WEBVTT - Kayak CEO Sees Last-Minute Holiday Traveling

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<v Speaker 1>It is the most wonderful time of the year because

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<v Speaker 1>the holidays are here and we get some time off,

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<v Speaker 1>have money, we'll travel, have time, will travel. But Katie,

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<v Speaker 1>are there any travel deals to be had? It's a

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<v Speaker 1>great question. Luckily, my husband has been booking everything, so

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<v Speaker 1>I couldn't tell you. But but he'll know the answer

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<v Speaker 1>to that. Yeah, we'll get him on here tomorrow. Okay. Well,

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<v Speaker 1>in the meantime, let us check in with Steve Haffner,

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<v Speaker 1>he is CEO of Kayak, to tell us what he

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<v Speaker 1>sees out there. Steve, give us a read of what

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<v Speaker 1>you're seeing. Are there a lot of people looking searching

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<v Speaker 1>for last minute deals? Absolutely, travel interests, consumer travel interests

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<v Speaker 1>and getting out in a way is stronger than ever

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<v Speaker 1>so Kayak domestic queries up versus last year. International queries

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<v Speaker 1>are up even more people, despite the headlines of macro trends,

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<v Speaker 1>UH seemed very eager to get out in a way.

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<v Speaker 1>And and that's reflecting in prices. By the way, the

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<v Speaker 1>average domestic airfair is five dollars right now, and if

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<v Speaker 1>you want to leave our borders, the average international affair

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<v Speaker 1>is almost a thousand dollars. Well, we live in the macro,

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<v Speaker 1>and all we talk about is inflation is a recession coming,

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<v Speaker 1>And like you said, you're not really seeing that reflected.

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<v Speaker 1>And I want to talk about the psychology of that.

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<v Speaker 1>Is that revenge traveling? Is that just extreme pent up demand? Yeah,

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<v Speaker 1>I mean we we're not seeing it yet. But what

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<v Speaker 1>you have to remember what the travel business. We had

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<v Speaker 1>two years of basically no travel, and that was all

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<v Speaker 1>collapsed into six months of travel two And you know,

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<v Speaker 1>I think I think most of the revenge travel is

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<v Speaker 1>done by now. People are just remembering how great travel

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<v Speaker 1>is and they're looking forward toward the next trip. So

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<v Speaker 1>I think that's what's going on. I suspect prices will

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<v Speaker 1>stabilize a little bit going into at least I hope

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<v Speaker 1>they do. But we we don't see any slowdown in

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<v Speaker 1>consumer interests and travel. I want to pick up on

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<v Speaker 1>something you mentioned, which is, uh, international flight searches are

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<v Speaker 1>up sixty percent year on year. How much of that

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<v Speaker 1>do you think is due to the strong dollar and

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<v Speaker 1>people realizing that if they go somewhere else they can

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<v Speaker 1>take advantage of their dollar because at home, and I mean,

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<v Speaker 1>obviously this is a case globally inflation is is such

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<v Speaker 1>a scourge and it's really limiting what we can spend

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<v Speaker 1>out there. But if you go to Europe, then you

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<v Speaker 1>know there's a discount. If you go to Japan, there's

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<v Speaker 1>a discount. And it if you're going to spend the

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<v Speaker 1>time and the money to take a break and go somewhere,

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<v Speaker 1>better to go somewhere where your dollar gets you further.

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<v Speaker 1>It definitely goes a lot further abroad than it usually does,

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<v Speaker 1>especially in Europe. But the problem is you still got

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<v Speaker 1>to get there first, and you know, international air Force,

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<v Speaker 1>like I mentioned, are almost a thousand dollars round trip

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<v Speaker 1>and economy to get there, so it's still very expensive.

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<v Speaker 1>I will say that the most the highest trending destinations

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<v Speaker 1>aren't in Europe. They're actually in an Asia Pacific because

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<v Speaker 1>you've got a bunch of countries there that have been

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<v Speaker 1>closed for the last two to three years. So I'm

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<v Speaker 1>talking about Vietnam is the top of our list, Australia,

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<v Speaker 1>Thailand even so, I know that during the pandemic and

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<v Speaker 1>right afterwards, are a lot of flights that were cut

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<v Speaker 1>and so the supply of these flights were limited. Have

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<v Speaker 1>we seen supply come back up to meet that increased demand?

