Booking Holdings Inc. — Before, During, and After COVID-19
In my previous post entitled: COVID-19 Impact on BODs — It’s Time for the Gloves to Come Off! — I wrote about many companies that missed the opportunity to REINVENT.
And I mentioned that it’s particularly troubling since 97% of all CEOs & BODs are not receptive to outside advice!
I also mentioned that in the past, my posts included only passive narratives about such companies. And I promised that from now on, I will start presenting at least one ACTIONABLE STRATEGY for all to see. Each of my posts will be dedicated to a single company. This is the first such post about reinventing Booking Holdings Inc. (BHI).
My detailed, practical, and FREE advice will be out there in the open. It will add pressure and shine the light on unreachable CEOs and BODs — that do not take their fiduciary duty seriously enough to avoid stakeholders’ scrutiny. Disregard my advice, and sooner or later — the stakeholders will hold such CEOs and BODs accountable!
It’s the kind of vulnerability that can be easily avoided — especially when the markets are jittered by Fear, Uncertainty & Doubt. And when the CEO’s compensation climbs to $14MM a year — the anxiety-driven expectations rise too…
According to BHI’s annual report: “2019 was a solid year for Booking Holdings Inc. In 2019, we operated the largest, most profitable global online travel business in the world, with a 2019 operating margin of 35.5% as a percentage of revenues. Our net income grew 21.7% to $4.9 billion and we generated $4.9 billion of cash from operating activities.
We are particularly proud of having achieved above-market growth while maintaining industry-leading profitability. During 2019, Booking.com, our largest brand, added approximately 400,000 accommodations to its reservation services, including approximately 376,000 homes, apartments and other unique places to stay, and, as of March 31, 2020, had approximately 2,607,000 directly bookable hotels and other places to stay available through its platforms representing more than 29.4 million reported listings (units potentially available for booking as reported to us by the property).
Further, we were pleased to announce that we had 6.3 million reported listings of alternative accommodations as of December 31, 2019. In 2019, we recorded revenue of $3.1 billion from alternative accommodations and alternative accommodations were nicely profitable and grew faster than our core accommodation business”. Very impressive, indeed!
Yet, on Apr 24, 2020, Glenn D. Fogel, President and Chief Executive Officer of BHI wrote the following in a letter to BHI stockholders: “We are facing an unprecedented global pandemic. I believe the COVID-19 virus will impact global travel more than the 9/11 terror attacks, the SARS epidemic and the 2008–2009 Global Financial Crisis combined. Furthermore, it is not possible to predict the trajectory of the virus nor its long-term impact on the travel industry with any degree of certainty”.
And on May 7, 2020, Seeking Alpha reported: “Booking Holdings (NASDAQ:BKNG) reports gross bookings were down 51.2% in Q1 to $12.39B On a constant currency basis, bookings fell 50% during the quarter. Room nights sold were down 43% vs. -29% consensus, while rental car days were 36% lower. Airline tickets were down 8.0% on an unit basis”.
So, on May 28th, I emailed Glenn Fogel. This is a short excerpt from my opening sentence: Glenn, I saw you on BNN Bloomberg this morning & felt compelled to connect. There is SO MUCH MORE you can do than waiting for government bailouts & travel industry recovery. I can elevate the Booking brand & bring MASSIVE NEW REVENUES & PROFITS. And if it doesn’t work, we do not get paid — just as I did with Verizon 20 years ago!
And I followed up once more on June 4, 2020, with the following: “I tried to reach you today and placed a call to your Headquarters. Unfortunately, I couldn’t connect with the operator. Nobody picked-up. So I’m sending a follow-up email to the messages I also sent on LinkedIn — after your interview on BNN Bloomberg”.
I never heard back from Glenn, or anyone else on BHI’s team. Not a peep… My disappointment is particularly regretful since the comments from analysts such as Wedbush’s James Hardiman are becoming more common: “The tone from Booking Holdings (NASDAQ:BKNG) with its earnings report and conference call, whether a function of conservatism or not, supports the firm’s view that a recovery will take the next few years rather than the next few months. We would caution those who expect a V shaped recovery, but instead, investors should prepare for a long recovery period with potential setbacks along the way until a vaccine is in place”.
Shaped by extensive life experiences, my pattern recognition abilities allow me to see how to maximize business offerings & profitability. And looking at existing problems with a pair of fresh eyes — often brings a set of creative solutions, that were never even considered in the past.
