The Impact of Major Global Events on Travel and Hospitality Sectors

Immediate Impacts on Travel and Hospitality

Travel and hospitality sectors are experiencing immediate impacts from global events. Booking Holdings is expanding accommodation offerings to enhance booking experiences. Delta Air Lines reports strong international travel demand. Hilton partners with AutoCamp to cater to adventure-seeking travelers. American Airlines adjusts customer engagement strategies, while Carnival Corporation faces declining cruise demand due to geopolitical and economic factors.

"With Stay's commitment to excellence in hospitality and the expanded accommodation offering, travelers can expect a seamless booking experience and unparalleled stays across more than 175,000 destinations in more than 220 countries and territories across the globe." --- (BKNG, press release, 2024/04/18)

"Strong demand for international travel, particularly to leisure destinations, enabled a one point increase in load factor on a 16% increase in capacity compared to the March 2023 quarter." --- (DAL, sec filing, 2024/Q1)

"For the rapidly increasing number of travelers looking to prioritize exploration and adventure, we recently announced an exclusive partnership with the premier outdoor hospitality company, AutoCamp." --- (HLT, earning call, 2024/Q1)

"To reengage the broader business and leisure agency community. Additionally, we have eliminated plans to differentiate how customers earn miles based on where they book their travel, removing another significant obstacle impacting booking behavior and business relationships." --- (AAL, earning call, 2024/Q2)

"These factors include, but are not limited to, the following: • Events and conditions around the world, including geopolitical uncertainty, war and other military actions, inflation, higher fuel prices, higher interest rates and other general concerns impacting the ability or desire of people to travel have led, and may in the future lead, to a decline in demand for cruises as well as negative impacts to our operating costs and profitability." --- (CCL, sec filing, 2024/Q2)

Financial Performance During and After Events

Travel and hospitality sectors are showing resilience and strategic adjustments post-global events. American Airlines and Delta Air Lines are optimistic about regaining revenue and improving financial performance. Marriott focuses on balancing demand and supply, while Booking Holdings highlights the significant impact of unforeseen events on travel.

"I’m confident we’ll regain the standing in the agency and corporate channel, and that, combined with our direct distribution strength, will put us back on track to producing revenues that will meet and exceed our long-term financial targets." --- (AAL, earning call, 2024/Q2)

"That said, we are encouraged by the actions the industry is taking. Seat growth is decelerating, and there appears to be increased focus on improving financial performance." --- (DAL, earning call, 2024/Q2)

"and it's been several years frankly, I think will also provide a good balance for the company's performance as we continue to do more and more conversions, which doesn't impact the supply picture, but also then evens out when you're looking at demand and supply balance." --- (MAR, conference, 2024/06/04)

"You didn't expect something like 2,008, the global financial crisis. And sometimes there are local events that can be really horrific, tsunamis, volcano, volcano hit actually the quarter that it happened very badly, shut down travels." --- (BKNG, conference, 2024/05/20)

"and we needed to make a change. We’re taking actions that will improve our performance, but a reset will take some time and we will continue to feel the impact of our prior sales and distribution strategy on revenue and earnings through the remainder of this year, which is reflected in our updated full year guidance." --- (AAL, earning call, 2024/Q2)

Changes in Consumer Behavior

Consumer behavior in the travel and hospitality sectors is evolving with increased reliance on mobile apps for direct bookings, driven by machine learning and AI advancements. Corporate travel is outpacing consumer travel, and flexible cancellation policies are impacting marketing efficiency. Companies are leveraging marketing strategies to influence these behaviors.

"So we’re having really good wins, I would say, from ML and AI, but the coolest, newest things we really think will impact consumer behavior and experience are still coming and Ariane and the team will get to tell the world about those in a week or so." --- (EXPE, earning call, 2024/Q1)

"The significant majority of room nights booked on our mobile apps are direct, and we continue to see favorable repeat direct booking behavior from consumers in our mobile apps, which allow us more opportunities to engage directly with consumers." --- (BKNG, sec filing, 2024/Q1)

"And also the fact that corporate continues to outgrow consumer, that is also bringing it back into what I'd say is a more normalized curve as it relates to historical perspective." --- (DAL, earning call, 2024/Q2)

"Thanks. Peter Kern: Okay. I’ll take a piece and Ariane can jump in. I would just say, we’ve said it before, but we look at all our marketing, all are things to drive consumer behavior as one big bucket of capital." --- (EXPE, earning call, 2024/Q1)

"Increases in cancellation rates can negatively impact our marketing efficiency as a result of incurring performance marketing expense at the time a booking is made even though that booking could be canceled in the future if it was booked under a flexible cancellation policy." --- (BKNG, sec filing, 2024/Q1)

Business Model Adaptations

Marriott and Hilton have adapted their business models to ensure strong cash generation and growth, while Hilton also expands into new travel experiences. Expedia leverages its brand and technology to enhance services and customer relationships, and reports growth in merchant hotel revenue, reflecting strategic adaptations to global events.

