Vacation rental booking company Airbnb Inc said on Tuesday that it expected fewer bookings and lower average daily rates in the second quarter versus a year earlier, sending shares lower.
U.S. travel companies, which have benefited from higher prices and hybrid work, are moderating their outlook for 2023 as pre-pandemic travel patterns return and consumers seek cheaper accommodation amid high inflation and recession fears.
People are most price sensitive in North America, especially in the United States, Airbnb CEO Brian Chesky told investors on a call.
“In the United States, the lowest price listings have the highest occupancy,” he added.
The company’s gross booking value increased 19 per cent to $20.4 billion in the first quarter from a year earlier, in line with a 19% increase in nights and experiences bookings to 121 million. Average daily rates were flat year-on-year at $168.
Nicholas Cauley, an analyst at Third Bridge, said pressure on household budgets was likely to result in consumers choosing more affordable accommodation, leading to a decline in average daily rates in future quarters.
“The company is now facing fierce competition from rivals like Booking.com and Expedia’s Vrbo so its future looks less certain,” he added.
Airbnb said to remain competitive, it was equipping hosts with new tools to normalize pricing and starting its marketing campaigns earlier in the year to attract cost-conscious travelers ahead of the peak summer season.
“Some of the pressures that we’re seeing there on overall revenue growth has frankly just been some of the elevated (average daily) rates,” Airbnb Chief Financial Officer David Stephenson told investors.
The company said earlier this year that average daily rates would remain pressured as vacationers returned to lower-cost urban rentals.
It forecast second-quarter revenue between $2.35 billion and $2.45 billion, largely in line with analysts’ expectations.
(Reporting by Priyamvada C in Bengaluru and Doyinsola Oladipo in New York; Editing by Shinjini Ganguli and Jamie Freed)