A widely distributed Covid-19 vaccine would clearly help travel companies in 2021. But the industry won’t simply bounce back to its pre-pandemic levels, one top travel executive told Barron’s.
(ticker: TRVG) Chief Financial Officer Matthias Tillmann thinks
(PFE) latest news about its vaccine was a welcome development, especially given that the early results show it could be more than 90% effective. But his company, which helps people search for accommodations around the world, is preparing for a long-term shift in travel patterns. And it’s not betting that a vaccine will turn everything around next year.
“If we really get it by year-end, it will probably take time in 2021 to distribute this so it won’t have a big impact on our industry,” he said in an interview on Friday. “But then 2022, it can be a big game changer.”
Trivago’s revenue is likely to fall 70% to 80% in 2020 from 2019 levels. The German company hasn’t yet projected 2021 revenue. Trivago will be closely watching what destinations people search for on its site starting in January, when most travelers start thinking about their spring break and summer trips. Tillman doesn’t anticipate people will be booking intercontinental flights that they put off during the pandemic.
“I think [a vaccine] will for sure have a positive impact. Perception will be much more positive towards travel,” he said. “But I wouldn’t assume that people say that, ‘Now I will go on this long-haul flight to Asia from Europe or to the U.S.’ People will probably feel safer to travel within their regions. That’s what we anticipate.”
International travel also depends on business trips rebounding, and that could take even longer, he said.
Trivago launched a product called Discover in April and has now set it up around the world. It helps travelers choose nearby destinations, see events happening in those areas, and shows them accommodations that can fit their needs. Increasingly, those are alternative accommodations like apartments or houses, as opposed to hotels. There are articles directing people on how to plan their vacations too. Go to Trivago now and you’ll get a prompt asking if you “Need inspiration for your next post-isolation trip?”
It feels like a new kind of offering for travel search sites, which have traditionally differentiated themselves by the size of their inventory, their user-friendliness, or their access to travel deals. The Discover section is meant to help people who may not have a specific destination in mind and are looking to get away to a safe place within driving distance. “It’s really for someone who is looking for inspirational destinations locally,” he said. Instead of picking a city and then browsing hotels, people can leave their queries more open-ended.
“So you can say, ‘Over the next six weeks, give me any weekend where you have good deals or where something is going on. And I want to travel for a weekend, and I don’t want to get away more than 200 miles, so I can drive.’ And then we will show you what’s around, and also include accommodations,” he said.
Early results have shown customers like it, he said.
Tillmann said he’s optimistic about a Biden administration because the president-elect appears to be taking the virus more seriously. Even if that means that Americans face more severe restrictions on their movement in the short-term, it could make it more likely the country gets control of the virus and the economy bounces back.
“It seems like he has the whole situation on his agenda and wants to put stricter measures in place to fight the virus,” Tillman said. “I think it’s better for the overall industry to take the short-term pain, be very serious about it, and do everything to contain the situation and then go back onto a sustainable recovery in the long term.”
Write to Avi Salzman at [email protected]