Booking Holdings CEO Glenn Fogel: eTraveli Acquisition, Prices — Full Video

Booking Holdings has viewed its planned $1.7 billion acquisition of Swedish-based company eTraveli Group as a coup in its attempts to boost its flight business. However, the European Commission has blocked the deal, arguing that the deal would increase Booking.com’s hotel market share in Europe.

Booking Holdings CEO Glenn Fogel addressed the ongoing issue at the recent Skift Global Forum in New York City. He also touched on commission fees for partners and New York City’s new short-term rental regulations, among other issues.

Watch the full video or read a transcript of it below.

Interview Transcript

Dennis Schaal: Good morning, we’re back. More importantly, you’re back, Glenn. Thanks.

Glenn Fogel: I’m back.

Schaal: Thanks for being here.

Fogel: Well, thanks for having me again. It’s just beautiful. I mean, this is so much better than last year.

Schaal: And look at the beautiful weather too. Let’s talk about the weather. There’s a lot going on. So on Monday, the European Commission blocked your $1.7 billion deal to buy Sweden’s eTraveli Group. They’re a flight technology and (online travel agency).

Can we show a slide? This is a quote from you in 2022, “Given the strategic importance of flights to our connected trip offering, we believe it is critical to bring eTraveli’s flight expertise and technology in-house while also unlocking some of the limitations that exist in our current commercial agreement.” Critical, did I say that? Now, what, Glenn?

Fogel: It is extremely disappointing to me that the regulators decided to block this transaction. I absolutely believe they’re wrong on the facts, wrong on the law, and it’s wrong policy. That being said, for the business, we’ve had a relationship with eTraveli for many years and we recently extended that agreement for many more years. So we are going to continue to build out our flight business, which has been doing very, very well.

This is unfortunate in terms of it will not allow us as quickly and as easily to improve the flight product that we have right now. Therefore, that is bad for consumers. That is bad, particularly, for people who have been pleading for a better flight experience. Everyone here, we all fly. We all buy our tickets, many of us do it ourselves online and we know it’s not as easy as it should be. There are a lot of ways to improve it.

Now, I can’t get into the minds of the people, the regulators in terms of what their thinking is. I can say a couple things that I know to be true, and these are, first of all, we are not a dominant player in travel in Europe. The numbers that I saw some of the regulars put out, I don’t know where they come from but they’re not right. I also know the fact that us doing a flight business certainly would help our hotel businesses. No doubt about that. And the regulator said one to 3%. That was their decision. And they say-

Schaal: That’s a thing though. They claim that by doing the flight business, it’s going to make you more dominant in hotels.

Fogel: That was their basis, and they say it’s going to get better by 1 to 3%, therefore, you should not be able to improve the flight business. There’s so many things and we’re going to obviously appeal this. We’ll go to the courts, it will take time. I’m confident that my belief is the correct one. And I look back, and some of us who are old enough to remember, about 20 years ago, actually, more about 24 years ago, there were some air travel companies, tour operators in Europe and they want to do a merger. It’s called First Choice in Air Tours. They tried to do the merger, and the regulators, just like this, the EU Commission said, “Can’t do that, it’s bad.” They went to court.

Three years later, court knocked it down, said the regulators are absolutely completely wrong. Of course, by then, it was three years later and I don’t see too much about Air Tours or First Choice anymore. This is a problem, when regulators make decisions that are incorrect, it impacts people negatively. It’s unfortunate but it is.

Schaal: Fortunately, I can get into the minds of regulators. So they claim that you have more than 60% (online travel agency) market share in Europe, and they did a survey of 15,000 hotels, and overall, the conclusion was that the hoteliers were fearful that this would boost your hotel market share, that you could raise prices for hotels and possibly, consumers would end up paying higher hotel rates. What do you say to that?

Fogel: I say that a couple things, so first of all, let’s get this straight. So we have a relationship with Etraveli for many years, helping us to provide the backend to help us sell airline tickets. We go out, we buy the shares, the equity of eTraveli. We give the owners cash. Okay, done. Now, a hotelier says, “That could increase the costs of me doing business with you.”

