Trivago CEO Optimistic on Summer Return for Travel

on the pandemic. Another story about how travelers could get COVID vaccine certificates to enable entry to countries under plans being discussed by ministers with governor with government governments. Excuse me, and the aviation industry want to get to I'm rushing because I want to bring him in a go to voice for us when it comes to travel. We've talked with him many times throughout the pandemic. Axel Heifer is

back with us. He see out the online travel platform in search site Travago, and he joins us on the phone from Germany. Excel, it is so great to have you back with us. How how are things going? Yeah, wait, wait to stop. I mean, as Roger said, I mean, the times are still pretty difficult UM for travel obviously, but than for for all of us with all the restrictions around the world. On the other hand, UM, I do think that there is is clear hope and there is a clear path to UM to return to a

more normal life. And the second half of the year with some countries being very successful in vaccinating very quickly UM and more and more vaccination production capacity coming online. So it's it's a mixed um of of a very very difficult present and an improving outlook for the future. Before we look forward a little bit, tell me, I mean, so, is everything pretty quiet still? Is it like it's been largely the last year or so? Are you seeing some

activity a little bit on your platform? I mean the travel is travel activity is very limited, UM. So we we've we've seen quite a lot of travel in the third quarter of last year where the infections came down pretty much everywhere in the northernmosphere, and you could clearly see that there is a huge demand of UM of all of us getting a break and traveling, seeing friends and family and and just going to the beach or

the mountains. But then with the autumn coming, infections have obviously come up, and travel has collapsed pretty much UM in all of our main markets, so the demand is is very quiet. But you know, we are we are focusing on on the recovery and improving our product offering. Well. It's interesting too, I mentioned Expedia reporting, Disney reporting earnings. You know we're watching too in terms of uh, you know, indications of when they start to see their parks opening.

How do you see this is a second half story, a third quarter, fourth quarters story, I mean, how do you see it? Maybe you know playing out here. It's very difficult to predict, but we are we are very confident that by the third quarter most of the main markets will have made a lot of progress UM and and in the vaccination program, so that there will be returned to to travel will in summer, and the question when the summer will start will will obviously be answered

slightly differently market by market. If you look at countries like Israel, UM, I mean, they will be fully vaccinated much much earlier than than some countries in continentally Europe and UM, the UK and the US being somewhere in the middle. So as soon as there are sufficient progress and through the better weather, the new infections world dropped, there will be some return to travel well. And what's interesting too, and I think you and I actually have

talked about it before. You know, this whole idea of health passport or some kind of COVID you know, vaccine certificates to allow you to go you know, across border. Are we gonna do we need that in order for this to work and for the travel industry to really open up. It's a good question, and I think it's a It's the question is to me more political question,

how this would be implemented. I mean, if you if you would only allow UM for vaccinated people to travel, I think at that is UM could create quite some some issues because there is a certain certain sequence of handing vaccinations out UM, so so there is a clear

preference to a certain age groups in particular. Whereas if you use the vaccination passports to make it easier to travel so to UM, to lift the requirements of a quarantine or of UM of multiple tests UM, I think that that is a different matter, and it would for sure help to make it easier. But the key thing that is holding travel back is more the predictability. So

will I be able to go somewhere. What kind of experience will I have and will I be able to return without an unexpected position of a new quarantine restrictions or travel restrictions do you anticipate to And I think we've talked about this too, that the type of travel that maybe we continue to see, at least for at least the first half of the year and maybe even into the second half of the year is much more you know, country within a country, you know, and it's

a lot more of local travel. Do we can tea to see that kind of thing versus cross border? Yeah, I would expect the same pattern that we've seen in

twenty twenty. So first friends and family UM, and predominantly domestic or neighboring internationals, so for the US, Mexico, and then UM continentally, for example, for Germany was a lot of Netherlands and Austria UM, and then UM with more progress also some international travel, and international travel obviously requires a lot more improvement, as you need an improved situation in the country of origin and the country of destination

to then UM installed travel corridors. But domestic will will be the first for shure to recover. You sound exhausted I don't know. I mean I I it has been. It has been pretty much exactly a year. Actually we reported,

we reported this week and I looked it up. So the the first earnings that we report a queue for twenty ninety in actually February eleventh, we we had this one sentence in the share all the latter that said, there is the new virus spreading in Asia, and we don't think that we can make give any guidance because there is some uncertainty. Um. And of course it turned

out very, very different than what we anticipated. But I think now that we are one, we we are closer to the end of the pandemic than than to the beginning. And and that's the way to think about it. Yeah, so today I have an optimism, be an optimist, and and focus on on the recovery rather than looking at the difficult times that we are still in right now. Right because I know all the times that we've talked to you over the past year, I mean, this whole

