Government relief or not, if a substantial coronavirus recovery doesn't take shape by June, it's hard to believe that Booking Holdings won't execute substantial layoffs like everyone else. Perhaps the crisis, too, will spur new discussions about enormous pay gaps between CEOs and their workers.
Booking.com terminated 48 contractors in Amsterdam when their agreements expired, and Glenn Fogel, CEO of that unit and its parent Booking Holdings, told employees in an internal video Friday that additional layoffs were certainly possible.
Under the headline, “Dizzying”drop in turnover at Booking: layoffs on the way, Dutch site NRC reported on the video it obtained, as well as internal documents, although it didn’t publish the actual video.
“Staff at Booking.com, the world’s largest travel site, is very concerned about a possible dismissal (layoffs),” the NRC story said. “Last Friday, American top executive Glenn Fogel announced this during a video conference with hundreds of employees. In it, Fogel replied ‘probably, yes’ to the question of whether layoffs would be made.”
There have been no announcements of layoffs, although the company is undoubtedly mulling its options as competitors and big travel companies virtually everywhere have furloughed or fired staff.
With bookings down 85 percent as of early April, compared to a year earlier, Booking Holdings confirmed Thursday that it applied for government assistance in the UK and the Netherlands. Fogel, who tested positive for coronavirus a couple of weeks ago, and is reportedly fully recovered, said at the time that the company hadn’t decided yet whether to apply for relief under the U.S. CARES Act.
“This pandemic has had an immense impact on many industries, especially the travel industry, which is under unprecedented pressure,” Booking Holdings said in a statement. “We are not immune to this pressure, and as we work to manage costs aggressively, we are also looking at government subsidy efforts as they are being announced across regions.”
In the UK under its relief program, Booking Holdings would be able to furlough employees for three months but they would receive 80 percent of their pay from the government. The Netherlands relief package would enable the company to keep employing working for three months at full salary paid by the government. During this period, a major restructuring would be barred.
“The relief will help us support the short term financial health of our business, and our employees, as we continue to plan for the longer-term recovery when the travel economy begins to emerge from this difficult time,” Booking Holdings stated.
Works Council and Employee Concerns
There is deep concern among Booking.com employees about layoffs, according to the story from NRC, which obtained internal documents. Booking’s Works Council, which is an internal employee association, submitted a plan to Booking a couple of weeks ago seeking to limit the number of layoffs and to ensure they are carried out in an equitable manner.
There is, according to reports, dissatisfaction among Booking.com employees with the company’s stock buybacks of 2019 — reportedly around $8 billion worth — because it might have bettered served as a buffer against the firings that might still happen this year. And there is anger about the deep divide between Fogel’s compensation and those of employees.
In 2018, Fogel was the highest compensated online travel CEO at $20.45 million, and that amounted to the largest gap 402 to 1 between CEOs and employees’ median pay among peer companies that Skift tracked.
Most of the 2019 CEO compensation numbers in online travel haven’t been publicized yet.
In the wake of the coronavirus pandemic this year, Fogel agreed to cease taking any salary for the remainder of the year, and top executives have taken pay cuts. The Works Council has asked Fogel to give up taking his share grants and options in 2020, as well.
Expedia Already Did Layoffs, Barry Diller Is Not Bullish
That Booking Holdings is considering layoffs is hardly surprising given the the nearly grounding of global travel. Consider that Booking Holdings is in better financial shape than Airbnb and Expedia, which laid off about 12 percent of staff earlier this year.
Booking Holdings has pledged to massively reduce its travel advertising in 2020, and in a CNBC interview Thursday, Expedia Group chairman and senior executive Barry Diller said, “We won’t spend $1 billion in advertising probably this year.” He said Expedia spent around $5 billion in advertising in 2019. [See the Diller video below.]
Diller noted that after 9/11 in 2001 he went ahead with a then-pending transaction to acquire Expedia, saying “if there’s life, there’s travel.”
He said the recovery post-coronavirus will not mimic either 9/11 or the 2008 financial crisis.
“As far as travel is concerned, while I’m absolutely optimistic that at some point, but I don’t think soon, I don’t think it’s until probably September, October, November, December, really get life back,” Diller said. “And in order to travel, you’ve got to have that. So, they’re totally different situations. This is not analogous. I don’t think it’s analogous to anything. Certainly not analogous to 9/11 and to the financial crisis in ’08.”
Photo credit: A Booking.com lodging rating as seen in the Netherlands on July 8, 2019. The company is mulling layoffs and applying for governmental relief. jbdodane / Flickr.com