the French DST, which occurred in Q3 of last year.
Finally information technology expenses increased 20% your India, driven by higher software piece, and Altisource datacenter and cloud costs.
On a GAAP basis, we incurred an operating loss of $308 million as all GAAP operating expenses in the quarter included charge of $489 million related to an impairment of goodwill open table in kayak.
This impairment charge is driven by very juice financial projections as result of the code 90 pandemic.
We excluded the impairment of goodwill from a non-GAAP results.
Our Q1, GAAP net loss was $699 million or Q1, GAAP net loss includes $307 million, a pretax losses on our equity investments and trip Dot com and that's one and 200 million dollar impairment charge related to a strategic investments.
This was partially offset by $33 million of FX remeasurement gains on a euro bombs. We excluded these unrealized losses impairment charge I remeasurement gains from our non-GAAP results.
Now onto our cash and liquidity position.
Do you want any cash and investment balance was $9.2 billion, which decreased from all December ending balance of $11.8 billion do several factors, including the following primary drivers.
First we've got $380 million operating cash outflow in the quarter, which was driven by an $820 million use of cash due to changes in working capital as well as the lower earnings we generated in the quarter.
Working capital in Q1 was negatively it was negatively impacted by pre payment of taxes in the Netherlands of 719 million $70 million to $70 million that was subsequent responded in April.
The large reductions in all deferred motion bookings accounts payable accrued expenses balances were mostly offset by the significant reduction in our accounts receivable balance you want.
The deferred merchant booking reduction was driven by both low bookings and customer refunds. We expect these balances. The all continue to decline in the low level of bookings were currently sitting in the business.
Second we repurchased $1.3 billion was talking to you won almost all of which was purchased under a stock buyback plan, we filed last November.
We halted buybacks or soon to be recognized the growing impact of the pandemic.
Third we got Capex, an $80 million in the quarter and finally, the value of our investments declined in part by the 370 million dollar unrealized loss on the equity securities and the hundred million impairment related to a strategic investment I mentioned earlier.
In addition, we had $106 million decline in investment value that did not impact the personnel, but was reflected in the balance sheet.
The majority of the remaining $288 million difference between Ashley investments at year end of March 31st is primarily due to timing of the settlement sales and from corporate bonds that were classified in prepaid expenses on other assets at the end of March. These sales are settled in April.
<unk> is a cash and investments.
You know what happens to stabilize the business for the immediate shock of the crisis, we taking several steps to shore up and also our liquidity position.
We halted repurchase or stock and we will nos initiate repurchases and so we have better visibility into shape and timing of recovery from the code 90 pandemic.
We worked received a refund in April of the prepayment of taxes in the Netherlands. It was made early in Q1.
We amended our revolving credit facility to substitute a minimum liquidity covenants for the previous leverage covenant through due to 21 to ensure we continue to have access to the source of liquidity.
And finally, and most notably we completed a bonds a convertible note offering on April eight that raised 4.1 billion of capital.
If you're just on March 31, any cash investment bounce a $9.2 billion for a bond the convertible note offering on the settlement of the corporate bond sales on the refund of the Dutch.
Thanks, prepayments all of which occurred in April our March 31, cash and investment balance what it would increase to about $14.3 billion.
Approximately 12 will go into this is highly liquid after considering the actions we've taken including recently completed the sale of our trip Dot Com and yes. There is a movie on cash and investments into corporate a movie on cash and investments in corporate bonds, It's a AAA treasury and government money market funds.
After the bomb the convertible offering we have about $13 billion, a debt formerly into which mature before the end of 2022.
Usually covered 19 crisis I will not provide quarterly guidance like we normally do however, I will provide some color from our preliminary results, which will give you a clear picture, although recent topline trends considering the April was the first month fully impacted by the pandemic.
As Glenn mentioned on newly booked room nights in April with down it would down 85% year on year.
As a reminder, newly built room nights excludes the impact of cancellations of course, these new bookings, maybe counseled in the future, especially as a very high percentage of new bookings in April with made reflects what cancellation policies.
Reported room nights continue to be negative in April as cancellations outpaced new bookings.
