Video is exclusive to members, sign up now to enjoy this and many other features.

Outlook on Travel Demand

Former Head of Google Travel Vertical Search

IP Interview
Published on May 30, 2020

Why is this interview interesting?

  • Outlook on Q3 and Q4 occupancy for hotels
  • Comparison of coronavirus with 9/11
Executive Bio

Javier Delgado Muerza

Former Head of Google Travel Vertical Search

Javier is a leading travel executive with experience across the whole travel value chain. He started his career at Iberia, the flag carrier of Spain, before moving to Expedia in 2003 where he spent 8 years leading the Southern European Affiliate Network. Javier then joined Google as Head of Travel in Spain before moving to Lead Travel within the Vertical Search team where he was in the team building Google Flights and HotelAds. Javier is now the Chief Commercial Officer at Iberostar, a Spanish chain with over 1,200 hotels globally, where he is responsible for marketing and distribution.

Interview Transcript

What is your outlook on occupancy for the industry, in 2021 or 18 months’ time? Do you think we can get back to 60%, 65% occupancy levels, in 18 months?

I hope so, but it’s difficult to say. If we look at it from the position of a bottle that is half full or half empty, the approach is the following. Q2 is completely wiped out, so we’ve lost all of the business for Q2. It is true that we were hit by the virus around the start of March and then all of the figures and the occupancy rates, went down the drains, quite quickly. As a company, we are now considering that May is completely lost; we have closed sales and we are not accepting any bookings. Most of the countries – not even hotel chains, I’m talking about countries and home destinations – are operating in the same manner. For June, it remains to be seen. We are revising the policies and the sales activity, on a day by day basis.

The interesting piece is, when you look to Q3, the numbers are still pretty stable. By stable, I mean, we haven’t seen a massive wash of business going away, just yet. It is true that the wash that we saw in Q2 came in different waves, as the virus hit different countries and moving from the East to the West. But Q3, surprisingly, in our books and in talking with colleagues from all over the world, they are still pretty stable. We have seen some erosion of the occupancy rates, but in our case, we are seeing around 30% occupancy rates, for July and August. This is a relatively good number, because we haven’t lost a lot of the bookings that we already had.

If you compare that with previous years, it’s a bad number, because we should be at a higher level by now, but if you consider that we are now five, six, seven weeks into the crisis, we haven’t seen a massive erosion just yet. It doesn’t mean that it won’t happen later; it might well do. But it hasn’t yet happened. This gives a ray of hope. If we look at Q4, we’re actually seeing positive pick up. Pick up is when we see new business and the cancellations, net net, there’s a pick up. That’s positive for Q4. We are seeing pretty good numbers for Mexico, we’re seeing numbers come back for the Canary Islands, which is an important destination for Europeans. By that standard, there should be some hope.

To your question, how long is it going to take, to regain pre-crisis levels? It will probably take 24 months, from the time that the virus is declared as being controlled. Either because there is a vaccine in place or because the authorities decide or announce that things are now under control and the epidemic is controlled. But I think it will take time to recover.

Another important aspect we need to look at is, how things have changed through time. Take 9/11. 9/11 has a massive impact on travel and tourism and for society, in general. It took a long time to recover from that tragic event. The different terrible attacks that we’ve seen happen, through time, in the last 20 years since then, society and travel, as an industry, has been able to recover faster and faster. It doesn’t mean that events are not tragic. A life is a life and terrorism is always a terrible thing to happen, but if we look at the Paris events, a few years back, which were massive attacks, hundreds of people killed in the streets, we saw Paris come back two, three, four weeks later. We’ve seen the same in Turkey. So terrorism, unfortunately, has become the new normal.

This is a new event; it’s an epidemic and it’s a virus coming into society. It will take time for people to adapt and to find the new norms and new standards to be followed and observed. But eventually, we will get back to normal life.

Sign up to test our content quality with a free sample of 50+ interviews

Copyright Notice

This document may not be reproduced, distributed, or transmitted in any form or by any means including resale of any part, unauthorised distribution to a third party or other electronic methods, without the prior written permission of IP 1 Ltd.

IP 1 Ltd, trading as In Practise (herein referred to as "IP") is a company registered in England and Wales and is not a registered investment advisor or broker-dealer, and is not licensed nor qualified to provide investment advice.

In Practise reserves all copyright, intellectual and other property rights in the Content. The information published in this transcript (“Content”) is for information purposes only and should not be used as the sole basis for making any investment decision. Information provided by IP is to be used as an educational tool and nothing in this Content shall be construed as an offer, recommendation or solicitation regarding any financial product, service or management of investments or securities.

© 2024 IP 1 Ltd. All rights reserved.