The REINVENTION Process
The process of REINVENTION that I offer varies from company to company. Each company’s challenges are unique and so are the solutions to their problems. However, my REINVENTION process is always the same. It’s like a 5-legged stool that includes:
· OPM — Using Other People’s Money
· Push/Pull — Adding New & Untapped Revenue Streams
· Noncustomers — Focusing On New & Untapped Market Segments
· Business Model Innovation — As Important As Technologies Behind It
· Operating Advisor/Mentor — Hands-On Assistance With Strategy AND Execution
Below, is a short description of each component. I will then offer a detailed explanation about a particular Noncustomer strategy that I proposed with BHI in mind: :
- OPM — Other People’s Money
We deliver ground-breaking RapidRevenues™ through tangible acceleration strategies. To make the process smarter & cheaper, we Design, Structure, Finance, and Deploy Opportunistic Joint Ventures. It’s all about RESULTS — or we do not get paid.
Our turnkey approach helps to raise 10X more capital at 1/10 of the cost and it is based on our structured finance expertise. We financed over $1B of renewable energy infrastructure projects in the past and now offer a similar methodology to financing Healthcare, Fintech, Construction & Manufacturing ventures.
- The Push, The Pull, and The AI Bull™
What we learned over the years is that it’s not just technology innovation, but also the exponential increase in the value offered to clients at a much lower cost — that makes all the difference. Yet we see too many product-oriented entities focused on pushing their product out the door — while losing ~70% of available revenues.
Our proprietary process generates huge secondary and tertiary revenue streams. Such a strategy is scalable and sustainable, and it also offers revenue smoothing.
- Business Model Innovation
It’s not just the technology that matters. I’m convinced that Business Model Innovation is as disruptive as Technology Innovation. Please read about my AI experiences with Verizon 20 years ago! I wrote about it in: Keyword Spotting — The Art Of Listening & Observing
- Operating Advisor/Mentor
As an Operating Advisor/Mentor, I work with VC/CVC/PE supported companies at a granular as well as strategic levels. I do so because you can’t separate Strategy from Execution, or Leadership from Management. You need BOTH to succeed! Any separation of the two — leaves execution doomed to fail.
A strategy needs to be executed, or it doesn’t count. I often emphasize that my involvement can be viewed as a substitute for bringing FIVE experienced C-level executives on board to:
· Maximize the monetization of innovation efforts
· Get the most out of disruptive marketing strategies
· Boost operational efficiency
· Capitalize on brand enhancement
· Bring in RAPID revenues & secure access to untapped pools of growth capital
I worked with many companies in the past and some have done very well by analyzing their customers with granular details. Logically, they are selling their products and services to existing customers they thoroughly scrutinized. And yet, I firmly believe that there are HUGE and untapped opportunities to generate new revenues by focusing on …. noncustomers!
No sector has been more affected by COVID-19 business closures than the travel and hospitality markets. Nobody knows how long such industries will suffer, or how much help will they get from governments.
And yet, as old jobs disappear, the new ones emerge. Take Open Table as an example. Since restaurant reservations don’t make any sense when the restaurants are… closed, there are plenty of new reservations that can be made — but not for the restaurants.
We all grew accustomed to seeing a security guard in front of many stores preventing over-crowding and maintaining social distancing. Such jobs are often performed by store employees but what if BHI offered the bookings to a wide range of temporary workers instead? The stores could simply book a “gig” instead of constantly disrupting the schedules of its employees.
More part-time jobs of such nature are a good thing, and there would be plenty of students that could benefit from an additional source of income — long-term. And if you ask: but will such jobs last even after the vaccine is discovered? My answer is a resounding yes. If history teaches us anything — such jobs will last for much longer than initially intended.
To make a point, I look at shopping mall security guards in Israel. When during the 1970s’ PLO was planting the bombs at many Israeli supermarkets, a security guard was placed at the mall’s entrance. From that day, every shopping bag and backpack was checked at the door. Guess what, 50 years later, the security guards are still there…
So yes, as we gradually reopen the economies, the security guards might become a more permanent fixture — not only at the stores but also at all the entertainment venues, night clubs, etc…
And what about food delivery jobs, or curbside pick-up jobs at the stores that are open? It was just last week that we learned about Just Eat Takeaway acquiring Grubhub for $7.3 billion to create the largest food delivery firm outside China!
