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Along with the debate about the shape of a potential travel industry recovery, crosscurrents are emerging about which companies and business models would lead the charge.

Cowen Equity Research published a recent investor note contending that Booking Holdings is “in a better position to maintain staff today and invest in the recovery” compared with other online travel booking giants Airbnb and Expedia Group.

The Cowen note, written by Kevin Kopelman and Emily Lavin, centers on Bookings’ advantageous liquidity position as compared to privately held Airbnb and public company Expedia.

Cowen estimated that the trio had the same fixed costs — around $750 million per quarter — before coronavirus-induced cost chops, but that recent financing moves leave Booking Holdings with about $8.5 billion in liquidity, and Airbnb and Expedia each with around $1-2 billion after the outflows of considerable prepaid bookings.

Business Model Winners and Losers

One of Bookings’ big advantages, according to Cowen, is that because it primarily uses the pay-at-the-hotel agency model, it only had around $1.6 billion in prepaid bookings on its books at the end of 2019.

Although Airbnb boasted around $2 billion in cash in early March and access to a $1 billion revolving loan, according to Cowen, Airbnb took the pro-consumer step of agreeing to refund cancelled guest bookings while Booking Holdings and Expedia took more conservative approaches.

The virtual lockdown of travel around the world “has likely resulted in significant outflows as Airbnb refunds some cash it had collected upfront for now-cancelled bookings (though Airbnb is also issuing travel credits to some guests in lieu of cash),” Cowen said.

Expedia had a much larger amount of deferred bookings than Booking, around $5 billion for Expedia versus $1.6 billion for Booking at the end of the year, which is “likely leading to large outflows over the past 1.5 months (though Expedia is also offering travel credits),” Cowen said.

On the short-term rental side of Expedia’s business, its Vrbo unit was urging hosts to refund guests a portion of their upfront payments, but wasn’t mandating it, as Airbnb unilaterally did.

Both Booking and Airbnb may have a marketing advantage over Expedia during a recovery because both were generating more direct traffic and were less dependent on Google to find customers than was Expedia before the coronavirus crisis.

Booking in Better Shape for a Recovery

Although Booking issued ominous warnings about what could happen in the second half of 2021 if travel deteriorates further and before its recent financings, Cowen concluded that Booking Holdings is “better capitalized to invest during a travel recovery.”

It should be noted that Airbnb’s recent $1 billion debt financing from two private equity firms comes at an 11-12 percent interest rate, Booking priced $3.25 billion of its debt offerings at around 4 percent, and that Expedia is “cash-constrained,” according to Cowen.

Which Business Model Will Have the Advantage?

When it pitched investors about its fundraising, Airbnb argued that short-term rentals would be in a better spot than hotels during a coronavirus recovery because travelers would have more control over their environments for sanitary purposes, and could stay in less-populated locations outside city centers.

Booking Holdings has argued — and Expedia can make similar promises — that it offers both short-term rentals and hotels so can better-please travelers whichever kind of stays they desire.

On the other hand, one might contend, Booking Holdings and Expedia are more dependent on hotels than Airbnb, many properties have closed, and some may never reopen.

Representatives of Airbnb, Expedia and Booking didn’t respond to a request for comment for this story.

What Will the Recovery Look Like?

Cowen is bullish on a recovery once coronavirus fades. It forecasts that hotel room revenue will fall 50 percent in 2020, and will jump 50 percent and 33 percent in 2021 and 2022, respectively.

Those 2021 and 2022 projections could turn out to be overly optimistic considering there may still be no coronavirus vaccine for most of 2021, and travel behavior and various countries’ travel restrictions may be significantly changed for an extended period.

Still despite their varying abilities to bounce back quickly, Cowen believes that all three companies — Booking, Airbnb, and Expedia — will “participate significantly in the bounce back.”

Photo Credit: Pictured is a photo of Booking.com's Amsterdam headquarters. Booking Holdings has a lot of cash to use once a coronavirus recovery takes place.