While the COVID-19 pandemic continues to ravage the world, there's an indication that the tourism industry slowly starts to rebound from its March-April lows. The recent data from TSA shows that more people start to fly every week, as the air traffic increases by 5% to 10% weekly. As a result, we could safely assume that Booking Holdings (NASDAQ:BKNG) has reached its bottom and has a high chance to increase in value by the end of the year. While Q2 earnings results will be one of the worst in the company's history, Booking expects to make a profit for the whole fiscal year. By having enough liquidity and being able to sustain its relatively high margins, Booking will survive the pandemic and thrive once the virus is contained.
Liquidity is Everything
Over the last few years, Booking has greatly expanded into various directions and its portfolio now consists of services like Kayak, Priceline, Agoda, and others that help users book apartments, hotels, cars, and even restaurant seats. The diversification helped the company to cross-sell its services to a much broader customer base. By being one of the most notable companies from the tourism industry, Booking can make money by taking travel commissions from travel agencies, running ads, and collecting fees from bookings that were made on its platforms. Before COVID-19, Booking's business was booming, and in the last five years, its revenue was growing at a compound annual growth rate of 10%. However, things quickly changed once the virus started to spread outside of China in early March.
In Q1, the company's revenues declined by nearly 20% Y/Y to $2.29 billion, while its earnings declined by 60% Y/Y to $290 million. At the same time, gross bookings were down 50% Y/Y, the number of rooms that were sold during the period were also down 43% Y/Y, and the average rental car