I don’t follow the relationship at all. We’re currently doing business with eTraveli. We’ll be doing the same business after we own the shares of eTraveli, how does that impact anything? Again, the logic makes no sense at all, but I certainly see, if I am a hotelier or someone and somebody asked me, listen, what do you think about somebody raising prices? And I would say, I’m against it. I’m against raising prices. So I would not trust polls or surveys as a way to come out and make very serious decisions for the good of an entire society.

Schaal: Quick point though, the quote I just read said, “Acquiring them would help you unlock certain limitations in your partnership agreement.”

Fogel: Right now, when you’re working where you have a shareholder currently, who has certain objectives, and we have certain objectives, it’s easier instead of having to discuss these two objectives, which may not always come together and be able to have one person driving the train, but it is what it is, and we’ll work together and look, the good thing is our flight business has grown so rapidly over the last couple of years and I expect it to continue to do so. I’m just disappointed that we won’t be able to provide even better service to consumers. Hopefully, we go through the courts and hopefully, at some point down the road, there is a final decision.

Schaal: Do you remember George Herbert Walker Bush, number 41?

Fogel: I do. I am that old. Yes.

Schaal: He was campaigning and he said, “Read my lips, no new taxes. Are you ready to take the pledge? Read my lips, no higher commissions if this deal goes through.”

Fogel: So a couple things, I believe Mr. Bush did not get reelected.

Schaal: You’re not running for anything.

Fogel: Probably a bad decision on his point to make that statement, came back and bit him. Here’s the thing, what should we charge a partner? Well, it’s not what we should charge, it’s to negotiate what can we charge. What is the market for a price? If we charge too much, nobody buys our service. It’s that simple. If I went to hotelier and I said, “We’d like to have 60%, 70% commission,” you know what they’d say, “Go away.” Or if I say, “How about 50? What about 40? What about 30?”

Schaal: We’ll use Expedia.

Fogel: They look at the market and say, “I can use anybody.” And by the way, as we all know, and anybody who runs a hotel knows very well, you get to choose. You choose who you want to use and when you want to use them. It is not a surprising observation that when it is high season, third party distributors get fewer rooms than they do when it’s low season. And this is the thing, if somebody does not like… says, “You’re charging too much,” I would respond, “Okay, then perhaps you should use someone else. If we are not giving you value, don’t use our service.”

I do the same thing with everyone else. By the way, there’s this company, google, you’ve heard of it. It’s a big company. You have to buy Edward, you got to put money in to get… but you get to choose how much to pay, like you bid. And then if you bid higher, maybe you’ll get more customers. If you don’t like the price, don’t use it. It’s that simple.

Schaal: We could go on and on, on this topic, but let’s move to something else.

Fogel: Okay.

Schaal: Well, something related. So if this deal does get blocked, so your whole career has been being involved in (mergers and acquisitions). You helped Priceline acquire the two companies that became Booking.com. You were very involved in buying Kayak, Agoda, OpenTable maybe. But if this deal gets blocked, it… It always depends on the type of deal, but it seems like you’re pretty much barred from buying anything substantial in Europe.

Fogel: It’s interesting in terms of what is the regulator’s viewpoint and is this a specific transaction that applies this or is what else does it apply out to? And by the way, why does this apply in other industries for other people who want to do transactions? And one might question, was this whole transaction not so much about us, but about the EU regulators trying to make a statement moving from what previously had been settled law and regulations of how (merger and acquisition) applies and trying to come up with new laws and new regulation without actually having to have a new law, just come up with a new rule.

It’s interesting because, and again, I can’t get into the minds of regulators, but I’m reading about the interesting things happening in the United States in regards to regulatory (merger and acquisition) issues. And there’ve been a lot of things put out by the current administration trying to stop a lot of mergers.

And a lot of them have failed these efforts to try and create new rules that are not based on the current laws is failing in many places. And we’ll see how this new thing came out yesterday with Amazon, and we’ll see what that ends up or …. We’ll see because this really is coming to a new end. I don’t know how it’ll turn out. I do know this though. I know that we want to try and promote new products, new services that benefit society, and I sometimes think that sometimes people think that big is bad. Big is not necessarily bad. Big can be bad if it’s misusing what your powers and your abilities are, using things that are illegal or incorrect that you should not do.