We expect our revenue in April to have a greater year on year decline the newly built room nights considering the impact of the cancellations in March to April stays and also since many hotels, especially in Europe, we're not opening in April.
New bookings or revenue for us full second quarter may vary from April's results, depending upon the level of coal demand on a combination availability, we experienced in may and June.
Oh as Glenn noted, we've seen some stability our newly booked room night growth trends with the year on year decline rate being quite consistent <unk> April after usually rapidly through the first quarter.
We believe the domestic travel will rebound student international travel as we expect travelers to look to their home country or region first for safe trouble option.
In April we witness a meaningfully higher domestic mix in our business.
Historically domestic accommodation bookings represent about 45% a booking dot coms total business. If we consider western Europe is one market you start makes increases to about 55%.
In April booking dot coms domestic share increase were probably 70% and if you consider western Europe as well market the domestic makes increased over 75%.
Towards the end of April we saw some very early indications that domestic travel we're starting to Richard in certain markets, where Shelton place rules for relax, including Greater China, South Korea, Vietnam and Germany.
Newly built right newly built room nights in the U.S. decline, let's talk a little average in April and we saw improvements in domestic travel during April we cannot tie. This relax you Shelton place rules, but these are the only happen in a few states and in recent days.
Yeah. Thank you Kevin going Yeah, let let let me take that so.
Marching expenses are going to correlate quite closely to the or rate of newly will prove night. So you can a shoe bus close correlation that.
I actually walked through a number of these and they prepared remarks of Q. on Q2, but just to summarize sales and although obviously a piece of that is a large besides tie to to a machine platform that is variable with volume, but things like customer service costs and bad that says you saw it was a major factor into one of those may continue to be a factor in a cute.
Next biggest Sara <unk> personnel and as we mentioned the the the hiring freeze and the other actions that we took did not have much and impacting q. on.
Two you'll get the full impact to those also to the extent we are successful with our application for government aid that would generally help to to some of the optimization actions that we've already taken like kind of can open table will also help q. too. So I was we moved through the <unk> activities.
That will also help with US now expenses, we we we move to the year, although the government aid programs, we mainly focused upon two two and not the second hall as I mentioned fresh will decrease on on on G.N.A. objectives, we start to a laugh the D.S.T. expenses last year and <unk>.
Technology is and then she line we so obviously your family pressure night, you want I pointed out that some of those costs relates 12 volumes and even to our revenues were based you know pretty high.
Into volumes that we have to process through the business through refunds and cancellations. We're all so high that drove <unk> up that was one of the factors, we expect that to be less pressure on that line going through the rest of the.
Thanks, and if I could just asked one quick follow up can you talk about how six actually van and <unk> out to customers. You have had they can't tell all and also helping them coordinate refunds when they're dealing with a hotel.
Yeah.
Yeah. So you know this difficult issue, we have customers who have.
Purchased.
Ah reservations far in the future grabs network non refundable and then there was case, a pandemic and yourself horse manure situation, where situation, where the customer says well I can't travel because the government has said that you cannot travel there and we have hoteliers, who are saying wait I can't find every.
Yeah, maybe even spend some money here and it's difficult situation. So.
We always believe in trying to do what is best for the customers and our contract hoteliers is completely set up for this exact situation. Fortunately her situation in which case and then goes over all long history of travel that in a situation like this the hotel should refund customer.
So what we'll do is we will provide monies to the customer and recover from the hotel now we've talked about that there is an issue you know many of these hotels are close right now there's nobody actually there to have discussions when you know we hope to get a portion of it but we don't know yet if you're not talking with the people, we always want to come up with a good relationship with hotel so as they real.
<unk> start again, we want to do this and the best way possible I don't think we have any specific numbers to give Dave is put in the reserves and I think that's we hope for the best going forward.
Thank thank there.
Thank you your next time and the content since then.
Yeah. Thanks, a lot that's a couple of questions, though in the in the new bookings ever coming in.
Seeing any kind of add on in terms of people most people often the alternative noggin, which is about that or.
So.
Then.
You know in terms of just the the fixed cost I think Dave and you gave it depends though.