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<v Speaker 1>It's coming back, but it's it's still below where it

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<v Speaker 1>wasn't two thousand nine. So if you look at t

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<v Speaker 1>s a passenger accounts, now we're almost back to two levels,

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<v Speaker 1>which is pretty impressive because the airlines themselves have about

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<v Speaker 1>eight percent fewer seats to fly, so you know, if

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<v Speaker 1>you're if you've been flying, you will notice the planes

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<v Speaker 1>are full. And that's also what's being reflected in the

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<v Speaker 1>air fares. And I know we're talking about holiday travel

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<v Speaker 1>and the fun type of travel, but let's talk about

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<v Speaker 1>um business travel for a little bit. Are we seeing

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<v Speaker 1>any sort of rebound there? Business travel is definitely back,

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<v Speaker 1>not in terms of total passenger a count, but in

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<v Speaker 1>terms of revenue because of these average fairs. What's different

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<v Speaker 1>about it though versus pre pandemic is, uh, the day trip.

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<v Speaker 1>The whole notion of flying somewhere to see a client

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<v Speaker 1>and being home in your own bed at night is

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<v Speaker 1>essentially gone, so just way to convenient for that. Plus

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<v Speaker 1>a lot of companies allow their employees attack on a

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<v Speaker 1>day or two on either side, so what we're seeing

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<v Speaker 1>is a lot more to the three day trips than

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<v Speaker 1>than single day trips. And then the second trend that's

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<v Speaker 1>a little bit uh different these days with business travel

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<v Speaker 1>is it's not all about visiting clients. Now. A lot

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<v Speaker 1>of companies are trying to get their employees together, so

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<v Speaker 1>we're seeing a lot more off sites and fun destinations.

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<v Speaker 1>So that must mean that the kinds of um flight

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<v Speaker 1>routes that companies are the airlines are offering has to

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<v Speaker 1>reflect that perhaps we are not flying into San Francisco

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<v Speaker 1>anymore to this savent step because they can zoom. Certainly,

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<v Speaker 1>we know that all these people who are in the

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<v Speaker 1>Bay Area are working from home, so that they're fine

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<v Speaker 1>with doing that technology and meeting that way. But if

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<v Speaker 1>companies are sponsoring their employees to go on an off site,

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<v Speaker 1>it might be to New Mexico as opposed to San Francisco.

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<v Speaker 1>That's right. So the last three Kayak oup sites, for example,

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<v Speaker 1>have been in Dubai, in Mexico and in Iceland. I

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<v Speaker 1>want to work at Kayak. That sounds great. Let's talk, though,

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<v Speaker 1>I mean I'm still stuck on the macro since that's

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<v Speaker 1>all we do at Bloomberg. And you do write in

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<v Speaker 1>your notes, uh that if you look at domestic flight searches,

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<v Speaker 1>prices are up fifty two percent internationally prices up twenty

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<v Speaker 1>nine percent, and obviously the consumer is resilient. We're seeing

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<v Speaker 1>that in all parts of the economy. But at what

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<v Speaker 1>point if you look at past inflationary periods, and to

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<v Speaker 1>be fair, there haven't been a ton of them in

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<v Speaker 1>the past two decades or so, But at what point

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<v Speaker 1>do we start to see maybe a little bit of

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<v Speaker 1>that demand destruction in the face of higher prices. Well, look,

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<v Speaker 1>I I would hope demand softens a bit, because that

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<v Speaker 1>will absolutely put a little bit more downward pressure on

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<v Speaker 1>on prices. But I think it's actually input costs that

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<v Speaker 1>need to soften first. So fuel it's a big, big

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<v Speaker 1>cost center for the airlines. That's got to come down.

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<v Speaker 1>Staffing costs has gotta come down, and then we you know,

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<v Speaker 1>the big airlines have ordered much more fuel efficient planes.

