Agoda ready for long haul after layoffs

Agoda ready for long haul after layoffs

An online shopper browses Agoda. (Photo: Pattanapong Hirunard)
An online shopper browses Agoda. (Photo: Pattanapong Hirunard)

Following a staff reduction of more than 25%, online travel agency (OTA) Agoda says the company is maintaining stable cash flow and can weather months or years of travel restrictions thanks to the strength of domestic bookings.

In May the company laid off 1,500 of its 5,500 employees globally because of a sharp drop in hotel bookings, following global lockdowns.

Of its 4,000 remaining employees, over 2,200 work in Thailand.

Agoda also cut salaries of senior leadership team by 20%, while its chief executive John Brown will not be paid for the remainder of the year.

"It was one of the hardest days of my professional career," Mr Brown said regarding the layoffs. "But from a cash flow perspective we are okay and do not have to cut more staff even if the situation continues for 1-2 more years."

Despite bottoming out to near zero bookings due to the lockdown in April, he expects domestic bookings this year to match 2019 levels. International bookings, which are often for longer stays at upper-scale accommodations, have dropped significantly.

Mr Brown said in 2019 there was a near even ratio of domestic to international bookings in Thailand, but this year international bookings account for only around 3%.

Domestic trends in booking show that consumers are booking better quality hotels (3-4 stars), mainly attributed to people who usually travel abroad redirecting their travel funds to domestic travel.

The duration of stays is just 1-2 nights over the weekend, a far cry from 1-2 weeks for inbound travellers.

In a recent survey of Agoda users, 78% of Thais say they will travel locally this year, the highest of any market.

The top domestic destinations for Thais are Bangkok, Pattaya, Chiang Mai, Hua Hin and Phuket.

Agoda also sees emerging secondary cities such as Nakhon Si Thammarat, Nakhon Nayok, Khon Kaen, Udon Thani and Chanthaburi are increasingly playing a more important role in domestic tourism.

As the first OTA to feature in the government's domestic tourism stimulus, Agoda has delivered some 1 million room-night transactions by zeroing out all commission fees for hotels listed under the campaign.

The industry standard for commission fees on OTA websites sits at 10-15%.

He said as 80% of hotels in Thailand on Agoda are small and medium-sized enterprises (SMEs), the stimulus campaign has been effective in helping these businesses.

Agoda has adapted to changes in consumer preferences by adopting three programmes with hotel partners.

To ensure consumer confidence in health and safety measures, the site implemented "Hygiene plus", a verification feature that allows travellers to identify hotels that meet a checklist of standardised health and safety measures.

The site also offers an easy cancellation feature, offering higher flexibility for travellers.

Lastly, Agoda has implemented a "go local" campaign in addition to the government's stimulus campaign, offering up to 25% discounts on selected accommodations.

Agoda was founded by two Americans in 2005 and is among the most successful tech companies started in Thailand. The company is headquartered in Singapore.

The company was purchased by Bookings Holding in 2007, which also owns Priceline and Bookings Holding has a market cap of over US$70 billion.

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