As well or on the on your queue for called and then you said that less than 50% of the okay.
After the you know the incentive that you're taking.
And then you have taken <unk> <unk> <unk> <unk> could land.
Okay.
Yeah <unk> on the on the new booking I mention the fact that we're seeing a bit of of what I call. It dumbbell in the kind of <unk> very close to other current stay all there a long way out what happened in the first call that is hotel and alternative performed about things so.
He basically almost in lock step from a growth point of view quarter in April we saw a shift to alternative associate those longer term boring. So we saw I'll test in combination doing betta in in April bookings, particularly at the far end is done.
Well, what should the two month plus out bookings, particularly in the domestic markets, where we saw some no decent returned right into domestic markets in amongst all all of April so it's all relative to the mix on the fixed costs. We are still as Glenn said I think you went through a fair amount detail is called.
We are still building optimize plans for 90 Bucks a business really only oh, some place yet in one of our business segments and working through the other business seconds as we as we speak <unk>. The time you that is also got to be tied to what we're doing around some of them a program. So I don't want to with with.
But just yeah I'll give you dated point for example that they the reductions that we took that kind of in table reduced personnel and off expenses that by about 20% and those would be part of that fix will send me things cost based talked about wanting down from the all not I really don't want to go into these little finalize off.
Signs, yet, but we do and when we do we'll let you know what we expect him to do to what cost base.
Guarded thank you and good luck.
<unk>.
Thank you your next time <unk> Morgan Stanley Pizza Hut.
[noise] Hi, this is Alex long on for Brian. Thanks for taking the question two questions. One Glen you talked about sort of positioning the business to become stronger he talked to us a little bit how you think about new strategies or approach in the U.S. market, specifically coming out of the downturn.
And then the second question just given the stay at home dynamics and went to strong social media <unk>, you seen an opportunity to potentially use more <unk> social advertising the dry press coming out of the downturn.
<unk>.
It's very important for us as we come out as optimized to make sure that we're doing everything we can to become a better competitor in the U.S. you know we've talked in the past that we believe we under index in the U.S. and that is something that isn't pouring.
Countering and be able to one of the things that we believe just providing a better overall value proposition to the customers. When it's all says we talked in the past and make our customers more potential customers aware of this better value proposition that goes through the connector trip that we've talked about in the past now court and we think there will be.
By something different and better to the consumer but your point is a good one about social media and how do we get that message to those consumers and with our C.M. old came from Google What is being here yeah about 10 months now we actually believe that social area social media is a way to try.
Drive that message to the consumer and we will be doing things in future I'll be it always looking watch the light our life for that.
It doesn't snow go to waste a advertising money.
Okay. Thanks.
Thank you.
The next responses from the late one.
Thank God.
Thanks to questions. If I can first can you just talked about how you see the P.M.L. coming out of the in specifically do you think it performance marketing can structurally benefit perhaps from lower competition in advertising auctions and then secondly, you know wondering.
You know if you're seeing any shift between kind of urban in more skiing, each type of locations on April booking and and given you know somewhat of a shift to alternative yeah give us an update on how you feel about your your whole home inventory position is people, perhaps look to locations that with less urban density.
Thanks.
Right well, let me, let me start with the the second one verse about the nature of the Where's the demand going in April and suction I can't keep any more specifics and beyond what we've already described a slight increase and people are going for the alternative accommodations over her home I I can say.
No there's not a lot of skiing in April so I can't tell you.
Your your first question was.
First question was do you see how do you see the P. and L. coming out of this and then might there be some longer term structural benefit lower competition in in advertising options.
Yeah. So one of the things I think is sport I understand what we do believe that certainly because of this and damage. Some of the smaller players in the industry are going to have trouble going forward, but the big players are still going to be around they're going to be very competitive as they were in the past and they're the ones who are the you know sophisticated.
Layers in the performers marketing area. So I don't think it's going to change a great deal nurses. The <unk>. We didn't compete against pass are going to be say people going forward. So I don't see significant change that area in terms of the P.N. out when we get to that place down the road that striding sung where we have fully recovered I hope to be doing what we did in the past hassle.
