Speaker 1: We have Priceline CEO Brett Keller joining us now. Brett,
Speaker 1: it's great to have you with us, because it feels
Speaker 1: like for the cruises you're still seeing really robust demand there.
Speaker 1: We were talking about pricing power with some of the
Speaker 1: CEOs of some of the big cruise lines earlier in
Speaker 1: the day on Bloomberg TV today, and then you take
Speaker 1: a look at the airlines. It's a much different picture.
Speaker 1: Of course, when it comes to the forecast for travel demand.
Speaker 1: From where you're sitting at Priceline, how does it look
Speaker 1: to you?
Speaker 2: Yeah, well, I think what we're seeing is that consumers
Speaker 2: are certainly seeking out value, and cruise lines create and
Speaker 2: produce a lot of value for consumers. It's one of
Speaker 2: the cheapest ways to travel in terms of all inclusive meals, entertainment, etc.
Speaker 2: And you spend many times you can spend less than
Speaker 2: one hundred dollars per person per night, So it's great
Speaker 2: value there. We're seeing the same thing. We have shoppers
Speaker 2: coming into price lines specifically focused on our value offers,
Speaker 2: whether that's our vacation packages, express deals, etc. When you
Speaker 2: look at the flight industry, listen, TSA numbers continue to
Speaker 2: show that there's growth year on year. In fact, we're
Speaker 2: tracking five or six sent up year on year for
Speaker 2: the last month, and so consumers are still flying. I
Speaker 2: think what happened in the airline space is they added
Speaker 2: a little too much capacity and so they're removing that
Speaker 2: as they look forward over the next quarter, and that's
Speaker 2: going to put a little more pressure on pricing, as
Speaker 2: their prices have been down for most of the year.
Speaker 1: I mean, what's your opinion there that maybe the airlines
Speaker 1: were betting that this post pandemic burst of travel that
Speaker 1: we saw was going to be sustained, whereas now it
Speaker 1: seems like maybe we're returning to more normal pre pandemic levels.
Speaker 2: Yeah, obviously travel has been very hot for the last
Speaker 2: year and a half. Consumers were really investing significantly in
Speaker 2: that part of their spend, and so we saw a
Speaker 2: lot of travel overseas, which is a very rich part
Speaker 2: of the travel experience for the airlines. And so I
Speaker 2: think what's happening is consumers are pumping the brakes just
Speaker 2: a little bit, but travel is still healthy. It continues
Speaker 2: to be one of the highest prioritized discretionary spend categories,
Speaker 2: and we're certainly seeing that. I think across the industry,
Speaker 2: but there are some pockets leisure travel in particular. Consumers
Speaker 2: are being a little more careful about how they're spending
Speaker 2: their dollar as they've kind of come through this peak
Speaker 2: of summer now in travel and they're looking forward to
Speaker 2: Labor Day and beyond.
Speaker 3: Last year, brett AI was the buzzword in markets, and
Speaker 3: it's also something we heard a lot from companies. How
Speaker 3: have you worked AI into your product?
Speaker 2: Yeah, thank you for asking that, Listen. We were one
Speaker 2: of the innovators of AI. Over a year ago. We
Speaker 2: launched chatbot and put that to work, and we're finding
Speaker 2: that really across the consumer booking process, this is becoming
Speaker 2: more and more natural for consumers to interact with So
Speaker 2: they're using it not only to plan and think of
Speaker 2: itineraries ahead of booking their travel, but during the booking
Speaker 2: process itself, they're engaging in our chatbot, asking questions about
Speaker 2: the property that they want to stay at, the location,
Speaker 2: the activities nearby, and then post purchase, they're using it
Speaker 2: to service their product. It's a much easier way to
Speaker 2: very quickly cancel a reservation, make changes to a reservation,
Speaker 2: or find out more information about a refunder other things
Speaker 2: that are important to the consumer. So we're finding it
Speaker 2: to be a very useful and innovative tool to help
Speaker 2: the consumer just smooth out that travel process all along
Speaker 2: the way.
Speaker 3: How hard are consumers working to save money? I mean
Speaker 3: when you say refund it makes me think about sometimes
Speaker 3: it's not easy to get those You've got to do
Speaker 3: the legwork. When I look at, for example, car rental prices,
Speaker 3: it always doubles once I add all the insurance and fees,
Speaker 3: and then if I really want to save money, I'll
Speaker 3: actually call my credit card and say hey, am I
Speaker 3: insured for this rental car? Or figure out with my
Speaker 3: state farm agent. Like our customers doing the extra work
Speaker 3: to save the money.
