More than twenty years ago, the company led by Dana Dunne began selling airline tickets ‘online’ and now they offer everything from hotels to insurance to 17 million customers in 45 countries. The crisis has taken its toll, but the CEO of eDreams ODIGEO is confident in the rebound effect of demand when sanitary restrictions allow it.
With , 2020 has been a year to forget. How are they doing this year?
Without a doubt, 2020 was an unprecedented year for all of us. However, at eDreams ODIGEO, we face the current fiscal year calmly, having a solid financial position. In the third quarter of fiscal 2021, we have outperformed the rest of the industry, performing 14 points above the industry average. This positions us in a privileged place to come out as winners of the crisis. Likewise, we maintain a strong liquidity position at the moment, of 122 million euros at the end of last January, having registered a positive marginal benefit, of 6 million euros, in the last quarter. The rapid recovery of reservations that was registered last summer indicates that the travel market will probably revive strongly as vaccination plans progress. We will be there to satisfy the great accumulated demand that exists after this period of confinement.
“Since 2015 we have managed to double the revenue we generate outside of our core European markets”
How do you weather a crisis like this?
Every crisis leaves winners and losers. In our case, we quickly realized that we could overcome this crisis, even the most extreme scenarios. We make sure to take immediate short-term actions to manage the situation and at the same time put in place a series of long-term measures in order to strengthen the business for the moment when the market returns to normal. Thanks to the strength of our business model, we don’t need to raise additional capital or take tougher measures; for example, we have kept our teams intact and highly motivated. In our industry this is unheard of and is due to the model and strategy we have implemented.
Has the flexibility of a low fixed cost structure been essential?
Of course. Our business model is characterized by being very flexible and adaptable to the needs of the context. Among other things, because our cost base is more than 80% variable, which means that as soon as our activity is reduced, as has been the case as a result of travel restrictions, our costs are also reduced by the same amount. extent. This gives us great flexibility, as it allows us to weather demand reduction situations like the current one with much more peace of mind than other businesses that have a much more rigid cost base.
Part of its strategy has been based on income diversification. What products have worked best for you?
When I took over as CEO of the company, eDreams ODIGEO was the leader in the flight market in Europe, but it was almost entirely dependent on this product. In order to build a much more sustainable business in the long term, we began a diversification strategy to broaden the company’s revenue streams and not just depend on a single line of business. The results are being very positive and we have significantly improved our strategic position. One of the products that provides travelers with the most added value and works extraordinarily is the dynamic flight plus hotel package. This product allows travelers to combine the flight and hotel of their choice, providing great flexibility, as well as great savings.
“Governments must prioritize the search for solutions that allow people to travel safely again”
How has delayed reimbursement from providers, especially airlines, affected you? Have they recovered?
Unfortunately, those who are suffering from this situation are consumers. We are aware that the situation has been very complicated for everyone. However, airlines are legally required to refund tickets within seven days and some are taking up to nine months. We, as a travel agency, will continue to support our travelers in everything we can to get out of this situation.
Which markets have behaved better this last year?
We are a global company with a presence in 45 markets around the world, covering more than 80% of the world travel market. Although most of our activity is located in six main European markets (Spain, France, Italy, Germany, the United Kingdom and the Nordic countries), we continue to improve our positioning in other areas of the world. In fact, since 2015 we have managed to double the revenue we generate outside of our core European markets, which shows that our geographic diversification strategy is also working.
They were revolutionary with the Prime subscription service and it has even worked well for them in this crisis.
That’s how it is. Prime is one of the biggest successes that this challenging year has left us. Despite challenging market conditions in recent months, our subscription program has added 94,000 new subscribers in the third quarter of our current fiscal year alone, demonstrating that it is an attractive proposition for travelers. In this period, Prime’s deferred income reached 20 million euros, representing an increase of 126% compared to the third quarter of the previous year. All in all, 37% of the group’s bookings are currently made through Prime. Our forecast is to reach two million members in 2023, so this pioneering service in the industry will continue to be one of our clear commitments.
What business plans do you have for 2021?
At eDreams ODIGEO we are already leading the transformation of the travel industry and our goal is to continue evolving our technological capabilities, which are unique in the industry, to continue shaping the future of travel. We will continue to lead the innovation of pioneering travel products and services, such as eDreams Prime, which, as I said, is already having great success among travelers. In addition, we will continue to innovate in the mobile area with our app and strengthening our artificial intelligence to offer even more personalized services for travelers.
Do you plan to open new markets?
At this time, it is not in our short-term plans to expand into new markets. However, we can confirm that we are always working to expand the borders of our business to reach the maximum number of travelers possible.
? Have the vaccines worked?
Of course. Already last summer we saw how the travel market recovered by almost half in just two months, and this still without any vaccine, which shows that the desire to fly remains intact in travelers. In 2021, the news of the arrival of vaccines and the programming of the different plans to immunize the population against Covid generated a very positive effect on travel searches and on the general perception of travel. It is important that vaccination rates continue to rise for demand to reactivate definitively, but there are clear signs that recovery is closer.
“The ‘rebound’ effect is unquestionable, other crises have shown us that traveling is intrinsic to human beings”
The million dollar question: when will pre-pandemic figures be reached?
We are optimistic, and we believe that with vaccination we will have plenty of capacity to recover those numbers or even exceed them. The “rebound” effect is, in my opinion, unquestionable, since other crises have already shown us that traveling is something intrinsic to the human being and people have an infinite desire to take flight again. It is very important to remember something: the demand for travel has not disappeared, it is only accumulating. This means that when the necessary conditions are met, it will materialize in a powerful reactivation of the travel market.
To what extent will the mobile be the protagonist of the reservations? Have reservations in the ‘app’ increased or is the computer still preferred?
The mobile channel is one of the strengths of eDreams ODIGEO, we are the leaders in mobile reservations in Europe. In the third quarter of our current fiscal year, 58% of the group’s bookings were made through this type of device. The pandemic has made electronic commerce more universal than ever and it is increasingly common to make purchases on mobile phones, including travel. In addition, the last-minute booking trend that is taking place throughout Europe also benefits the mobile channel, since these types of reservations tend to be made more on these devices. This benefits us greatly as by leading the mobile travel booking market in Europe for a long time we are in a better position to capture all that demand for mobile bookings,
Will the role of travel agencies be strengthened in the post-Covid-19 era?
Without a doubt. In fact, an international market research firm has just carried out one for eDreams ODIGEO in order to understand how online agencies like us can help travelers in post-Covid times. More than 10,000 travelers from all over the world have participated and the results show that our business model is essential for travelers. Eight out of 10 users prefer to book with OTAs such as eDreams ODIGEO instead of doing it directly with the airlines because they find better prices and a greater combination of routes. It must be remembered that we offer 274,000 flight combinations, which is infinitely higher than what a single airline can offer, and customers value the flexibility of being able to choose what best suits their needs.
“We have called for the establishment of a European fund to protect travelers against airline bankruptcies”
To what extent is the promotion of a health passport important to eliminate travel barriers?
These types of measures are, ultimately, mechanisms for epidemiological control, so it would not be prudent for us to assess their detail or convenience. What we can say is that we are in favor of health authorities and governments studying all possible alternatives so that the tourism market can be reactivated as soon as possible in the safest way. The travel sector is one of the largest and most important, both from an economic point of view for countries, and from a personal and emotional point of view for citizens: traveling is intrinsic to being human. For this reason, governments must prioritize the search for solutions that allow people to travel safely again.
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