Online travel agency eDreams Odigeo has been pretty explicit in its bookings breakdown. Similar businesses should also expect a rocky few months ahead as the world deals with the outbreak and spread of coronavirus.
Barcelona-based online travel agency eDreams Odigeo has seen bookings take a dive across all its markets following the outbreak of the coronavirus.
Not only is the disease causing problems across its China and Asian source markets, but in Italy — where 400 people have been infected — the company has also seen a significant dropoff.
“[Before] the outbreak of the coronavirus, we were seeing solid, high single-digit growth rates for bookings. After the outbreak, increasing concerns about coronavirus have inevitably resulted in a slowing of demand,” Dana Dunne, CEO, told analysts on an earnings call on Thursday.
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Bookings across the business were up 8 percent on a year-over-year basis for the week ending January 16, 2020 but that had flipped to a drop of 12 percent for the period between February 22 and 25 with Italy (down 35 percent) and China (down 92 percent).
The company’s geographical spread means it is somewhat protected from problems in specific countries. China only accounts for 1 percent of total bookings with Italy at 7 percent.
If the current booking trend continues, eDreams still expects to report an increase across three key metrics — bookings, revenue margin, and adjusted profit (EBITDA) — for its 2020 full-year results.
Dunne, however, declined to give any guidance for 2021, saying this would wait until June, when there would likely be “a lot more clarity on the length and depth of this coronavirus outbreak.”
Travel brands are increasingly waking up to the idea of using subscriptions as a revenue and loyalty play and eDreams has taken the idea on further than most.
The company started testing its Prime scheme on the quiet a couple of years ago and recently added hotels to the service. Around 555,000 people now subscribe to the service across four different markets — Italy, Spain, France, and Germany — with a target of two million set for 2023. Members get a discount on flights and other services.
Dunne is now targeting a fifth country.
“I would expect that, let’s say, over the next six months, we would come to another market, at least another big market of ours, but we haven’t set that in stone yet in terms of the exact timing of it. Right now, we’re focused more on improving the proposition to the customer as opposed to moving out to a new geography,” Dunne said.
EDreams reported a 13.6 percent drop in operating profit to $55.4 million (€50.6 million) for the nine months to the end of December 2019. Revenue during the same period increased 11.4 percent to $480 million (€437 million).
One of the reasons for the drop in profit is the closure of Milan and Berlin call centres for a total cost of $9.8 million (€8.9 million).
On a quarterly basis adjusted net profit increased 23 percent to $12.4 million (€11.3 million).
Photo credit: Italian Army soldiers. The coronavirus has spread from China to other parts of the world. Antonio Calanni / Associated Press