Expedia Warns of Soft Demand Even as It Posts Earnings Beat

(Bloomberg) -- Expedia Group Inc. warned of “softening” travel demand in the current quarter and will be adjusting its expectations for the rest of the year, the company said in a statement Thursday without providing further details. 

The company issued the warning as part of its second-quarter results, which topped Wall Street’s expectations. “However, in July, we have seen a more challenging macro environment and a softening in travel demand. We are therefore adjusting our expectations for the rest of the year,” said Chief Executive Officer Ariane Gorin.

Shares of Expedia fell 3% in extended trading.

The forecast is the latest evidence of softening travel demand, which has been cited by a chorus of executives from companies including Airbnb Inc. and Booking Holdings Inc. Investors have been watching closely for signs of revived growth, especially since travel spending is sometimes seen as a bellwether for consumer confidence more broadly. Airbnb shares plunged the most in two years after the company projected its slowest growth forecast since 2020, noting that more US travelers seemed hesitant to book trips months in advance. 

Expedia said in May that top-line gains are slowing more than expected so far this year. It had already cut its full-year guidance to mid to high single-digit growth.

Thursday’s warning overshadowed a solid earnings beat for the second quarter. Gross bookings across Expedia’s platforms, which include flight reservations, hotel stays, car rentals activities and vacation rentals, grew 6% to $28.8 billion in the three months ended June 30. Wall Street was expecting $28.6 billion, according to Bloomberg-compiled data. 

Room nights booked — a key metric in the travel industry — grew 10% to 98.9 million, exceeding estimates for 96.1 million nights. Second-quarter revenue increased 6% to $3.56 billion, ahead of analysts’ average estimate of $3.53 billion.

Booking, which does more business in Europe than some of its peers, also gave disappointing guidance, citing mild moderation in the region. It also observed that US consumers were trading down for lower-star hotels or shorter trips, while cheaper flight prices also weighed on the company’s results.

Seattle-based Expedia may serve as a health indicator for the broader US travel market, which has seen a leveling-off in growth after an initial post-pandemic travel boom. The company has more domestic exposure than its peers, making it more sensitive to shifting travel patterns of Americans considering urban or international trips over more domestic coastal or resort locations, where most of the vacation rentals from its Vrbo business are located.

(Updates with decks.)

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