Published - May 10th, 2023 @ 5:20 PM (CET)
‍

‍

Airbnb's shares dipped 13% before the opening bell on Wednesday as the leading vacation rental company revealed a pessimistic outlook for the second quarter, suggesting that elevated travel expenses may finally affect budget-minded American consumers.

‍

Thanks to household savings and pent-up demand, the US travel sector has been largely shielded from inflationary pressures that have disrupted other industries. However, Airbnb announced on Tuesday that it anticipates a decline in bookings and a drop in average daily rates, or accommodation prices, in the second quarter.

‍

CEO Brian Chesky noted that consumers are price-sensitive in North America, particularly in the United States, while addressing an analyst query during a post-earnings call. Last month, Hilton Worldwide Holdings Inc hinted that the pent-up travel demand responsible for boosting the hotel operator's annual profit outlook might lose momentum in the latter half of 2023.

‍

Investors have been closely monitoring the durability of travel demand, concerned that the recovery experienced over the past year might encounter a macro-economic obstacle. In recent months, some airlines and hotel operators have recommenced investor returns, with increased prices contributing to higher profits.

Nevertheless, Airbnb's average daily rates during the first quarter remained stagnant year-on-year at $168, following a 5% increase a year prior. JPMorgan analyst Doug Anmuth believes that Airbnb's statements will lead to heightened caution in the travel industry, particularly regarding vacation and the US market. However, online travel agencies (OTAs) may be better protected overall.

‍

A number of analysts argue that accommodation prices need to decrease even more. RBC Capital Markets analyst Brad Erickson stated that while Airbnb considers itself supply-limited, it must persuade hosts to lower prices to enhance demand. In a note, Erickson also reduced the price target by $30 to $105. Airbnb shares were trading at $110.11 before the bell.

‍

‍

The information on mexem.com is for general informational purposes only. It should not be regarded as investment advice. Investing in stocks involves risk. A stock's past performance is not a reliable indicator of its future performance. Always consult a financial advisor or trusted sources before making any investment decisions.

‍

‍