But just because something is big, many times, that actually makes something good. And I’ll tell you, I love Amazon. It brings me my stuff. It comes right away. It’s cheap. And I love Booking.com because yes, we’re a bigger company than many, but there’s a lot of good things that are very helpful to both sides of the marketplace.

Schaal: It looks like there might be some further roadblocks coming. So later this year, the reports is that Europe will designate Booking.com a gatekeeper. I love this quote that you gave to the Financial Times. I think you were talking about the regulatory environment and you said, “Every day, we have to fight to try and get bookings. If we don’t fight for the best for the consumers and our travel partner suppliers, that business will go somewhere else. It just takes one click.”

Fogel: I like that quote. Thank you. So-

Schaal: It’s pretty tough business. I mean, you have your… Go ahead.

Fogel: I meet with regulators and I meet with government people all the time, and sometimes they start off with the, you’re very, very powerful and dominant. And I say privacy will prevent me from going and looking, but I’m just curious, do you do all your travel with us? You get these looks like, maybe not. And then you’re like, so tell me, do you feel you can only use us and there are no other ways to do it, you’re going to get a hotel? And you’re just, “Oh my God, I got to use Booking again. It’s horrible. I have no choices.”

We all know in this room and they know, that is not true. In fact, you’ve got data. I know you have data. How many times people look at different sites before they actually press by. I don’t remember the numbers you put out but they’re-

Schaal: 28.7. No, a lot of sites. Dozens of sites.

Fogel: Dozens.

Schaal: Yeah, I would say.

Fogel: Dozens of sites before you buy yet, yet somebody thinks that there’s some dominant position. Am I the only person who sees there’s a bit of a problem between those two things? That’s crazy. It’s like living in a kafkaesque world. It’s dominant, but yes, I do look at many other sites. Look, the reason people choose us, and that’s what I meant in the FD thing, they choose it because they believe that using us versus another one is giving them more value. Maybe it’s a better price, maybe it’s better customer service. Maybe it’s just easier to use.

Whatever the reason is, people have choice, in this idea that somebody decides, well, I’m in charge and I’m going to say that you’re dominant and you are not going to be able to do things. That is not the way we should be doing our regulatory framework and not how we should be trying to improve our society.

Schaal: Before we go to some audience questions, another topic about how we should not be doing things this way. What day is today? It’s Wednesday. On Friday, Saturday or Monday, whatever, we might have a government shutdown. What is that going to do to your business? What is that going to do to the travel industry? What’s your take?

Fogel: Well, it’s definitely not going to be good. Let’s start off with that one. We all know that. Depends on how long it goes for, and nobody really knows. And from reading the media, I’ve not seen anybody come out clearly with what some of the plans are in terms of how some of the government run things are going to be done or not.

But here’s some things we can be pretty certain of, the longer it goes, the worse it’ll be. The people who are critical workers for the government will still work, but they won’t get paid. I don’t know about you, but working without paying, not a good feeling. And if we look back the last time there was a government shutdown, at length, May, it was 2019, I think, about 18, 19, somewhere around there, people started not showing up for work as much. They started calling in sick.

That’s really bad for things like TSA. That’d be really bad for the air controllers in the tower. When do you stop flights? Flights shut down because there aren’t enough people in the tower. Well, we saw that already. Just a shortage in general. There’s a shortage of people in the tower. But imagine everybody starts saying, “You’re not paying me?” It’s been X amount of time. I’m feeling ill today, I’m not coming in. That’s really bad. And if you look back, and maybe it’s a coincidence, but when the number of people in the tower started going down significantly, all of a sudden, they got together with an agreement in Washington to keep it going.

So I would say that all of us here have a duty to make sure we are reaching out and talking to our representatives, and saying, “Hey, work it out and get it going.” We, in travel, took a tremendous hit from pandemic. Horrible. Now we’re up, things are finally going back up. Now we’re going to have another knockdown. It’s like a fighter gets off, the canvas gets up and you hit them in the jaw again. It’s crazy. I really wish because it’s so important that our lives are not being so disrupted because people can’t just have a standard, get together, have a negotiator, come out with something that works. I go to Washington, I feel like it’s like sports, and who wins? Who loses? But these are real people’s lives that they’re playing with.