The point I’m making is that there are plenty of new and untapped markets that could benefit from BHI’s booking expertise. The COVID-19 unemployment checks are going to stop at some point. But the new booking opportunities will not. Like it, or not — it’s not your father’s old pizza delivery world any longer…
Digitization, IT, and Artificial Intelligence are causing the greatest disruption of global supply chain markets and their utmost technological transformation of the last 50 years. BHI should welcome and embrace such changes… and keep booking new and emerging “gig economy” jobs as they come!
If you are still doubting my advice and dismissing my recommendations — think again. Dismissing is easy. It is much more difficult to offer sound advice and deliver results…
IMHO, the merit of the outside advice has nothing to do with how many years the advisor was involved within a specific industry. If you already have considerable domain-specific expertise, it’s time to start looking for outside-the-box thought-leaders. After all, the most successful companies strike the right BALANCE between:
• Domain-specific experts AND generalists
• Mile-deep AND mile-wide points of view
• Strategists AND tacticians
• Leaders AND managers, etc.
Why? Because there are significant benefits to BOTH. And only by using both types of advisers, the companies can gain from new and innovative recommendations and insights. The best turnarounds and pivots occur when CEOs take outside advice seriously.
No matter the size of your company, surrounding yourself with smart, pragmatic, honest, and extremely diversified Advisory Boards — is as important, as hiring the right employees. Otherwise, and before you know it, “The Law Of The Instruments” takes place: “To a man with a hammer, everything looks like a big nail”.
So, let’s just look at the two simple numbers: as of Sep 4, 2020, the $80B BKNG shares gained 0.19% over the entire year.
In comparison, the $4B gig economy platform FVRR (Fiverr International Ltd.) gained a whopping 419.56%. But what do I know? You’ll be the judge…
I’m at that stage in my life where I don’t care about BOD politics and water-cooler gossips. Nor do I offer fake flatteries to CEOs. All I care about is how to solve CEOs’ problems & deliver results. So, I am in the business of joining Advisory Boards/BODs of the most innovative companies all around the world. And as one of the ultimate BusinessAI™ veterans on the planet w/ over 30-yr hands-on AI expertise, I also bring supreme business savvy to separate the wheat from the chaff.
As an Operating Advisor/Jack of All Trades, I work with VC/CVC/PE funds and the companies they support — at a granular as well as strategic levels. And in addition to focusing on organic growth, my ground-breaking RedCarpet™ revenue acceleration strategies include Design, Structure, Finance, and Deployment of Opportunistic Joint Ventures. It is delivered at no cost to the client company, as we leverage “other people’s money” — an ingenious alternative to costly acquisitions…
My turnkey approach helps to raise 10X more capital at 1/10 of the cost and it is based on structured finance expertise. We financed over $1B of Renewable Energy projects in the past and now apply our expertise to the Finance, Healthcare, Fintech, Construction & Manufacturing sectors. And if our unique value innovation does not generate the desired results — we do not get paid…
What I learned over the years is that it is not just technology innovation, but also the exponential increase in the value offered to clients at a much lower cost — that makes all the difference. Yet I see too many companies focused on pushing their product out the door — while losing ~70% of additional revenue streams.
My proprietary “The Push, The Pull and The AI Bull™” process, generates huge secondary and tertiary revenue streams. Such a strategy is scalable and sustainable — resulting in significant revenue smoothing. It allows me to tackle rapid innovation issues; disruptive marketing strategies; operational efficiency improvements; brand enhancement; and securing growth capital.
In some cases, I step-in as an interim CEO to significantly accelerate scale-up and expansion. The emphasis is on EBITDA & Revenue Acceleration, Margin Enhancement & Opening New Channels in diverse markets. Unique pattern recognition abilities allow me to see what is still missing & how to maximize business offerings & profitability.
SELECT ACCOMPLISHMENTS: Using AI in CT medical diagnostic, financial fraud detection, solar PV, wind, WTE, energy efficiency, etc. Finance skills: equity, non-recourse debt, balance sheet financing, and tax equity. I also took a tiny startup public, building a $135MM enterprise & received grants from NRC & DND. Academic R&D collaborations included: UW, UofG, UofT, and MCC Consortium in Texas.