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<v Speaker 1>So if United you can get its hands on, you know,

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<v Speaker 1>a hundred more Dreamline ears from Boeing, that will help

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<v Speaker 1>a lot with their their actual unit economics. Is there

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<v Speaker 1>going to be a quiet period, a lull um in

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<v Speaker 1>terms of travel coming up anytime soon? Or has our

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<v Speaker 1>post COVID travel habits changed? All of that changed what

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<v Speaker 1>we're familiar with, where you know, maybe mid January is

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<v Speaker 1>a really quiet period, but that that's no longer the case.

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<v Speaker 1>I don't Yeah, we haven't seen that in the numbers,

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<v Speaker 1>so it used to be historically you see these peaks

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<v Speaker 1>and valleys, and but what the airlines would trying to

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<v Speaker 1>do is cut airfares to maintain occupancy on their planes,

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<v Speaker 1>and hotels who do the same thing with their rates.

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<v Speaker 1>But we're seeing no evidence of any price softness, which

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<v Speaker 1>tells you that demand is is still pretty strong throughout

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<v Speaker 1>all these periods. And I think the pandemic gave consumers

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<v Speaker 1>a lot of flexibility, particularly someone so you don't have

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<v Speaker 1>to go into the office every day, as you mentioned

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<v Speaker 1>in San Francisco in particular, So that that means that

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<v Speaker 1>they're exercising the desire to fly in a typical pit

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<v Speaker 1>time periods. And I think that's that's good for the industry,

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<v Speaker 1>and that's actually good for consumers too. And let's unpack

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<v Speaker 1>some of this demand. Where are people actually looking to go,

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<v Speaker 1>especially on an international level, where are they trying to

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<v Speaker 1>fly to. It's the usual suspects, you know, the big cities,

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<v Speaker 1>so Paris, London, etcetera. In Europe, and then as I mentioned,

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<v Speaker 1>a pack is a is a big draw in terms

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<v Speaker 1>of being trendy right now because you know, you're average

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<v Speaker 1>American hasn't been to Australian three years, right because you

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<v Speaker 1>had a quardantinae when you got there for extended period

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<v Speaker 1>time at your cost. So for for those folks who

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<v Speaker 1>have connections in a pack in Japan or in Thailand, etcetera,

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<v Speaker 1>now is the time to go, and they're voting with

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<v Speaker 1>their feet. Steve, is there anything you're excited about when

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<v Speaker 1>it comes to innovation and travel, something that you're looking

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<v Speaker 1>ahead to that could really change how these companies are

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<v Speaker 1>responding to this increased demand? Absolutely. Look at Kayak, we've

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<v Speaker 1>been innovating the space where it was it was twenty years.

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<v Speaker 1>So the thing that I'm really interested in these days

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<v Speaker 1>is how can we make the security line and the

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<v Speaker 1>check in much more efficient than it is today because

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<v Speaker 1>we simply don't have the staff and the human resources

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<v Speaker 1>to handle the volume of consumers coming through airports right

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<v Speaker 1>now and onto planes. So you would hope that identity

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<v Speaker 1>facial recognition can can make the whole process a lot

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<v Speaker 1>more efficient, and I think that's that's coming. So if

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<v Speaker 1>you've ever had the experience of boarding a delta flight internationally,

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<v Speaker 1>but they just scan your face when you board. It's

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<v Speaker 1>pretty darn cool and also very very efficient. See kind

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<v Speaker 1>of scary. That is scary. I don't want to think

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<v Speaker 1>about that one too deeply. But Steve twenty seconds, are

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<v Speaker 1>you traveling this holiday? I am not. I actually live

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<v Speaker 1>in Miami and up in Stanford for the for the

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<v Speaker 1>cold weather for the next three weeks, and then you know,

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<v Speaker 1>once the dust settles on January and the rear view mirror,

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<v Speaker 1>then I'll go down the same parts, all right. So

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<v Speaker 1>I think you're the opposite of the snowbird if you're

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<v Speaker 1>traveling from Florida to the snowy place. Really interesting to

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<v Speaker 1>get some time with you, That is Steve Haffner. He

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<v Speaker 1>is co founder and CEO of Kayak. He joins us

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<v Speaker 1>on Zoom from Stanford, Connecticut to break down the holiday

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<v Speaker 1>travel trends. We have much more at Bloomberg Business Week

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<v Speaker 1>coming up. You're listening to Bloomberg Radio