Airbnb slides as bookings slow amid higher average prices

SAN FRANCISCO – Airbnb shares slid after the company reported a slower pace of growth in the number of nights booked as prices for lodging remain high.

People booked 115.1 million nights and experiences on the home-rental platform in the second quarter, up 11 per cent from a year earlier but the slowest pace of growth since the pandemic shutdowns. Analysts had forecast 117.8 million nights.

In the current quarter, Airbnb said it expects a “modest” sequential increase in nights and experiences booked and that revenue will outpace nights and experiences due to continued resilience in prices.  

Revenue for the third quarter will be US$3.3 billion (S$4.4 billion) to US$3.4 billion, surpassing analysts’ expectations of US$3.2 billion, the company said in a letter to shareholders on Thursday. The shares slid about 2 per cent in extended trading after the results.

Despite disappointing bookings in the second quarter, consumers continue to show that they are willing to prioritise spending on travel, especially on international trips and visits to cities.

Airbnb said bookings have been increasing in the current quarter and were up 10 per cent in April from a year earlier and 15 per cent in June. That comes even as average daily rates rose 1 per cent from a year earlier to US$166. They are now up 42 per cent from 2019 levels.

The San Francisco based home-sharing company has seen its business shift and adapt to travel and lifestyle trends resulting from the Covid-19 pandemic.

After travel initially ground to a halt, it quickly rebounded as people sought to escape crowded cities and hunker down in rental homes with outdoor space and home offices. People were staying longer too, taking advantage of more flexible work-from-home policies. 

As pandemic restrictions have eased and the last barriers to travel came down in 2022, pent-up demand has led to a surge in trips.

Americans are travelling abroad in huge numbers in 2023, venturing internationally to take advantage of the stronger dollar.

Airbnb’s cross-border nights booked increased 16 per cent compared with a year ago, with strong growth across all regions.

Cross-border trips to Asia-Pacific increased more than 80 per cent, while travel to North America increased 20 per cent. 

Airbnb said revenue rose 18 per cent to US$2.5 billion in the three months ended June 30, beating analysts’ projections for US$2.4 billion. Adjusted earnings before interest, taxes, depreciation and amortisation was up 15 per cent from a year earlier to US$819 million, well beyond analysts’ forecasts of US$725.7 million.

The stubbornly high prices also helped drive Airbnb to its most profitable second quarter ever. Net income was US$650 million, a 72 per cent increase from a year ago. 

Airbnb’s peers in the online travel industry have given mixed views of consumer behaviour.

Earlier on Thursday, Expedia Group gave a muted view of the travel industry, reporting revenue that missed analysts’ estimates, sending its shares down 17 per cent.

Expedia’s Vrbo unit competes with Airbnb in the market for short-term rentals.

Expedia chief financial officer Julie Whalen said the shift in travellers’ preference towards shorter stays and urban markets has had an impact on Vrbo. 

Airbnb’s traditional strength, however, is in cities, and it saw high-density urban nights booked increase by 13 per cent in the second quarter.

Booking Holdings reported second-quarter revenue that beat analysts’ estimates, and predicted a “record travel season in the third quarter”. Its shares jumped 13 per cent in extended trading. 

Airbnb has risen 65 per cent in 2023 through the close of trading, outpacing the 12 per cent gain of Expedia and 40 per cent increase in Booking. BLOOMBERG