Leading margins in the industry and still growing nicely and that's about the best one can put forward in terms for your long term prediction.
Okay. Thank you.
<unk>.
Thank you your next response or something like.
<unk>.
Hi, This is there the underdog thanks for taking a question of.
<unk> can you talk about your business travel next one of the mix was going into Corbin 19, then do you have any data suggest maybe I'm businesses, hoping recovery and some other markets, where you are seeing something and then in those markets, where you are seeing some pick up and demand or doesn't countries recovering in a similar <unk>.
If the time not in those countries can help educators on how well their country recoveries might look like one Florida. So why don't I take the latter one you take the former what you know one of the things I think it is somewhat.
I think it's something that can be.
Deceiving and turn into trying to take what has happened one country and then model outcomes are everywhere else and we've seen a little bit of cases, where countries have begun to open up doing better, but then because they opened up the economy, there's a resurgence in inception.
Then they put in the reinstatement I'll be restrictions and things go back.
And I think it's it's hard to do that and also you have different countries that different travel patterns that also so I definitely would not I definitely would not take what is happening one and then apply that across the entire world and say okay. That's how this is going to roll out I think that'd be.
Has to come up with a very bad prediction for future.
David in terms of the first question.
I mean, nothing really no major updates on business travel at as we don't have a formal a formal percentage we have so the clad estimate the maybe as much as a fifth of all business might be business travel, it's not anointed numbers not number though we really track will spend more time looking at it's basically just a self declared booking field.
What I would say is obviously when said we're just talking about very small deviation you're trying to you as much color. We can <unk>. What we saw in April Whoa, what will tell you and it's pretty obvious the domestic business was rates you grew appreciably fast.
The International Relations extent, that's business traveled while international that still very depressed or not saying a lot. These all there's always your trunk of it is so that's another way to look at it we don't really have any specific data for a month of April what happened to business travel. This is normally just travel other than the fact that we've.
Oh, what happened to a domestic burst international.
Think of.
Thank you your next responses and Steven.
Please please go ahead.
<unk>.
Hurting experimenting to merchandise better to the customer and you know connect to travel have been theme as you've been talking about for some time now, but with the demand environment being what it is does that slowed down the product development team in terms of the.
I need to innovate because I guess, there's a comparative lack of data on consumer behavior, but I guess on your competitors are probably struggling with the same difficult circumstances as well, but strictly as you think about what you want to achieve oh for booking and towards a product development of what you know the company it looks like on the other side of the crisis. Thanks.
You know you're right one of things it's been a great advantage for us.
These are experimentation.
Build a because with more about with more data real to come up with insights and be able to develop things much faster that's always been a a great advantage for us and if there's no demand you're right. It's hard to put something in the city is just working or not how wells at work or not.
I agree with you that but one can still make a great insights with what in comparison to a small amount of data, but still can give you. The insides don't forget we were a lot smaller 10 15 years ago, but we were able to come up with a lot of new things that were very valuable and make us a leader in innovation this industry.
And we believe that will still be able to do that and that connected trip will still be going forward. Because we do believe and we are seeing how we're seeing data before cold, but it was indicating we're going in the right way and I do believe that this will continue going forward as demand comes back Oh, we'll be I'll do more and more with that data.
Thank you.
Thinking Unix response system, Eric Sheraton, Yes. Please go ahead.
<unk>.
I'm on that plane.
Inventory longer term gland.
He was about how supply might consolidate on the other side of coping 19, just because if the benefits of eating scale versus somebody historical trends, which could be quite a positive for the T.A.S as demand is needed advanced starts to pick up <unk> <unk> <unk> <unk> <unk> <unk>.
It tend to be a better portrait for the hotel industry. So just curious about the relationship with supply and how you yourself see supply evolving over the long term on the other side of coping 19. Thanks, so much guys.
In the long run.
Very long run.
There'll be supply that will be.
Measure it with what it was before Cove, it and you'll match up with what's to the <unk> and is in the long run their main be there may be any period right now going forward should go into the Chicago <unk> took a maybe some decline in some areas supply that just isn't as great.
