Airbnb expects lower prices, bookings as inflation hits consumers

Airbnb Inc said on Tuesday that it expected fewer bookings and lower average daily rates in the second quarter versus a year earlier, sending shares down.

Vacation rental booking company Airbnb Inc said on Tuesday that it expected fewer bookings and lower average daily rates in the second quarter versus a year earlier, sending shares down 11.5 per cent in after-hours trading.

U.S. travel companies, which have benefited from higher prices and hybrid work, are moderating their outlook for 2023 as pre-pandemic travel patterns return and consumers seek cheaper accommodation amid high inflation and recession fears.

People are most price sensitive in North America, especially in the United States, Airbnb CEO Brian Chesky told investors on a call.

“In the United States, the lowest price listings have the highest occupancy,” he added.

The company’s gross booking value increased 19 per cent  to $20.4 billion in the first quarter from a year earlier, in line with a 19% increase in nights and experiences bookings to 121 million. Average daily rates were flat year-on-year at $168.

Nicholas Cauley, an analyst at Third Bridge, said pressure on household budgets was likely to result in consumers choosing more affordable accommodation, leading to a decline in 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 to remain competitive, it was equipping hosts with new tools to normalize pricing and starting its marketing campaigns earlier in the year to attract cost-conscious travelers ahead of the peak summer season.