WEBVTT - Priceline.com CEO Brett Keller Talks Travel Demand

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<v Speaker 1>We have Priceline CEO Brett Keller joining us now. Brett,

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<v Speaker 1>it's great to have you with us, because it feels

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<v Speaker 1>like for the cruises you're still seeing really robust demand there.

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<v Speaker 1>We were talking about pricing power with some of the

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<v Speaker 1>CEOs of some of the big cruise lines earlier in

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<v Speaker 1>the day on Bloomberg TV today, and then you take

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<v Speaker 1>a look at the airlines. It's a much different picture.

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<v Speaker 1>Of course, when it comes to the forecast for travel demand.

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<v Speaker 1>From where you're sitting at Priceline, how does it look

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<v Speaker 1>to you?

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<v Speaker 2>Yeah, well, I think what we're seeing is that consumers

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<v Speaker 2>are certainly seeking out value, and cruise lines create and

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<v Speaker 2>produce a lot of value for consumers. It's one of

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<v Speaker 2>the cheapest ways to travel in terms of all inclusive meals, entertainment, etc.

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<v Speaker 2>And you spend many times you can spend less than

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<v Speaker 2>one hundred dollars per person per night, So it's great

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<v Speaker 2>value there. We're seeing the same thing. We have shoppers

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<v Speaker 2>coming into price lines specifically focused on our value offers,

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<v Speaker 2>whether that's our vacation packages, express deals, etc. When you

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<v Speaker 2>look at the flight industry, listen, TSA numbers continue to

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<v Speaker 2>show that there's growth year on year. In fact, we're

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<v Speaker 2>tracking five or six sent up year on year for

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<v Speaker 2>the last month, and so consumers are still flying. I

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<v Speaker 2>think what happened in the airline space is they added

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<v Speaker 2>a little too much capacity and so they're removing that

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<v Speaker 2>as they look forward over the next quarter, and that's

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<v Speaker 2>going to put a little more pressure on pricing, as

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<v Speaker 2>their prices have been down for most of the year.

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<v Speaker 1>I mean, what's your opinion there that maybe the airlines

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<v Speaker 1>were betting that this post pandemic burst of travel that

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<v Speaker 1>we saw was going to be sustained, whereas now it

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<v Speaker 1>seems like maybe we're returning to more normal pre pandemic levels.

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<v Speaker 2>Yeah, obviously travel has been very hot for the last

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<v Speaker 2>year and a half. Consumers were really investing significantly in

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<v Speaker 2>that part of their spend, and so we saw a

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<v Speaker 2>lot of travel overseas, which is a very rich part

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<v Speaker 2>of the travel experience for the airlines. And so I

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<v Speaker 2>think what's happening is consumers are pumping the brakes just

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<v Speaker 2>a little bit, but travel is still healthy. It continues

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<v Speaker 2>to be one of the highest prioritized discretionary spend categories,

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<v Speaker 2>and we're certainly seeing that. I think across the industry,

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<v Speaker 2>but there are some pockets leisure travel in particular. Consumers

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<v Speaker 2>are being a little more careful about how they're spending

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<v Speaker 2>their dollar as they've kind of come through this peak

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<v Speaker 2>of summer now in travel and they're looking forward to

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<v Speaker 2>Labor Day and beyond.

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<v Speaker 3>Last year, brett AI was the buzzword in markets, and

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<v Speaker 3>it's also something we heard a lot from companies. How

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<v Speaker 3>have you worked AI into your product?

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<v Speaker 2>Yeah, thank you for asking that, Listen. We were one

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<v Speaker 2>of the innovators of AI. Over a year ago. We

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<v Speaker 2>launched chatbot and put that to work, and we're finding

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<v Speaker 2>that really across the consumer booking process, this is becoming

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<v Speaker 2>more and more natural for consumers to interact with So

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<v Speaker 2>they're using it not only to plan and think of

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<v Speaker 2>itineraries ahead of booking their travel, but during the booking

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<v Speaker 2>process itself, they're engaging in our chatbot, asking questions about

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<v Speaker 2>the property that they want to stay at, the location,

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<v Speaker 2>the activities nearby, and then post purchase, they're using it

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<v Speaker 2>to service their product. It's a much easier way to

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<v Speaker 2>very quickly cancel a reservation, make changes to a reservation,

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<v Speaker 2>or find out more information about a refunder other things

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<v Speaker 2>that are important to the consumer. So we're finding it

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<v Speaker 2>to be a very useful and innovative tool to help

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<v Speaker 2>the consumer just smooth out that travel process all along

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<v Speaker 2>the way.

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<v Speaker 3>How hard are consumers working to save money? I mean

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<v Speaker 3>when you say refund it makes me think about sometimes

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<v Speaker 3>it's not easy to get those You've got to do

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<v Speaker 3>the legwork. When I look at, for example, car rental prices,

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<v Speaker 3>it always doubles once I add all the insurance and fees,

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<v Speaker 3>and then if I really want to save money, I'll

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<v Speaker 3>actually call my credit card and say hey, am I

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<v Speaker 3>insured for this rental car? Or figure out with my

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<v Speaker 3>state farm agent. Like our customers doing the extra work

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<v Speaker 3>to save the money.