idea we talked about. You know that we don't have a playbook. We're kind of finding our way through it. And I do feel like vaccines are certainly a game changer. I talked earlier on our broadcast about how let me just find the stats so that I can do it right. But Dr Anthony Fauci, at least here for the US as US vaccines supply should increase enough by April all out,

anyone who wants a shot to begin getting one. That to me like, we're getting, you know, goal posts like this, signposts like this to give us some idea of a visibility going forward. You I'm assuming you're talking to a lot of people in the travel industry, you know, you talk about the second half? Is everybody kind of talking about the second half at this point? I think there there's there's a wide consensus that in the second half we should see a significant improvement. Um, whether we see

it a bit earlier. They are obviously the very very different assumptions and and the different perspective on the on the second quarter is predominantly driven by the uncertainty around the new virus variants. So how quickly will they spread? What exactly will that mean for um, the increase in infections And on the other hand, how quickly, um will the vaccination programs be rolled out, and how quickly will

the mortality rate drop? And depending on on your view on those two questions, you're you're more positive or more skeptical for a bit earlier recovery and earlier start of the summer. So how do you continue to run a company in this environment? I know you've got to worry about employees, UM, tell me where you are with that. And and I'm also how do you do kind of long term strategic planning in this type of environment or do you kind of just have to put it on

hold until you get through this? I mean on the on the business side, UM, it is actually not that difficult because the every every data point that we look at, every survey that you look at, shows that there is an increasing desire to travel. I mean the longer the lockdowns and the restrictions last, the more we all want to travel and you know, see friends and family and and really get out of there and and break out

of the routine. So there is very strong demand and we are not worried at all that there will be no no rebound ones. Things are more under control. The bigger challenge, UM is is I think I mean not specific to travel, is it's a change that we are all facing that this has been going on now depending on where you live for for a year, and and

we are all exhausted. I mean, it's just it's difficult to live in a in a world where, um, you basically spend most of your time at home, where the schools are closed in a lot of countries and a lot of regions where you need to be a parent and employee and a teacher at the same time in

parallel basically. And that's why I think what what will make it make much easier and give us a lot of relief will be the reopening of schools wherever they are closed, and then also the reopening of some activities that that allow you to allow us to break out of the routine. And then the step after that is travel UM. And I think once we see the first steps that that that that allow us to to have a bit more normal life, the pressure that we all

feel will will be um will ease a lot. And and that is also the key challenge in running a travel business, but running any business, I would say, I mean, do you anticipate that in the second half you could see your business up two hundred three d as people who as you said, I'm with them, I'm tired of it. You know, I've been basically living in a bubble for the most part, and um, you know, can't kind of wait to be able to just kind of break out

a little bit. Do you anticipate that we could see some kind of off the charts kind of increases when it comes to travel. There there there will be definitely be a rebound. I mean how much exactly is almost impossible to predict, to be honest, because you will still have certain parts of the population that we'll see friends and family but will be reluctant to really travel, will not feel feel fully safe and and in a way, UM,

I don't think it really matters. I mean we we can't cannot force it anyway, and all we can do is to prepare as good as we can and offer services and and support for those that do want to travel. And if if the the certain segments will will travel the year after so so so so so let's be I mean that that that that's okay. Um, And we we've also been a bit bit spoiled, I mean, being

being a travel tech company. I mean we've only seen growth and it's not it's quite normal for a business to also have one or two bad years right, there are cycles. Yeah, that's exactly. But but there are a business cycles. Then as long as we are getting out of it, whether we're getting out of it a bit bit bit more quickly or a bit more slowly, I don't think that's that's really a big concern. Hey, well,

last question. You did report earning some members of the Wall Street Alice community raising their price targets on you guys financially, do you feel like you can get through easily or you can at least get through another couple

of rough quarters if you need to. Yeah, absolutely, I mean there there we were, and we were in a very fortunate position that we had a very conservative balance sheet when we entered the crisis with a quite healthy cash position and and UM and looking at the year of twenty we basically kept our our cash position but i UM by reducing our working capital and that that has funded our operating losses, so we we didn't have to raise any capital m and still have the same

same cash balance, pretty much the same cash balance. So so from that perspective, we were not really worried at all UM and that it should be well sufficient for UM for the month and perhaps even quarters to come well, looking forward in the quarters to come talking to you with a much more I'm glad to hear your optimism, but I'm hoping the environment is is a lot more optimistic as well. Axel, thank you so much. Exel he for CEO of at Travago on the phone in Germany.