Speaker 2: Yes, consumers are absolutely, I think taking the time to
Speaker 2: not only shop ahead of their trip, to look at
Speaker 2: the various different players in the space who can deliver
Speaker 2: the best value in the lowest price, and two to
Speaker 2: your point, when it comes to add ons, whether that's
Speaker 2: insurance activities, even dining, they are making very specific decisions
Speaker 2: to fit that within their budget. And so Priceline, for example,
Speaker 2: offers an insurance product with the relicar. We've actually seen
Speaker 2: the insurance take rates go up meeting more people are
Speaker 2: adding insurance to their car. I think that's just a
Speaker 2: part of the post pandemic experience. People are really trying
Speaker 2: to protect their purchases, to ensure that if, for in fact,
Speaker 2: they have travel disruption or something happens on the trip,
Speaker 2: they're covered for that. Consumers are insted in that.
Speaker 3: Are they clicking on the insurance the airline insurance as well?
Speaker 3: Every time you buy a ticket the airline says, hey,
Speaker 3: if you've give me twenty more dollars, you know you
Speaker 3: can cancel on the day of Are more consumers using that?
Speaker 2: Yeah, we have seen an increase in travel insurance associated
Speaker 2: with an airline ticket purchase, especially for the bigger transactions
Speaker 2: like a vacation package. People really do want to protect
Speaker 2: their investment, and insurance is a legitimate and a very
Speaker 2: good way to do that.
Speaker 1: I want to talk to about trends that we might
Speaker 1: be seeing when it comes to length of travel. There
Speaker 1: was a really interesting story on the Terminal a couple
Speaker 1: days ago that had data from Embark Beyond which found
Speaker 1: that the average trip length is down fourteen percent year
Speaker 1: over year, now averages six point tuesdays rather than seven
Speaker 1: point eight days. Now Embark beyond. It serves primarily US
Speaker 1: ultra high net worth individuals, But are you seeing similar
Speaker 1: trends when it comes to price lines customers?
Speaker 2: Now, we service the value consumer, and in the data
Speaker 2: that we're looking at, we haven't seen a material difference
Speaker 2: in length of stay for our consumers. They continue to
Speaker 2: book at a fairly normal rate in terms of how
Speaker 2: far out they're looking, and so we're not seeing a
Speaker 2: significant collapse, for example, in last minute bookings and consumers,
Speaker 2: are you really taking the same types of trips? I
Speaker 2: think where we're seeing the focus now is on what
Speaker 2: type of trip am I going to take? And am
Speaker 2: I going to change that behavior based on what my
Speaker 2: budget's going to allow me to do? And so obviously
Speaker 2: last year and really earlier this year, we saw a
Speaker 2: lot of travel overseas, over to Europe, over to Asia.
Speaker 2: Now as we approach Labor Day, we're seen a lot
Speaker 2: more consumers interested in in more nearby destinations, so things
Speaker 2: like Mexico, the Caribbean, the Bahamas. People still want to
Speaker 2: take that vacation, they want to get to beaches and
Speaker 2: warm destinations, but they're sticking a little bit closer than
Speaker 2: they were, say six months ago, and I.
Speaker 1: Mean, it's interesting to tie it back into how we
Speaker 1: started this conversation. You think about how people are traveling.
Speaker 1: We've been talking about the trade down across industries really
Speaker 1: all year. When you think about sort of the shift
Speaker 1: from airlines now cruises are hot, really now you see
Speaker 1: people traveling by car more. I mean, is that part
Speaker 1: of that overall trade down narrative.
Speaker 2: Yeah, that's something we watched very closely because it's a
Speaker 2: very rational thing to do. Right, you would have stayed
Speaker 2: in a five star hotel, now you're going to stay
Speaker 2: a four. You would have stayed in the three, and
Speaker 2: now you're shifting down to a two. We haven't seen
Speaker 2: a material move in that trade down experience in the
Speaker 2: bookings and in the consumers that we're looking at here
Speaker 2: at Priceline. And again, I think people still want to travel,
Speaker 2: but they are looking for discounts, they're looking for deals
Speaker 2: to save. They want to do the same trip they
Speaker 2: did before, but they'd like to knock off a couple
Speaker 2: of dollars on that trip and bring the pricing down.
Speaker 2: And so again we're seeing a lot more interest in
Speaker 2: our value offers on our Priceline website.
Speaker 1: All right, bred it's always a fascinating conversation with you,
Speaker 1: of course, as we monitor the consumer and the traveler,
Speaker 1: that of course is Priceline CEO Brett Keller