Airbnb shares fell a staggering 14 percent in after-hours trading on Tuesday following disappointing second-quarter results.
The once-thriving vacation rental giant is showing signs of trouble as it sees “signs of slowing demand” from U.S. customers as many travelers in recent months have turned to tried-and-true hotels and motels for their vacation stays.
The company missed analysts’ expectations, with earnings of just 86 cents per share, versus the 92 cents expected.
While revenue rose 11 percent year over year, Airbnb’s net income plummeted to $555 million, a whopping 15 percent drop from the $650 million reported in the same quarter last year.
Airbnb is now warning of signs of slowing demand from US customers, suggesting a possible shift in travel trends towards the more traditional form of travel: hotels.
Airbnb shares fell a staggering 14 percent in after-hours trading Tuesday following disappointing second-quarter earnings.
The company said it was experiencing “shorter booking times globally and some signs of slowing demand from US guests” (Photo: Airbnb CEO Brian Chesky)
The company said it was experiencing “shorter booking times globally and some signs of slowing demand from U.S. guests.”
But one sector of Airbnb is gaining momentum as the company says users booked 125.1 million “Nights and Experiences,” its highest second-quarter result ever.
“We saw continued growth across all regions compared to the second quarter of 2023, with Asia Pacific and Latin America again leading the way,” Airbnb said in a letter to shareholders as reported by CNBC Channel.
Airbnb also said it has removed more than 200,000 “low-quality listings” since it launched its “quality system” last year.
With recent incidents of tenants installing cameras and enforcing strict rules, more and more Americans are returning to old-school hotels.
In 2020, Airbnb CEO Brian Chesky stated that “travel as we know it is over and will never return” as a result of the coronavirus pandemic.
Chesky, who co-founded the vacation rental site in 2008, said there will be a “redistribution of where people travel to… from just a few cities, to thousands of local communities.”
Airbnb is now warning of signs of slowing demand from US customers, suggesting a possible shift in travel trends towards the more classic form of travel: hotels (pictured: Mirage hotel in Las Vegas)
He also revealed how the pandemic had deeply affected his business: “We spent 12 years building the Airbnb business and we lost almost everything in a matter of four to six weeks.”
At the time, he sounded optimistic about the market, noting that “Airbnb has more hosts” than before the start of the Covid-19 crisis “and had the same volume of bookings in the US in May and early June as it had the previous year “without any marketing.”
Additionally, a 2023 study found that booking a private vacation rental through Airbnb or Vrbo is not as affordable as many believe and is potentially much more expensive than a hotel.
Private booking options were 19 per cent more expensive than hotels, on average. One-bedroom listings on Airbnb and rival Vrbo exceeded the average cost of a hotel room (excluding five-star hotels) in 38 of 50 UK and global destinations.