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<v Speaker 2>Yes, consumers are absolutely, I think taking the time to

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<v Speaker 2>not only shop ahead of their trip, to look at

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<v Speaker 2>the various different players in the space who can deliver

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<v Speaker 2>the best value in the lowest price, and two to

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<v Speaker 2>your point, when it comes to add ons, whether that's

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<v Speaker 2>insurance activities, even dining, they are making very specific decisions

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<v Speaker 2>to fit that within their budget. And so Priceline, for example,

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<v Speaker 2>offers an insurance product with the relicar. We've actually seen

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<v Speaker 2>the insurance take rates go up meeting more people are

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<v Speaker 2>adding insurance to their car. I think that's just a

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<v Speaker 2>part of the post pandemic experience. People are really trying

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<v Speaker 2>to protect their purchases, to ensure that if, for in fact,

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<v Speaker 2>they have travel disruption or something happens on the trip,

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<v Speaker 2>they're covered for that. Consumers are insted in that.

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<v Speaker 3>Are they clicking on the insurance the airline insurance as well?

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<v Speaker 3>Every time you buy a ticket the airline says, hey,

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<v Speaker 3>if you've give me twenty more dollars, you know you

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<v Speaker 3>can cancel on the day of Are more consumers using that?

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<v Speaker 2>Yeah, we have seen an increase in travel insurance associated

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<v Speaker 2>with an airline ticket purchase, especially for the bigger transactions

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<v Speaker 2>like a vacation package. People really do want to protect

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<v Speaker 2>their investment, and insurance is a legitimate and a very

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<v Speaker 2>good way to do that.

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<v Speaker 1>I want to talk to about trends that we might

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<v Speaker 1>be seeing when it comes to length of travel. There

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<v Speaker 1>was a really interesting story on the Terminal a couple

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<v Speaker 1>days ago that had data from Embark Beyond which found

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<v Speaker 1>that the average trip length is down fourteen percent year

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<v Speaker 1>over year, now averages six point tuesdays rather than seven

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<v Speaker 1>point eight days. Now Embark beyond. It serves primarily US

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<v Speaker 1>ultra high net worth individuals, But are you seeing similar

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<v Speaker 1>trends when it comes to price lines customers?

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<v Speaker 2>Now, we service the value consumer, and in the data

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<v Speaker 2>that we're looking at, we haven't seen a material difference

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<v Speaker 2>in length of stay for our consumers. They continue to

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<v Speaker 2>book at a fairly normal rate in terms of how

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<v Speaker 2>far out they're looking, and so we're not seeing a

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<v Speaker 2>significant collapse, for example, in last minute bookings and consumers,

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<v Speaker 2>are you really taking the same types of trips? I

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<v Speaker 2>think where we're seeing the focus now is on what

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<v Speaker 2>type of trip am I going to take? And am

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<v Speaker 2>I going to change that behavior based on what my

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<v Speaker 2>budget's going to allow me to do? And so obviously

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<v Speaker 2>last year and really earlier this year, we saw a

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<v Speaker 2>lot of travel overseas, over to Europe, over to Asia.

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<v Speaker 2>Now as we approach Labor Day, we're seen a lot

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<v Speaker 2>more consumers interested in in more nearby destinations, so things

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<v Speaker 2>like Mexico, the Caribbean, the Bahamas. People still want to

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<v Speaker 2>take that vacation, they want to get to beaches and

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<v Speaker 2>warm destinations, but they're sticking a little bit closer than

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<v Speaker 2>they were, say six months ago, and I.

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<v Speaker 1>Mean, it's interesting to tie it back into how we

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<v Speaker 1>started this conversation. You think about how people are traveling.

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<v Speaker 1>We've been talking about the trade down across industries really

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<v Speaker 1>all year. When you think about sort of the shift

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<v Speaker 1>from airlines now cruises are hot, really now you see

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<v Speaker 1>people traveling by car more. I mean, is that part

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<v Speaker 1>of that overall trade down narrative.

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<v Speaker 2>Yeah, that's something we watched very closely because it's a

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<v Speaker 2>very rational thing to do. Right, you would have stayed

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<v Speaker 2>in a five star hotel, now you're going to stay

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<v Speaker 2>a four. You would have stayed in the three, and

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<v Speaker 2>now you're shifting down to a two. We haven't seen

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<v Speaker 2>a material move in that trade down experience in the

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<v Speaker 2>bookings and in the consumers that we're looking at here

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<v Speaker 2>at Priceline. And again, I think people still want to travel,

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<v Speaker 2>but they are looking for discounts, they're looking for deals

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<v Speaker 2>to save. They want to do the same trip they

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<v Speaker 2>did before, but they'd like to knock off a couple

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<v Speaker 2>of dollars on that trip and bring the pricing down.

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<v Speaker 2>And so again we're seeing a lot more interest in

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<v Speaker 2>our value offers on our Priceline website.

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<v Speaker 1>All right, bred it's always a fascinating conversation with you,

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<v Speaker 1>of course, as we monitor the consumer and the traveler,

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<v Speaker 1>that of course is Priceline CEO Brett Keller