We all know the devastating impact of COVID-19 to the travel industry. Countries’ reopening showed positive signs and we thought that we were on the right track going back on pre-pandemic levels. However, online travel company Booking.com has announced on Tuesday that it will reduce its global workforce by 25%, which shows that the virus is not done wreaking havoc in travel.
Although destinations are reopening months after lockdown, travellers are still hesitant to go on a holiday due to the lack of an effective cure and travel restrictions that could change in an instant. These attitudes directly impact Booking.com and travel agencies, in general. However, Booking.com is a behemoth in the industry so we can imagine the effect of this health crisis in the sector.
In its regulatory filing, the company is still working on the details on the number of employees affected, financial impact and other aspects of the contemplated cost reduction actions. Booking Holdings is expected to make relevant announcement to its employees on a country basis starting September.
According to Johanna Bonhill-Smith, travel & tourism analyst at GlobalData, “this news from Booking Holdings shows the struggles travel operators will continue to experience as they wrestle with the deleterious impact of COVID-19. The fact remains that 41% of global travellers expect to reduce international travel in 2020. Ever-changing rules regarding quarantine, cancellations and general travel between destinations worldwide continue to decimate consumer confidence, which is the largest barrier facing travel recovery.
“Unfortunately, as the battle with COVID-19 continues to rage and the larger industry players continue to make significant cuts, this suggests that more lay-offs may occur as hardships are felt by all. As the world’s largest online travel agent (OTA), Booking Holdings is undoubtedly one of the strongest players to battle through this pandemic but these substantial layoffs show that cost-cutting remains a vital component to weather this pandemic.
“With an asset-light business model, OTA’s remain at a clear strategic advantage to in-store travel agencies but even they are not immune. Other leading online operators including Expedia Group, TripAdvisor and Airbnb have already made significant cuts to their workforce in reaction to this pandemic and in a bid to cut costs”.