Airbnb warns of weak demand, says travelers waiting until last minute to book

Airbnb expects third-quarter revenue to be below estimates and warns of shorter booking windows, indicating travelers are waiting until the last minute to book due to economic uncertainty. This news caused a 15% drop in shares after the bell.

The domestic travel industry in the United States has been affected by cautious spending habits of Americans worried about the health of the economy.

In the second quarter, Airbnb reported a profit of $555 million, or 86 cents per share, down from $650 million, or 98 cents per share, the previous year.

Revenue for the third quarter is expected to be between $3.67 billion and $3.73 billion, falling short of analysts’ estimates of $3.84 billion.

Airbnb anticipates a slowdown in growth in nights booked and shorter booking lead times globally in the third quarter.

Booking lead time is crucial in the travel industry, indicating the number of days between reservation and arrival. A shorter booking window may suggest last-minute bookings due to increased uncertainty and cautious spending.

The company noted periods of consumer hesitation in booking in advance due to volatility in the last few years.

Booking also mentioned a decrease in lead times in the second quarter and further expected reduction in the third.

“The slowdown in the third quarter aligns with observations in the travel industry,” said Dan Wasiolek, Morningstar equity analyst. “Airbnb remains a strong brand for the long term despite the travel demand slowdown.”

Airbnb’s average daily rate grew by 2% to $169.53 in the reported quarter, with expectations of modest growth in the third quarter.

The net income margin decreased to 20% in the second quarter compared to 26% the previous year.

Nights and experiences booked totaled 125.1 million, up 9% from last year, with the highest growth seen in Latin America and Asia-Pacific.

Total revenue for the quarter ended June 30 was $2.75 billion, marking an 11% increase from the previous year.