Airbnb on Tuesday forecast weaker-than-expected third-quarter revenue and warned of a shorter booking window, suggesting economic uncertainty is causing travelers to wait until the last minute to book, sending its shares down 15% after the close.
Domestic travel in the U.S. has been under pressure since the start of the year as concerns about the health of the U.S. economy have made more Americans cautious about spending on travel.
San Francisco-based Airbnb reported quarterly profit of $555 million, or 86 cents per share, down from $650 million, or 98 cents per share, last year.
The company expects third-quarter revenue of $3.67 billion to $3.73 billion, below analysts’ expectations of $3.84 billion, according to LSEG data.
The company expects growth in room bookings to slow in the third quarter, citing shortening lead times for reservations globally.
Booking lead time is a key metric in the travel industry and refers to the number of days between the date of booking and the actual arrival. A shorter booking window could indicate that consumers are booking last-minute trips due to increased uncertainty and becoming more cautious with their spending.
The company said in an investor call that the past few years have seen some periods of uncertainty when consumers were hesitant to book far in advance.
Travel booking provider Booking also said earlier this month that lead times had shortened in the second quarter and were expected to shorten further in the third quarter.
“The forecast for a slowdown in the third quarter is in line with what others in the travel industry are saying,” said Dan Wasiorek, an equity analyst at Morningstar. “Airbnb won’t be immune to the effects of slowing travel demand, but it’s a brand that’s well-positioned for the long term.”
Airbnb’s average room rate, or price per night, increased about 2% to $169.53 in the reported quarter, and the vacation rental company expects a modest ADR increase in the third quarter.
Net profit margins, or the profit per dollar of revenue the company generates, fell to 20% in the second quarter from 26% in the same period a year ago.
The number of nights and experiences booked totaled 125.1 million, up 9% from last year. Globally, Latin America and Asia Pacific saw the strongest growth in nights and experiences booked, up 17% and 19%, respectively.
Total revenue for the quarter ended June 30 was $2.75 billion, up 11% from the same period last year.
