TripAdvisor reports losses as Booking.com stays profitable

Two of the biggest players in the travel market reported very different financial results this week

In another display of the effects of the pandemic crisis on the world travel market, TripAdvisor announced on 18 February 2021 a total net income loss of $289 million for the year ending December 31 2020. This is after tax adjustments in which they benefited an $80 million adjustment meaning pre-tax losses stood at $369 million for the year.

It is a hard time for the travel industry; Expedia Group announced losses of $2.7 billion in the weeks prior to the TripAdvisor announcement.

TripAdvisor is no stranger to the public; the site boasts millions of searches a day by travellers seeking the best places to go and reviews from others who have been there. But as the travel demand subsided due to various lockdown measures, the company saw profits fall sharply.

In 2019 they traded with a $126 million net income, a healthy balance sheet that was wiped out nearly three times over in their final unaudited accounts.

Unlike Expedia, TripAdvisor has held an advantage through their business model. Operating on commission and advertising revenue has helped bolster their revenue more so than traditional travel agencies that rely on completed bookings. But the results are still majorly disappointing.

Business metrics fall similarly to those shown by Expedia. Hotel and Accommodation revenues fell 62%; Experiences and Dining fell 67% and Rentals, Flights, Car and Cruises fell 81% in the final quarter alone. This translated to falls of 62%, 59% and 65% respectively in each area.

Despite this, optimism remains strong at the company. “As challenging as 2020 was for the travel industry, we enter 2021 with optimism,” said Chief Executive Officer Steve Kaufer. “Vaccine developments since November are encouraging and we see signals that indicate that pent up travel demand continues to grow, setting the travel industry up for a potential inflection later in the year.”

Booking Holdings (who operate a variety of sites including booking.com, agoda, priceline, rentalcars and restaurant booking platform OpenTable) reported on February 24th a drop in annual gross booking values (not revenue) of 63.3%, or $61 billion, a huge blow to the industry. Room nights dropping from 845 million to 355 million; rental car days from 77 million to 31 million and air tickets from 7 million to 6 milllion. Overall this translates to a fall in revenue from $15 billion in 3019 to just under $6.8 billion in 2020.

In total for the year, the company reported a total net income of $59 million versus a prior year of $4.86 billion, a substantial decrease. Every quarter seeing a decline versus last year. This figure however is bolstered by the sale of stocks and shares held by the company to the tune of $1.8 billion during the year; the company no doubt facing over $1 billion losses without this action.

One of the main disadvantages that booking.com holds above TripAdvisor is their payment processes; guests and businesses can choose to pay booking.com directly or pay the business. When the pandemic hit, agencies operating this model were hit hard with refund requests. In the case of booking.com they will have also had to assume some losses from guests they refunded on behalf of businesses who were closed and uncontactable.

So as we approach economies reopening, you can wonder just how reliant these companies are on a boom in tourism happening for 2021. The U.K. verges on opening again in the coming months and there will no doubt be those who wonder if it is the businesses who will pay more in the long run to boost these figures. Could we see increased commission rates above those that many already saw as above the amounts they were comfortable paying? Only time will tell, but one thing is for sure; it will be some time before their shareholders start seeing the successes of 2019.