A place to stay and therefore, they demand doesn't go there and price of adjusted to be better quality places are a little bit cheaper people go gravity, there, but here's the point the buildings don't disappear. The hotel business doesn't you know <unk>. The only there if if there's demand it will get to know maybe a new owner it may be recapitalize and such but it will it will.
Be there so I I I think in the long run I'm not concerned about a constraint on supply that impacts our ability to provide great value to the consumer at all or any chance that the supplier doesn't need us anymore I don't see that happening at all.
Thank you your next responses from Yankee Pack my thought.
Barclays. Please go ahead.
<unk>.
Oh, thanks for taking the questions Glenn how would you categorize you know you around to the previous question on the alternative accommodation side, I mean, I'm going to combinations has a great and mix up and went pretty from open apartments too you know like traditional vacation rentals and also you know people like a hosts at all or using that in homes have.
You've seen any meaningful disruption on that side is that you know something that's going to change meaningfully longtime any of you and and second question. I was also going to ask about your thoughts on investing behind drive in theaters like particularly in marketing you ask you can invest down bride and then supported with some of the direct channels to capture meaningful shall.
It just shows like already demand.
It was on that so much.
I'm talking about the first among the back to the cycle more so in terms of alternative accommodations.
Interesting question about will there be their client in the supply because there's no demand right now for many of them and and they just say well not going to bother with this one too is there an issue people are decide this isn't a great thing to do because they're concerned about having strangers in their homes and just don't want to.
<unk> how long does that go for you have also the trends beforehand about the regulatory environment does this issue over the pandemic increase a regulatory restraints on the supply or not the flip side of that is very interesting course, weirded air being being a lot of the students really come out of was the.
Great recession, 2000 May 2009, where a lot of people said I need to get extra income so I'll rent out my spare bedroom or something of that nature now of course, it's more fun too much more professional I think I think in the end. This is a good business for everybody people liked cool alternative accommodations for people to host the people who own. These properties of people are doing this.
<unk> industries. They like is good money and it's demand comes back they'll continue to do it and there will be supplied to meet that demand on the man sites people is you see right now just April alone people see a need for it I think that's good I really don't see a lot of changes you know one thing and I'll just use your question to point to this is that people think the wheels can be so different and I know.
Don't think the wheels can be hugely difference once we get passed this there have been pandemics in the past Yeah. I'll go back 100 years go back Hong Kong flew back there have been pandemic here have been terrible things, but in the N. people want to travel people are willing to supply accommodations and I don't see that there's going to be a great change in in the long run.
And your other question was.
Yeah. It was just on using brand advertising and supported with direct channels to catch a a lot of the incremental demand. During the initial <unk> do you think that's something that's possible or how are you thinking about it at least in certain markets like U.S., you know where <unk> like Brian advertising can be more efficient initially.
Well, we're talking with the whole marketing scheme about that one of the things you don't want to be doing the reason, we're not brand advertising right. Now. So you don't want to be putting a message out when nobody's really listening or very few people are listening to it and you're spending the money for the number of people who you're spreading this message to really are not interested in traveling right now that's not efficient.
Money I talked to earlier about how we really want to <unk> fishing in this so I'm not sure you certainly when we think that enough people are ready to travel then it'd be good to start pushing that message out from the critical thing is when is that right point it will be measuring very carefully you see when that right time is.
Mm.
Oh right. Thanks, a lot so.
Thank you your next response or something just in post the bank of America. Please go ahead.
Huh.
To see you back two questions and I apologize I had been asked but first thinking about your merchant platform today much bigger than before does that help you. When people are ready to come back in hotels are engaging with different offers or pricing or things like that and then secondly, if you assume where people are going to travel in their own countries versus.
International does that change anything for 80 ours or your market share or your take great. Thank you.
Why do the first where all the Dude talk the second one the merchant platform will be very important and that's why we do believe it's sung inform us to continue to invest in our payments product you can get that out because as you point out providing value providing the right price putting it together through that connect to <unk>. That's one of things we've talked about a lot and we still believe this is a great thing.
