Airbnb Inc. (ABNB.O) dropped 11.5% in after-hours trade on Tuesday after forecasting fewer bookings and lower average daily prices in the second quarter.
As pre-pandemic travel habits return and consumers seek cheaper accommodation amid high inflation and recession worries, U.S. travel corporations, which have benefitted from higher pricing and hybrid work, are reducing their 2023 prognosis.
Airbnb CEO Brian Chesky told investors on a call that North Americans, especially Americans, are price sensitive.
“In the United States, the lowest price listings have the highest occupancy,” he said.
In the first quarter, nights and experiences bookings rose 19% to 121 million, and gross booking value rose 19% to $20.4 billion. Daily rates averaged $168.
Third Bridge analyst Nicholas Cauley predicted that household budget pressures would push consumers to choose cheaper accommodations, lowering 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 it was arming hosts with new tools to standardize prices and launching its marketing efforts earlier in the year to target cost-conscious tourists before summer to stay competitive.
“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 CFO David Stephenson told investors. As tourists returned to urban rentals, the business predicted decreased average daily prices. As a result, analysts expected second-quarter sales of $2.35 billion to $2.45 billion.