Airbnb shares slide 10% as US tourism boom seen ending

North American consumers more 'price sensitive' to high cost of travel, company says

Airbnb said earlier this week it expects fewer bookings and lower average daily rates, or accommodation prices, in the second quarter.

Airbnb shares slid 10% after the online accommodation bookings firm issued a gloomy second-quarter forecast and signalled the high cost of travel may be finally catching up on budget-conscious US consumers.

Household savings and pent-up demand have largely insulated the US travel industry from inflationary pressures that have roiled other sectors.

Airbnb, however, said earlier this week it expects fewer bookings and lower average daily rates, or accommodation prices, in the second quarter.

"What we're seeing is that people are most price-sensitive, at least currently, in North America, especially in United States," chief executive Brian Chesky said.

Hilton Worldwide Holdings last month indicated pent-up travel demand that helped the hotel operator boost its annual profit outlook may run out of steam in the second half of 2023.

The resiliency of travel demand has been closely watched by investors amid fears the recovery over the past year may hit a macro-economic speed bump. Some airlines and hotel operators have resumed investor returns in the past few months, as higher prices boosted profits.

But average daily rates during Airbnb's first quarter was flat year-on-year, after rising 5% a year earlier.

"We believe Airbnb's commentary will result in increased caution in the travel space, but more specifically around vacation and the US, with OTAs [online travel agencies] better insulated overall," JPMorgan analyst Doug Anmuth said.

Some analysts say US accommodation prices may now need to go down further. 

"While [Airbnb] believes it is supply constrained, it will have to compel hosts to cut prices in order to improve demand," RBC Capital Markets analyst Brad Erickson said. 

• Reuters