Airbnb forecasts fewer bookings and lower daily rates in Q2 compared to last year
Airbnb Inc announced on Tuesday that it anticipates fewer bookings and reduced average daily rates in the second quarter compared to the previous year, resulting in an 11.5% decrease in share value during after-hours trading. US travel companies, which have profited from increased prices and hybrid work, are adjusting their 2023 forecasts as pre-pandemic travel patterns resume and consumers seek more affordable accommodation due to high inflation and concerns of a recession. Price sensitivity is highest in North America, particularly in the United States, according to Airbnb CEO Brian Chesky.
Chesky informed investors during a call that, in the United States, listings with the lowest prices have the highest occupancy rates. In the first quarter, the company’s gross booking value rose by 19% to US$20.4 billion compared to a year earlier. This is consistent with a 19% increase in bookings for nights and experiences, totalling 121 million. The average daily rate remained unchanged from the previous year at US$168.
Nicholas Cauley, an analyst at Third Bridge, believes that pressure on household budgets will likely result in consumers opting for more affordable accommodation, contributing to a decline in average daily rates in upcoming quarters. He added, “The company is now facing fierce competition from rivals like Booking.com and Expedia’s Vrbo, so its future looks less certain.”
To remain competitive, Airbnb is providing hosts with new tools to standardise pricing and initiating marketing campaigns earlier in the year to attract budget-conscious travellers before the peak summer season. Airbnb’s Chief Financial Officer, David Stephenson, told investors, “Some of the pressures that we’re seeing there on overall revenue growth has frankly just been some of the elevated (average daily) rates.”
Earlier this year, the company announced that average daily rates would continue to be under pressure as holidaymakers returned to lower-cost urban rentals. The firm’s revenue forecast for the second quarter ranges from US$2.35 billion to US$2.45 billion, which is broadly in line with analysts’ expectations, reports Channel News Asia.
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