"And we continue to have very strong cash generation in the business. It's really an extraordinary characteristic of our business model." --- (MAR, conference, 2024/06/04)

"Overall, we are very pleased with our first quarter results and we expect our industry leading brands, strong development story and powerful business model to continue to drive growth." --- (HLT, earning call, 2024/Q1)

"In addition to the above segment and product revenue discussion, our revenue by business model is as follows:   Three months ended March 31,     2024 2023 % Change   ($ in millions)   Revenue by Business Model Merchant $ 1,964 $ 1,794 10 % Agency 678 666 2 % Advertising, media and other 247 205 21 % Total revenue $ 2,889 $ 2,665 8 % Merchant revenue increased for the three months ended March 31, 2024, compared to the same period in 2023, was primarily due to an increase in merchant hotel revenue." --- (EXPE, sec filing, 2024/Q1)

"I think I talked about it on the last call, so more AutoCamps, I think areas like Safaris and yes and other riverboat crews and other things because we know that our customers, those are adjunct sort of travel experiences that connect to our business that gives our base of customers, incremental things to engage with us that they want to do and is not in conflict in any way with our business, but we think is synergistic." --- (HLT, earning call, 2024/01/31)

"Business Strategy As we endeavor to power global travel for everyone, everywhere our focus is to leverage our brand, supply and platform technology strength to provide greater services and value to our travelers, suppliers and business partners, and build longer-lasting direct relationships with our customers." --- (EXPE, sec filing, 2024/01/47)

Recovery Strategies Post-Events

Effective recovery strategies post-events include tracking assets and personnel for quick action (AAL), increasing spending and product improvements despite slower recovery (EXPE), offering diverse products for various trip purposes (MAR), leveraging strong demand in specific sectors like consulting and government contracting (HLT), and focusing on corporate travel recovery (DAL).

"And one of the things that we’ve learned is that in terms of any disruption, you better keep track of your aircraft certainly, but also your crews wherever they are and you probably ought to take action as quickly as possible to make sure that you don’t lose visibility for the purpose of recovery." --- (AAL, earning call, 2024/Q2)

"we have been ramping that spend and the product has been improving, we have seen a slower than expected recovery." --- (EXPE, earning call, 2024/Q1)

"Tony Capuano: Of course, and I think, David, you and I have had the chance to talk in the past about our overarching growth strategy, and that strategy is really guided by this desire to make sure our portfolio offers the right product everywhere our guests want to travel for every trip purpose, and we learn with increasingly fluence -- increasingly frequency, excuse me, that more and more members and prospective members of Bonvoy for certain trip purposes seek the price point and the value proposition of platforms in the midscale tier." --- (MAR, earning call, 2024/Q1)

"Business transient recovery remained steady with RevPAR across large corporates, up more than 3%, driven by strong demand in consulting and government contracting." --- (HLT, earning call, 2024/Q1)

"Duane Pfennigwerth: Appreciate those thoughts. And then maybe more of a conceptual one for my follow-up on corporate and the continued recovery in corporate you're pointing to." --- (DAL, earning call, 2024/Q1)

Technological Innovations and Digital Transformation

Marriott, Hilton, and Expedia are leveraging digital transformation to enhance customer experiences and operational efficiency. OpenTable focuses on innovative products for restaurants, while American Airlines emphasizes long-term technological changes and retraining. These initiatives collectively highlight the sector's commitment to technological advancements.

"Through this transformation, we expect to unlock new revenue opportunities, further strengthen our efficient operating model, enhance Marriott Bonvoy, and elevate the associate and customer digital experience." --- (MAR, earning call, 2024/Q1)

""Their perspectives will be invaluable as we focus on this next chapter for OpenTable – with the same commitment to restaurants and laser-focused approach to delivering products and services that will help them succeed." DeSaye is a seasoned technology executive with a proven track record of driving growth and innovation among restaurant groups." --- (BKNG, press release, 2024/04/17)

"Hilton has introduced industry-leading technology enhancements to improve the guest experience, including Digital Key Share, automated complimentary room upgrades and the ability to book confirmed connecting rooms." --- (HLT, press release, 2024/06/03)

"We believe this strategy will enable us to: simultaneously build pieces of technology that work in tandem; ship new capabilities and features faster; create a foundation for more innovative solutions; and achieve greater economies of scope and scale." --- (EXPE, sec filing, 2024/Q1)

"And while I love that we have a 5 year plan out there, the kind of issues that we're talking about, they're decades long initiatives because they involve not only a lot of people in retraining, but it involves tremendous technology change." --- (AAL, conference, 2024/05/29)