The Decline & Fall of Online Travel: Booking Holdings (BKNG $1,746)
Pandemics Highlight The Weaknesses in the Global Web Travel Sector.
Online travel is beginning to resemble the ancient hero in Ryszard Kapuściński’s voyaging classic, Travels of Herodotus. Kapuściński’ s ancient Greek traveler may have pioneered horseback routes through Asia and opened the marvels of Babylon or the Nile to the reading world. But the author aptly notes that, though Herodotus was on par with giants like Plato, Sappho, and Socrates, he would simply “appear and just as quickly vanish” from history.
And so it will be with Norwalk, Conn.-based integrated online travel giant, Booking Holdings, as it begins the trek back from its pandemic-induced coma.
Recent dispatches from “Booking” -- as investors like to dub this operation -- all indicate this is a big-tech unicorn imbued with the magical power to stride over the struggling travel sector. The firm just cached, by our count, $3.25 billion in cash from the sale of corporate debt. Its sticky online brands, like Booking.com, Priceline, and Kayak, combine to fetch roughly $70 billion in equity market value. Share prices have sojourned back up by roughly 25%, from their covid-crash bottom. Short interest on these equities is off by around 7%. Some 88% of company shares were held by institutions.
If you were clever enough to invest $1,000 10 years ago, in what was then Priceline Holdings, you’d have more $6,000 today. Booking Holdings appears to be buckled up for a first-class investor ride.
Maecenas sed diam eget risus varius blandit sit amet non magna.
Except, of course, when one takes the time to ask real travelers, property owners, transportation providers and regulators about what travel is becoming in the pandemic era. Suddenly, Booking Holdings, like most other web travel middlemen, stands little chance of making its way home in the comfy seats.
Booking Holdings, like AirBnb, Expedia (EXPE) and all the rest, are facing a no-growth slog in investing steerage.
The Traveling Unknown
What interviews with landlords, travelers, service providers, regulators and machine learning specialists in and around the travel business reveal is how little confidence any one player has in the true shape and topology of the post-pandemic travel market.
All complain of little accurate information. Travel restrictions seem to change in real time. The epidemiological information that drives these rules seem to become less standardized each week, rather than more. Enforcement is uncertain. Media coverage of travel has become dangerously partisan. Pandemic fears have been amplified by the American presidential election. How one moves about can be seen as a potentially ugly act, ripe for social media shame.
All complain that even basic online travel is now shrouded in an eerie Bleak House fog. Take, for example, a trip we have made dozens of times: Flying from New York City to industrial northeast Italy, outside of Venice, to meet with clients.
At first glance, the private sector appears to be innovating nicely. A consortium of European travel companies, called the European Covid-19 Travel Alliance, has created the Covid-19 Travel Database. Here, top-shelf operations like Barcelo Hotel Group, Booking.com, Trivago (TRVG) and others attempt to offer a clearing house for travel restrictions, rules, and various data needed to safely move about in a world facing an incurable pathogen.
Initially, the Covid-19 database offers a decent first blush for what Italy might expect from tourists: Masks for hotels. Distance for entering bars. Zoos are open, but be careful of the animals.
But, then there’s this disclaimer:
Trivago does not assume any responsibility for the accuracy or correctness of the information on this website. You should confirm whether restrictions are in place with official government sources prior to planning any travel.
Remarkably, there are few links to easily confirm the data. Travelers must work through public sources on their own. For Italy, that means reconciling the published European Union Travel Restrictions, the U.S, State Department Travel Restrictions, and the almost always overlooked requirements of the in-country U.S. embassies. It’s those diplomats that actually administer an American’s return travel from Italy to the U.S. during times of danger.
For the record, there is a so-called Level-4 travel advisory advising against travel to Italy, yet bookable airline tickets are readily available. A fact that is mostly confirmed by the Covid-19 Travel Regulations map, published by the International Sir Transport Association. One can fly to Italy but also to nearby countries like Montenegro that only have Level-1 restrictions. Overland travel is possible back to Venice. But that might also be a trip through Bosnia, Herzegovina, Croatia, Slovenia, or maybe Serbia, Hungary and Austria. Or why not Albania, Macedonia, Bulgaria, Romania, The Ukraine, Slovakia, Czechia, Germany and finally south through Switzerland onto Italian soil.
The exact details of all this travel are so complex -- and have changed so dramatically over the course of the reporting for this story -- that we can't reliably publish them here.
That’s after 6 weeks of research all we can say is, if Venice is your goal, you probably shouldn’t go. But we can’t say for sure that you can’t go. Or what would happen if you tried to return.
No Need for Middlemen
Those who travel in big tech circles speculate that disorganized pandemic travel data is a golden business opportunity. Google’s new Travel portal is chock full of AI-generated suggestions. Startups like Hopper, Baarb, and even Amtrak,’s Juliefeature intelligent machines solving traveler problems. The $3.5 billion in cash Booking Holdings just raised could buy a fleet of intelligent automated travel agents. But, machine learning experts we spoke with were quietly skeptical of the ability of artificial intelligence to do the tricky bookkeeping Booking Holdings would require in the pandemic era.
What befuddles intelligent machines, it turns out, is online travel companies having nothing to do with actual travel. Booking,com, Kayak and AirBnb might capture all sorts of data. But none can guarantee a flight, confirm a hotel. or arrange a visa.
What value can an automated data middleman add when Maine Governor Janet Mills suddenly waived quarantine rules for travelers from New York, Connecticut, or New Jersey? What can an online booking service do to speed a transaction when 250,000 are sent back to lockdown in Manila? How does a mobile app finesse travel to DisneyWorld, when it fell into a social media shame cycle while Florida recorded the largest daily increase in Covid-19 cases since the beginning of the pandemic?
The only active metaphor we could find for online travel now is the 1950s Poland that Kapuściński writes about in the early pages Travels with Herodotus. His early life came in an age when censors culled the nuanced details that make the world human from the available books and newspapers.
That left readers to feel for themselves what was happening out in the world. Travels with Herodutus is Kapuściński’s own story of spending his life reconciling what he was told, from what was truly there to explore.
Doesn't that feel analogous to the haze that shrouds Booking Holdings?
The operation won’t fold. It will still book trips. It will be flashy and a flashpoint. This stock is a technical option and a volatility trader’s paradise. For the disciplined professional investor looking for true value, this company will only be worth traveling with, once traveling itself establishes its new routes. For now, there are other places to search when looking for a safe ride in the pandemic economy.
