HotelPlanner CEO on travel trends as states reopen

Tim Hentschel, CEO of HotelPlanner, spoke with Yahoo Finance about how the tourism and travel industry is doing amid coronavirus, and the new data surrounding the states that are re-opening.

Video Transcript

JEN ROGERS: Welcome back to "The Final Round." So we've been telling you about this rally, and part of that is travel names just took off today. Now of course, they are still down big time from their highs earlier this year. But we had United up some 20%, Expedia also up close to about 18%, Norwegian up 18%.

So are people actually starting to travel, to make plans, at least, for maybe traveling over the summer? I want to bring in our guest Tim Hentschel. He is the CEO of Hotel Planner. So Tim, our call of the day today was a Piper Sandler report.

And in this report, it said a majority of consumers don't expect to book flights for personal or work travel for at least nine months. Are you seeing bookings happening before this nine-month period? Is stuff happening, like, for the summer?

TIM HENTSCHEL: Yeah, absolutely. I would agree with that we're not seeing flight travel, but we're seeing drive traffic. So, you know, it's going to be the summer of staycations, and that's what's driving our demand.

At Hotel Planner, we do group and we do individual. Group is flat. It's still down 80% year over year. But individual bookings from these staycations is actually improving. We're up 12% week over week and hotel bookings for individuals. And we're only down 40% year over year, which is saying a lot, since we were down 90% at the low in the middle of April.

JEN ROGERS: So where are people going? Like, what is a staycation? Or do you just go a little bit outside of New York City? Are people driving far? I mean, do you have a sense of how far people are going out of their radius and where they're headed?

TIM HENTSCHEL: You know, from what we can tell, people are staying within a five to six-hour drive, so a day drive, and mainly going to the shore, going to the mountains, going to the lake, going to places that they know and feel comfortable with, but getting away from crowds, so we're not seeing cities as a main demand driver. We're seeing, you know, rural destinations and beach destinations and mountain destinations.

ANDY SERWER: Can you talk a little bit about-- sorry, Jen. Can you talk a little bit about what you think the hotels are going to have to do to make staying safe? I mean, can they operate at full capacity, for instance, or even close to that?

TIM HENTSCHEL: Yeah, well, we're actually-- I mean, in the industry, we're seeing a shift back to hotels over Airbnb because the health and safety and the cleaning is standardized. So a lot of the hotel chains were the first to put out the guidelines. They're doing deep cleanings.

There is a 12-step process for everything, that they're using ultraviolet lights, they're taking people's temperature upon check-in. They will obviously have masks and gloves on. So, you know, there's a lot of standardization to the health and safety side on the hotel chain side. And of course, the independents to keep up are mimicking those guidelines as well.

JEN ROGERS: As we've heard from companies getting ready for this, whether it's testing or PPE or more cleaning, that's expensive. Are you seeing that translate into higher prices at all for consumers? Or do you know--

TIM HENTSCHEL: Oh, no. There's no--

JEN ROGERS: [INAUDIBLE] Yeah.

TIM HENTSCHEL: There's no demand. So last year in 2019, we had our highest rev PAR in the history of the hospitality industry. And you know, rev PAR is revenue Per Available Room. And so based on that, there was a lot of new construction, too. And so that inventory was coming online at the beginning of 2020. So you put on that with the catastrophic drop in demand now, and of course, prices are going down, down, down. So we're booking five stars at under $100 a night. So even though there's added costs, the hotels can't do a lot about them.

Now one of the good parts about it is because of social distancing in the four and five star hotels, you can't really go to the spa. They don't have the pool bar open. They don't have a lot of amenities open. And those add a lot of costs, so they can cut back staffing. I know a lot of four and five star hotels have taken their suites off of inventory, too, to save costs. So they don't have to have as much maid service because they don't have to clean the big suites.

MYLES UDLAND: And, you know, Tim, you mentioned, you know, the rev PAR you saw industry wide last year and the building that leads to, the enthusiasm around the experience economy, this is what people are going to want forever. Obviously, we're early days in this crisis, but does it seem to you like the travel industry at large is going to have to reckon with a different, you know, next decade I think even than they thought they were heading into at the end of last year?

TIM HENTSCHEL: Well, the recovery will definitely take a couple of years, where everybody is saying it's not V-shaped. It's going to be U-shaped. And, you know, it's not going to take a decade, though. I mean, we're estimating by 2021, Q3, Q4, the whole industry is estimating we should be back to pre-COVID levels.

And, you know, people [INAUDIBLE] really quickly. And there's a lot of pent-up demand, and we're already seeing it. I mean, I'm above expectations right now because I didn't think we would get over 50% year over year in individual bookings by the middle of May. So that's a good thing. For our balance sheet, it's healthier than it was. We don't need any more government stimulus or funding, and I assume that other companies in our space would be the same, based on that.

Now the sharing economy, those Airbnbs and Home Aways of the world, they're going to be hurt. And then advertising's down. So the meta searches like Trivago and Kayak, they're going to be hurt. But that's another issue. It's not the hospitality industry. It's the advertising industry that's been hurt, just by all this extended lockdown and all these companies, you know, having a tough time financially.

RICK NEWMAN: Hey Tim, Rick Newman here. I'm just wondering whom for recreational travel, who might be taking advantage of these deals. I guess, one group would be people who just aren't that worried about coronavirus infections. But you've also got people who had the virus and presumably have the antibodies and some immunity. Is there any evidence that people who've had the virus are, you know, out traveling and not worried about it, and you know, sort of a meaningful core set of customers?

TIM HENTSCHEL: Yes, so we actually are in good shape because we are the official booking partner of NASCAR. And as you know, NASCAR just had their big race. And if you look at surveys conservatives between the age of 44 and 65 are the most likely to travel right now. So we've been going after that demographic with NASCAR and other partnerships like that.

So you know, mainly middle America is tending to get out there before the coastal cities. But they're going to the coast. You know, they're taking advantage of when you see the big pictures of all the people crowding along the Jersey shore and Virginia beaches and all the way down to Florida, a lot of those beach goers are coming from middle America states.

JEN ROGERS: Really interesting stuff. Great to get a chance to talk with you. I hope when we're all ready to travel, we can still find these five stars under $100. You think those are going to hang around for a while?

TIM HENTSCHEL: Yeah, absolutely. It's going to be low demand for at least the rest of the year, so anytime you want to get out there, there'll be a good deal. Have a great one.

JEN ROGERS: Tim Hentschel is the CEO of Hotel Planner. Thanks so much for your time.

TIM HENTSCHEL: Thank you.