Airbnb Inc. Highlights Slowing US Traveler Demand, Disappoints Market with Outlook
For the third consecutive quarter, Airbnb Inc. signaled a dampening forecast, attributing it to reduced demand from US travelers. This indicates a continuing decline in travel spending, even during the traditionally busiest summer season. The company anticipates a "sequential moderation" in growth for nights and experiences booked, as shared in its recent letter to shareholders.
Airbnb reported an 8.7% increase for the last quarter, which did not meet investors’ expectations. Projections for the upcoming third quarter predict stagnation, contrasting sharply with analysts’ anticipated 11% growth. This would represent the slowest growth pace since 2020, as travel habits normalize post the Covid-19 pandemic surge in 2023—a trend influencing the wider industry.
Booking Holdings Inc. similarly issued a grim forecast last week, noting "mild moderation" in European travel and shorter booking durations in the US. Airbnb also observed these trends, with US guests showing signs of decreased demand and shorter booking lead times. Conversely, Latin America and the Asia Pacific remain the fastest-growing markets for the company.
Following the announcement, Airbnb’s shares dropped more than 10% in after-hours trading. The company forecasts current-quarter revenues between $3.67 billion and $3.73 billion, underperforming analysts’ consensus of $3.84 billion, partly due to foreign exchange challenges.
Despite these headwinds, Airbnb’s second-quarter revenue rose 11% to $2.75 billion, with nights booked increasing by 8.7%, yet still below the expected 9.8%. North American bookings saw a slight uptick, particularly boosted by the July 4 week, which logged the highest revenue ever for the region. Group bookings for parties larger than five surged by 16%, marking the fastest-growing segment for five consecutive quarters.
International travel recovery has been a positive for Airbnb, particularly in Latin America and Asia Pacific. The doubling of nights booked in Paris during the Olympic games added modestly to EMEA business gains.
Airbnb is investing in less mature overseas markets through unique stays inspired by local cultural icons, impacting short-term margins due to rising marketing costs. CEO Brian Chesky plans to expand Airbnb’s offerings beyond its core business, having spent the past year improving reliability and affordability for guests. The number of active listings surpassed 8 million in Q2, despite removing over 200,000 subpar listings.
Looking ahead, new luxury services, including personal chefs and in-home massages, are expected in 2024. Chesky also promises more details on the company’s AI initiatives later this year.
Original Story https://www.livemint.com/news/airbnb-gives-soft-outlook-on-signs-of-slowing-demand-from-us-11722975997850.html
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