Schaal: Exactly. So speaking about that, so you have a fintech division, and part of that is to… You develop your own payment system. And there were recent headlines across Europe, Hungary, England, Japan, Brazil, that your short-term rental hosts weren’t getting paid for weeks and even months. Your office in Hungary was raided. What’s going on there? And that hurts the little people. The individual homeowner is just trying to pay their mortgage and get by.

Fogel: Yeah. We did a very, very large change in our backend financial systems. Some things didn’t work so well. You do everything you can to make sure it’s going to be perfect. Wasn’t. Some people didn’t get paid a very, very, very small percentage. But even one person is one too many.

We have two types of customers. We’ve got the travelers and we’ve got the partners. And if we don’t provide good service to them, that’s on us. We screw it up, and there were mistakes. And if you don’t pay a very large company so much, well, its cap, it’s not a big deal.

By the way, in our agency business where we get paid by the partner who sends us money afterwards our commission, sometimes we don’t get paid on time either. So 30 days late, 60 days late, 90 days late, and during the pandemic, we didn’t get paid at all. Happens. This is not a pandemic, this is a mistake. And the thing is, for the smaller partners, partners that were really depending on that payment, I just felt so horrible.

Schaal: What kind of redress can you have for them?

Fogel: First thing is get their money as fast as you can, as fast as you can. And I’ll tell you, I get emails and I’ve read them and they are really heartbreaking. You just feel horrible when you do something wrong. And we have fixed it, it’s good now. But I’ll tell you, this is something where I say to the team, and I say that… I spoke out at a town hall, town hall for all of our 20 something thousand employees.

And I told them about this. I said, “Look, this is not the way we want to be. We got to do better. We should not ever, ever feel that this is okay.” Well, it’s only a small number of partners. That’s the wrong attitude. It’s always got to be, every partner counts. So the lesson from it was we have to do better.

Schaal: So here we are in New York City, they just effectively banned short-term rentals. You can only stay in a short-term rental, if the host is licensed, if you’re sharing the apartment with the host, no locks on the bedroom doors. What is your advice to the city of New York on their short-term rental policy?

Fogel: So this is a very complex situation. We have a bunch of things happening at once. We have many stakeholders going on. We have partners who want to be able to rent out their property. We have travelers who want to stay in it. And if let’s say it’s an apartment building, you have a bunch of other people who live on that floor. Maybe they don’t want to hear the wheelie suitcase every day coming in and out or whatever.

Schaal: Or maybe they can’t find an affordable apartment to live in.

Fogel: Right, as well, of course, too, because it’s being rented out on a short-term basis. A lot of things happening at once. And then throw on top of that a place like Venice right now where they just put a new… they try and put in a tax because of over tourism where the city’s overwhelmed and some people who their homes and they can’t live there, so there’re too many tourists. And that is partly due to the short-term rental effectiveness. So lots of different stakeholders that we have to all deal with. What is the right thing and what’s the right way to do it?

The way New York City has done it is one way to do it. We obviously are discussing with them issues about it. It may have been too draconian. Maybe there are other ways instead of a blanket across, maybe there are better zoning that could do it, working out better for everybody. But every municipality that has a large influx of tourism, tourists, they’ve got to work these issues out because there are competing interests here.

And sometimes people say, “well, how about just price? Why don’t we just put in a really big tourist tax on it?” But then only people who have more money could then visit. And maybe that’s not fair either. So I’m glad I’m not a politician, but I do believe we have a responsibility to participate and try and make sure this is what is the optimal solution for all the stakeholders.

Schaal: Some interesting things going on with AI. You just rolled out a trip planning thing in your mobile app just to genius members in the US, I believe?

Fogel: Yeah.

