Coronavirus Emergency: what are the policies adopted by OTAs?
In the first quarter of 2020, the travel industry suffered a significant setback due to the Coronavirus emergency and the resulting restrictive mobility policies implemented by governments in many countries. In this context, the rapid strategies adopted by OTAs (Online Travel Agencies) are also developing in order to counter the heavy losses suffered and at the same time not disappointing their customers.
There are 2 macro-categories identified within which the OTAs are taking measures, in a more or less homogeneous way:
- Cost containment policies;
- Cancellation policies;
With regard to the first category, OTA’s trend is to contain costs by implementing various measures: reductions in the budget allocated to the marketing divisions, as decided by Booking.com and Airbnb, which thus plans to save 731 million euros, rather than freezing recruitment. Expedia, on the other hand, still at the end of February had announced the dismissal of 3,000 workers, or 12% of its workforce, expecting to save between 270 million and 450 million euros.
In addition, Expedia has decided to reduce its projects, activities and teams: the American company is experiencing a change of direction in internal policies due to the new chairman, Barry Diller, who has announced that he wants to “simplify the entire organization”. At the same time, Booking.com has also announced the cancellation of internal events and reduced non-essential business travel.
In the second category, all OTAs had to manage the huge amount of cancellations made by their users, trying not to disappoint anyone. In the context of short rentals, the substantial difference between the different management policies concerns the choice to financially support either the travellers or the owners of the facilities advertised on the platforms.
AirBnb and Tripadvisor decided to guarantee travellers who had booked a trip between 14 March and 31 May 2020 a full refund if booked before 14 March. Initially, Airbnb’s policy aroused the anger of hosts, to which the American giant responded by launching a 237 million euro financial aid plan and a 9 million euro fund dedicated to hosts and superhosts respectively, who suffered heavy economic losses due to cancellations of reservations.
A different policy is adopted instead by Vrbo, of the Expedia group and Booking.com, who have decided to let the owner of the structure decide whether or not to make a total or partial refund of the trip, offer alternative dates or issue the classic voucher.
We at Twissen have observed that the downsizing of some OTAs was already happening before the crisis broke out due to the Coronavirus, which only accentuated this trend. The companies that, at the end of the emergency, will recover faster are the ones that will be able to make their organization more and more agile and flat, following the trends of the moment and increasingly strengthening their computer and digital systems.