For consumers really being able to put together different packages in a way. So you know paying one way and is clearly want things to his us having more control over the cash makes it much easier if a refund is needed to be doing it for one thing instead of a customer having to deal with refunds from their air from their hotel from there.
Car, maybe other things that are the attractions they didn't all different people they talked to try and get refund from by doing in one package connect your true with on the store merchant payment <unk> <unk> platform will be able to give much better value. Both in the time when they buy it and even if they have to deal with getting a refund so much more important and and and and David <unk>.
About 80 ours and what you think.
Yeah sure things just it so historically, both <unk> saved me a little shorter domestic travel because people's longer trips it'd be international and therefore, they be going towards higher A. mumbling say no to the extent those international trips get moved.
Back into the investing marketplace that this nation, they actually not be is right.
Because if the domestic market place was generally more short term oranges and that makes shifted it becomes more of the place where people want to go a long that may major vacations et cetera that may not be as big as fast as you walk before and there's really no difference to take rich.
Great. Thank you.
<unk>.
Mm.
Thinking Unix response system down your power Goldman Sachs. Please go ahead.
Great. Thanks, taking the questions two Hyundai first as kind of to build on the question around pining of advertising and when you decide to to sort of step back on the gas I guess, so what what are you looking for sort of indicate when when would be a good time to step in and and well what would your expectation be.
Around our allies, if if there's been somewhat in the vacuum created from hotels and and other partners, perhaps not being I was able or willing to spend when when things start to look a bit a little bit better and then the second question. You you mentioned maintaining good relationships with their suppliers wondering if he could.
You know sort of give us the sense of it during the global financial crisis, what what did your relationships. What does your you know access to inventory look like coming out of that environment versus yeah. Once you might expect than this one.
Sure so regarding the bread advertising.
Sure you'll forgive me for saying that I really don't want to give away.
And we're kind of put on the gas or what the signals are so our competitors can then you know get a jump on that.
I'm sure you'll understand that hey look it is important though for us to to feel that we are going to be effective and use that brand advertising and going through and and as the question earlier about there's a lot of things that we can do desktop now and and be able to put out what is have video half they have brand in here.
Reform is through a video channels that you can start seeing some bad a response and a better sense, where you're our allies or not and vehicle little bit more selective in how you use that I think we're gonna definitely be pushing that way.
In regards to the supply relationships and the great recession as <unk> going for we were very please to see that.
This is why we feel comfortable and confident to talk about how deep recession can be helpful distributors because in the past the suppliers leaned in heavily into distributors, who had demand for the obvious reason died or you know if your hotel and you're running 40 or 30% or something right.
Need to get that demand. We're here to provide a tool so that helps build that better relationship and I do think that schools are going to see going forward and I do agree I think that some of them may not be doing as much brand advertising, perhaps they were in the past that'd be due to cash constrained snow things, where they need to make sure they're maintaining a certain amount of cash.
<unk>.
Great appreciate it.
Thinking your next response is certainly Horowitz of ethical I.S.I. Please go ahead.
[noise] great. Thanks for taking the question given the moves you guys are made with your Balanchine shorten things off and obviously depressed Ah private and public evaluation I'm wondering how you're thinking about your potential ability to be a acquire a of assets across travel space. During this crisis can give me your shrunk down.
<unk>.
Well, we like we always like having a strong balance sheet for many reasons that being one of them and of course valuations as we know of change drastically, but they've changed drastically for a reason internally risk factor is significantly increased than it was a short time ago. So our our way we approach require.
<unk>.
That's where any type of acquisition is always the same which is we measure <unk> add to our business for the franchise help consumers and partners. What is it's gonna be great well, what do we think about and management do we think there grad do we think they can help us or not and it's no I can we operate <unk> and without that management.
This is something that we we will always be built our company through and then Hey is you know when we're going to continue to look out for got <unk>. We we recognize that this is a fun being time and we have to be careful and picky in terms of what we do because the rest factors are much higher now and and and David you I took anything more about.
<unk> no okay <unk>.
Right.
[noise], Okay. Our final question, it's I'm, Jamie pardon <unk> Securities.