Schaal: And then I understand that you’re using it internally and you’ve already been able to replace some positions for manually translating things, and you’ve transferred those people, you didn’t lay them off, you transferred them into different jobs. But it seems it’s definitely coming, we’re going to start hearing this year, X company laid off this number of workers because of AI. So where is all this heading?

Fogel: Well, I think from the previous session, I mean, there’s incredible promise in AI that we all know, and I didn’t hear everything that was said, but also, there’s incredible risk, and there’s the risk you’re just pushing out the issue of, what happens to people’s jobs? Since the human being wasn’t in the caves, there’s been technology and it’s made things change different. And we look in history and we see these types of very, very rapid technological changes can be very disruptive to societies. And when you see what could potentially be very large disruption to jobs, that causes a lot of problems.

So yes, we love the fact that we have all these new technologies and generative AI is going to be just one of the most transformative new technologies that possibly you have to go back, I don’t know, being able to use fire, I mean, this thing is going to be enormous, but how are we going to handle the changes in society like people’s jobs being displaced? So for example, we are retraining, moving people into something else. Is that going to work for everybody? Probably not. So what’s going to happen there?

Example, there are a few million people who make a living driving trucks in the US, now we all see, AI, it’s not generative AI, AI coming out and it’s going to automate trucking. What happens to these 3 million people? They’re very skilled in trucking. What are they going to do next? These are the issues. We have strikes right now in the UAW, part of the dispute, part of the issue is, what’s going to happen to their jobs as technology reduces their jobs, because now we want to have electric vehicles, a lot fewer parts in electric vehicles, a lot less jobs than that.

So that one too, or you have the people in the West Coast, the screenwriters, concern on the contract negotiations. One of them was about generative AI is going to create scripts. We all have to figure out, how is this going to do? But because we work in a competitive environment, we know that one of the things we have to do is cost-efficient, and it is less expensive to have AI or generative AI, any type of AI to do something. We’re going to be implementing it. And when we implement it, the way we’re saving money, potentially, could be because we don’t need that human being job, and it’s really concerning what happens to that human. And that’s something that I think our governments have to do a great deal thinking about how to deal with this in terms of retraining.

I was in Washington two weeks ago, I guess, yeah, two weeks ago, when Majority Leader Schumer had one of his first of several informatory sessions with other senators about AI and how they’re going to call regulations in Europe. There’s AI regulations already being pushed through Japan. China already has some stuff out Brazil, all over the world. This is going to be very, very important for our path going forward. And I just hope we get it right because mistakes here could be very hard to correct. So I hope people are thoughtful as they come out with what these regulations are.

Schaal: Got it. Switching gears, Expedia Group CEO, Peter Kern, will be in that chair in an hour and 15 minutes. He called your Agoda brand, “One of the worst rate abusers when it comes to violating raid parity and undercutting hotel rates.” And to that, you say?

Fogel: Did Peter really say that?

Schaal: He really did. And that was a quote.

Fogel: Maybe he woke up on the wrong side of the bed that time.

Schaal: You think that’s what it is?

Fogel: I don’t know.

Schaal: I mean, there’s a lot of hotels that are pissed off about it, I’m sure.

Fogel: Again, here’s the thing is, we believe that being a good partner means following the rules with the partner and such. And I don’t disagree with partners if they say, look, I don’t like X, Y, Z, and I’m not going to do business with you anymore. Understood. It’s our job not to do the things that are ticking them off, et cetera. So I can only say that we will continue always to strive to do what is right for the partner. And I talk to Peter occasionally, I ask him, “Could you give me some examples? I’d like to know so I can fix what you’re saying we’re not doing right.”

Schaal: Tell him to come clean.

Fogel: I’ll ask him. Look, here’s part of the issue too, it’s a very competitive market out there. And as we know, people don’t always know what the rules are with certain types of products, rates, et cetera. So some things can be sold incorrectly, not out of malice. But the price was there and you sold it. And believe me, I understand his point of how important it is that we do try and have rules, people following them and not… Let’s face it, you don’t like cheating in sports and you don’t like cheating in business.

Schaal: Thanks, Glenn. We got to play by the rules. We’re out of time.

Fogel: Okay.

Schaal: Thank you very much.

Fogel: Thank you very much.