Fincredible MacroTalk February 23rd: Travel and Leisure Trends
Management commentary on travel demand trends from $TRIP $ABNB $HLT $MAR $HST $WYNN $EXPE $RCL $DIS $CCL $LUV $DAL $AAL
It looks like we are nearing the end of Covid-19 disruptions when it comes to travel and leisure. Many companies in the travel industry like TripAdvisor, Airbnb and Hilton Hotels are experiencing their best performance since the start of COVID, and the travel industry is looking forward to a full recovery in the coming year. In this post you’ll find quotes from company earnings calls that paint a detailed picture of the current trends the travel industry is seeing.
All quotes are sourced from Fincredible.
Online Booking Sites
Online booking sites like TripAdvisor and Expedia continued to see improvements in the latest quarter, but their revenues are still well-below pre-pandemic levels. These companies are hoping they’ll completely recover in 2022. On the other hand, Airbnb already exceeded 2019 sales by 38%. One driver of this outperformance has been the fact that guests are staying longer than before, not just using Airbnb’s for short stays but to live in them.
“We were pleased with our 2021 financial results and are positive about the setup for 2022. We started last year with revenue that was 1/3 of pre-pandemic levels. Yet as the industry recovered in the second half of the year, we exited at 72% of pre-pandemic levels. And our Q4 results were slightly ahead of the expectations we had communicated in December….
So in summary, we are very optimistic that consumer travel continues to transition back to full recovery in 2022, and that we are positioned to benefit from the return to travel in general and international travel, a TripAdvisor strength, in particular."
Ernst J. Teunissen, CFO
“2021, was the best year in Airbnb's history. In Q4, revenue was $1.5 billion, our best fourth quarter ever and exceeded 2019 by 38%. Net income was $55 million, our best Q4 ever compared to a loss in 2019. And adjusted EBITDA was $333 million, also our best Q4 ever. Our adjusted EBITDA margin was a positive 22% compared to a negative 25% in Q4 2019. This is a huge improvement, obviously. Now in Q4, GBV was $11 billion, which surpassed 2019 levels by 32% and was driven by strong ABR…
Throughout the pandemic, we've seen growing demand for domestic and nonurban travel. In Q4, gross nights booked in nonurban markets was up nearly 45% from Q4 2019. And in the past year alone, Airbnb guests stated nearly 100,000 towns and cities all around the world…
And finally, guests are not just traveling on Airbnb, they are now living on Airbnb. Nearly half of our nights booked in Q4 were for stays of a week or longer. 1 in 5 nights were for stays of a month or longer. And in the past year alone, nearly 175,000 guests stayed for 3 months or longer.”
Brian Chesky, CEO
“Let me start off with a few broad comments about what we experienced in the fourth quarter, which I would say, even though we had to deal with a meaningful Omicron wave and a bunch of disruption in travel -- and of course, that was not great for travelers worldwide -- it was encouraging in many ways. And I think what we observed most notably is that the issues that involved were really issues of inconvenience. There were border shutdowns. There were planes out of service because pilots and crew were sick, things of that nature, but there was far less consumer fear over traveling. And really, it was an issue of being convenience of the health issues.”
Peter Maxwell Kern, CEO
“Overall, in the fourth quarter, total gross bookings for all products, net of cancels, were down 25% versus Q4 of 2019, a slight sequential improvement versus third quarter. And when compared to 2019, we have continued to see a mix shift towards lodging and more specifically, versus air. Given the continued volatility of the recovery due to Omicron, again this quarter, we are providing monthly detail on our total lodging bookings net of cancels, which includes hotel and Vrbo. For October, it was down 4% versus 2019. It was down 5% in November, 27% down in December, down 11% in January, with trends improving throughout January and with us up versus 2019 in the most recent weeks.”
Eric Hart, CFO
Hotels and Stays
Hotels saw a significant recovery during the past year, but the revenue trends are still well-below pre-pandemic levels.
The Omicron variant was definitely a big headache for hotels this past quarter. If you look at the chart below, you’ll see that the number of times COVID was mentioned during these earnings calls saw a significant uptick towards the end of last year.
Source: Fincredible Trends
“As our results show, we made significant progress in our recovery throughout 2021. We saw a meaningful increase in demand for travel and tourism, and our team members around the world were there to welcome guests with our signature hospitality as they look to more exciting destinations to our portfolio and achieving a record year of room openings.”
Christopher Nassetta, CEO
“I'll start with some thoughts on the first quarter of 2022. Omicron meaningfully impacted global group and business transient demand in January, historically the lowest occupancy month of the year. While we saw minimal disruption to leisure travel, global RevPAR for the month declined 31% compared to January of '19 primarily due to lower occupancy as rate was just 4% below 2019.”
