Expedia warns of soft demand even as Q2 earnings beat forecast

NEW YORK – Expedia Group warned of “softening” travel demand in the current quarter and would be adjusting its expectations for the rest of the year, it said in a statement on Aug 8 without providing revised guidance. 

“In July, we have seen a more challenging macro environment and a softening in travel demand. We are therefore adjusting our expectations for the rest of the year,” said chief executive Ariane Gorin.

Shares of Expedia fell 3 per cent in extended trading.

The company’s forecast overshadowed a better-than-expected earnings report for the second quarter. Gross bookings across Expedia’s platforms, which include flight reservations, hotel stays, car rentals, activities and vacation rentals, grew 6 per cent to US$28.8 billion (S$38.1 billion) in the three months ended June 30. Wall Street was expecting US$28.6 billion, according to Bloomberg-compiled data. 

Room nights booked – a key metric in the travel industry – grew 10 per cent to 98.9 million, exceeding estimates for 96.1 million nights.

The forecast is the latest evidence of softening travel demand, which has been cited by a chorus of executives from companies such as Airbnb and Booking Holdings.

Investors have been watching closely for signs of revived growth, especially since travel spending is sometimes seen as a bellwether for consumer confidence more broadly.

Airbnb shares plunged the most in two years after the company projected its slowest growth forecast since 2020, noting that more US travellers seemed hesitant to book trips months in advance. Second-quarter revenue increased 6 per cent to US$3.56 billion, ahead of analysts’ average estimate of US$3.53 billion.

Booking, which does more business in Europe than some of its peers, also gave disappointing guidance, citing mild moderation in the region. It observed that US consumers were trading down for lower-star hotels or shorter trips, while cheaper flight prices weighed on the company’s results as well.

Seattle-based Expedia may serve as a health indicator for the broader US travel market, which has seen a levelling-off in growth after an initial post-pandemic travel boom. The company has more domestic exposure than its peers, making it more sensitive to shifting travel patterns of Americans considering urban or international trips over more domestic coastal or resort locations, where most of the vacation rentals from its Vrbo business are located.

Expedia said in May that gains are slowing more than expected so far in 2024 and cut its full-year guidance to mid to high single-digit growth. BLOOMBERG