Good afternoon. Thanks for taking my question. So really appreciate all the data points on marks in April obviously somewhat limited, but what do you take a step back with curious if you guys have done some consumer work seems like you're in a unique position to sort of understand.
What types of travel consumers are are most likely to re engage in the soonest. You know obviously, there's no air travel hotels restaurants vacation homes apartments, you didn't car rental all of which you guys have your you know a piece of.
How are you thinking about which of those are are are most likely to resume normality the quicker.
Well, what we've seen as a hotel area and big talk a little about what we've seen that.
A lot of areas killed extremely limited whether by government restrictions, allowing people to go to a certain countries or the amount of flights and times available and people just general fearful about getting another clean right now and you may have seen for example, the Ryanair data that just came out in Europe, <unk> l. whether for air.
Oh in Europe dated April it was essentially almost nothing really almost nothing and that's unfortunately, what we've seen other parts of the world extremely low amounts of air travel, but it's all go somewhat together as people feel more comfortable about how their entire situation, but it's the vaccine.
Talking about is a treatment, perhaps it's also and their economic situation. All those things. So I think what we'll see if things start coming back yeah, Something's will be the other one I think overall it will all come back pretty very similar.
[noise] got it and then last question for me if I may sounds like you're not quite ready to give any sort of a monthly cash burn numbers given some of the the expense optimization, it's still going on but maybe walk us through some of the puts and takes you've got about a billion dollars of differed merchant booking how quickly as that coming down are there.
Timing differences between when you provide refunds to customers versus when you're getting those refunds from the hotels and then can you help us with an interest number given the the transactions that's taking place I'd like.
Yeah, well, we thank you James So have you all all wrapped up with as well and so yeah, we haven't given attack where we actually yeah. We did give you an indication it's the cab walk huh position would look like at the end of 2021 before we did off a bone offering you know because we have you know significantly over $1 billion more than that.
So we're not going to get into a monthly, but I I. We walked you through the the the changes to log to about cheaper yeah wasn't capitol movements in Q. <unk>. Those boundaries will continue to reduce until we sought to get travel demand occurring once again I think the best way to handle it just won't.
We've already gone through all summer vacation plans, and we decided where are we going to reach that cost base to that point in time, we'll give you more call up as to where we are I do not have an interest rate number <unk> Oh, my head, but we can talk with <unk> with everybody fault without one.
Okay fair enough appreciate it.
Thank you know for the questions and make you at this time I tend to call that <unk>.
You know I understand there was a technical difficulty and some of the last part of my US be my my prepared remarks were cut off.
I think what's actually works out well because the last two <unk> nice way to close this off so let me just close at all for everyone, but we know the progress against the pandemic, it's gotta be disrupted at times as relaxation of social distancing in some geography may lead to a resurgence of infections and or reinstatement of government restrictions.
ER aim is to optimize is to participate in the ultimate returned with demand manage our expenses in light of our best estimate of the shape of that return invest in our business to build our leadership position in the industry and serve our customers in <unk> partners and build shareholder value going forward, we have a tough road 100 Bucks.
And we have been through May difficult. It's just passed last few weeks and we're going to have some in the future the weights the months and quarters to calm the pay scale impacted coping 19 is unprecedented.
But we know one day, we will be on the other side and we're doing everything we can to ensure we're well positions and navigate through these challenging times.
We have the competence that with a highly variable <unk> want structure strong cash liquidity, great Global brand awareness and some of the best people anywhere we are well positioned to come out of this crisis and extend our leadership role in the global travel Eco system I'm going to close by giving a heartfelt. Thank you.
All the employees, our customers and partners center governments.
Work through these difficult days together.
To our employees I never been more proud of you and your enormous efforts to support our customers partners everywhere.
We know there'll be more tough days ahead, not does France for so many people industries all over the world I am confident we will get through it and lastly, I want to say thank you to all the front line workers out there the doctors and nurses the scientists trying to come up with a cure vaccine delivery people the people, making sure that'd be food in the stores basic.
<unk> everybody in a job that is designated is critical to all of your work night and day to help our we'll get through this thank you from all of US at booking holdings Goodnight.
Thank you then.
Oh, you mean now just kidding.
Good day.
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