Kathleen Kelly Oberg, CFO
“ RevPAR improved 13% compared to the third quarter despite some softening of demand in late December due to the Omicron variant.”
James F. Risoleo, CEO
“Wrapping up on business transient with more encouraging news, we continue to see a return to traditional business travel. In the fourth quarter, our operators traditional top 10 accounts made up 70% of business transient rooms, which is up from 40% in the third quarter. These accounts are all household names representing a mix of financial services, government contracting and consulting companies.”
Sourav Ghosh, CFO
“January results in Las Vegas were impacted by Omicron, particularly in the group side. Encouragingly, forward bookings in January were very strong and February to date has accelerated further positioning us well into March and beyond. To give you some context, our hotel occupancy in January was 61%. And with the latest wave of COVID quickly receiving, we expect occupancy to increase to the mid-80s in March. As we increasingly distance ourselves from our competitors, we believe we have strong pricing power on rooms, food and beverage and nightlife during 2022.”
Craig Scott Billings, CFO
Airlines
Similar to the insights from Airbnb, the president of American Airlines said “The lines between leisure and business travel are definitely blurred.” Remote work has made it more difficult to differentiate between leisure and business travel, with some people traveling for both, and in some cases even living in different cities each month. However, unless regular corporate travel comes back in full-force this year, it’s unlikely that airlines will achieve revenues similar to pre-pandemic levels.
“On the corporate travel side, the business demand we experienced in December has slowed, but we continue to believe there is pent-up demand for business travel, and we are hearing from many of our corporate customers that they intend to travel post-President's Day. I think that will depend on where we are with COVID case counts and hospitalizations, but we are encouraged by what we are hearing from our customers in terms of our future travel plans. We expect first quarter managed business revenues to be down 45% to 55% versus 2019, and improve sequentially from January through March.”
Andrew M. Watterson, Executive Vice President & Chief Commercial Officer
“On the consumer side, we're seeing some near-term hesitation and booking behavior given the prominence of COVID in our daily lives. And that, combined with operational challenges that the industry is facing, consumers are delaying travel until case counts subside and the industry operational reliability is restored. So as a result, we're seeing the rate of recovery step down in the months of January and February to approximately 70% versus '19 levels from nearly 80% where we were in December.
And while the downturn in demand has been quick, we expect an equally rapid improvement once U.S. case counts begin to decline. We remain confident in a strong spring and summer travel season, with significant pent-up demand for consumer and business travel, both domestically and internationally. We expect the month of March to return to the recovery trajectory that we were on in December, resulting in revenue recovery of 72% to 76% for the full quarter.”
Edward H. Bastian, CEO
“Leisure travel, particularly in the U.S., and short-haul international market remains very strong and is approaching a 100% recovery. We expect this trend to continue. And interestingly, we've seen many of our customers that we've historically called leisure travelers are actually flying for reasons beyond just vacations. They may find a feature or a mountain destination, but they're actually going to work remotely for the week. The lines between leisure and business travel are definitely blurred. The recovery of international and business travel slowed late in the fourth quarter, given the Omicron variant, but we remain very bullish on both. The return of international travel is directly linked to travel restrictions around the globe. As the restrictions fall off, we expect international travel to pick up considerably.
We still expect business travel to come back in full, but it will come back in a different way. And by that, I mean the overall mix of business customers, how they travel and how we serve them. As we have shared previously, small and medium-sized business travel remains the strongest segment. In the fourth quarter, small and medium business travel was roughly 80% recovered, while large corporate travel was only 40% recovered.”
Robert Isom, President
Cruises
When it comes to cruises, bookings are returning back to normal. Royal Caribbean, Disney Cruises and Carnival Corporation are key examples in which the guidance for the year ahead is looking positive.
“Turning to booking trends. Our cumulative advanced book position for the second half of 2022 and the first half of 2023 are at the higher end of historical ranges, and at higher prices compared to 2019 with or without FCCs but normalized for bundled packages. This is a great achievement, given pricing on bookings for 2019 sailings is a tough comparison as that was the high watermark for historical yields.”
David Bernstein, CFO
“With the peak in Omicron now seemingly behind us, we have seen meaningful and sequential improvement in the booking activity week-over-week since the beginning of the year. In fact, in the last week of January, bookings returned to pre-Omicron levels, and we expect demand recovery to accelerate as the variant subsides. With that in mind, we have extended our sales and marketing activities for a delayed and extended wave.”
Jason T. Liberty, CEO
“Disney Cruise Line continues to be one of the highest rated guest experiences of any of our offerings. As I said earlier, all 4 of our ships are now sailing and we continue to see tremendous demand for the incredible experiences we offer at sea. We are thrilled to be launching a new ship, the Disney Wish, in June of 2022, and we'll welcome her sister ships to the fleet in 2024 and 2025.”
Christine McCarthy, CFO
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