Business Maverick

Business Maverick

Travel earnings show consumers spend on foreign trips

Travel earnings show consumers spend on foreign trips
Consumers are willing to swallow higher prices to get their international summer trip. (Photo: Milan Jaros/Bloomberg)

Earnings reports from the big three online travel companies showed that consumers are willing to swallow higher prices to get their international summer trip. 

Airbnb Inc., Expedia Group Inc., and Booking Holdings Inc. all reported second-quarter results on Thursday, presenting differing pictures of what has generally been billed as a sizzling summer of travel. The common trend among them, though, was higher prices — from flights to hotels and short-term rentals — and a preference for European or Asian holidays.

That benefited Booking, which makes almost 90% of its revenue in Europe. The Norwalk, Connecticut-based company, which owns discount reservation site Priceline and flight aggregator Kayak, reported revenue that increased 27% and total gross bookings up 15%. Average daily rates for accommodations were up about 9 percentage points from a year earlier, the company said. Year-over-year room night growth was up in Asia by more than 40% in the second quarter but slightly down in the US.

“In the long run, people are always going to want to travel,” CEO Glenn Fogel said on Bloomberg TV Friday morning. “And you can basically make an estimate that travel is going to increase faster than GDP.” Fogel expects a “record travel season in the third quarter”.  

Though ticket prices remain high for international routes, travellers seem to still be willing to spend on the overseas experiences they missed out on during the height of the pandemic. For Americans, the strong dollar also makes that trip to Italy look even more appealing. Hot tourist cities are back on bucket lists too, after several summers of holidays spent in more rural, domestic settings. 

Global airlines like United Airlines Holdings Inc. and Delta Air Lines Inc. raised their annual profit forecasts on strength in international bookings and said they see strong demand continuing into the fall. Marriott International Inc. raised its profit estimates for the rest of 2023, with hotels in Asia and Europe driving revenue growth. At the same time, US domestic-focused carriers like JetBlue and Alaska Air are being forced to slash prices for trips within the US.

Higher prices are also reflected in lodging prices at Airbnb, where average daily rates have jumped 42% since 2019 to $166 at the end of June. But it’s all about location: Average daily rates were down 1% in North America in the second quarter from a year earlier, while in Europe, the Middle East and Africa, they were up 8%. 

That didn’t seem to deter travellers, who booked 115.1 million nights and experiences on Airbnb in the second quarter, up 11% from already elevated levels last year and Airbnb’s highest second-quarter ever. The high prices also drove Airbnb to its most profitable second quarter ever on a generally accepted accounting principles basis.  

“We actually saw acceleration in total growth on nights booked” from the first quarter to the second in North America, Airbnb CFO Dave Stephenson said in an earnings call on Thursday. “So I think that was telling about just the strength and resiliency of the North American consumer, and we continue to see that strength leading into Q3, which is why we’re forecasting further acceleration of nights growth from Q2 into Q3.”

San Francisco-based Airbnb said people were travelling longer distances and that cross-border nights booked were up 16% during the quarter. In particular, travel to Asia Pacific grew more than 80% and nights and experiences booked to North America by guests from abroad rose about 20% from a year earlier. Overall consumer demand improved during the second quarter, with nights booked increasing 10% from a year ago in April and 15% year-on-year in June. Airbnb also said more travellers were coming back to cities, its traditional stronghold, with bookings for high-density urban listings up 13%. 

For Expedia, whose platforms include flight reservations, hotel stays, car rentals, activities and holiday rentals, some of the recent travel trends weren’t as beneficial and it reported revenue that missed analysts’ estimates. The shift in consumer demand toward urban markets and shorter stays impacted Expedia’s Vrbo holiday-rental business, said CFO Julie Whalen on an earnings call on Thursday. The Seattle-based company makes most of its revenue domestically and doesn’t have the same international reach as Airbnb. “However, given the size and strong growth of our hotel business,” Whalen said, “we were pleased that we were able to deliver record lodging bookings in total”. DM

Gallery

Comments - Please in order to comment.

Please peer review 3 community comments before your comment can be posted

X

This article is free to read.

Sign up for free or sign in to continue reading.

Unlike our competitors, we don’t force you to pay to read the news but we do need your email address to make your experience better.


Nearly there! Create a password to finish signing up with us:

Please enter your password or get a sign in link if you’ve forgotten

Open Sesame! Thanks for signing up.

We would like our readers to start paying for Daily Maverick...

…but we are not going to force you to. Over 10 million users come to us each month for the news. We have not put it behind a paywall because the truth should not be a luxury.

Instead we ask our readers who can afford to contribute, even a small amount each month, to do so.

If you appreciate it and want to see us keep going then please consider contributing whatever you can.

Support Daily Maverick→
Payment options

Daily Maverick Elections Toolbox

Feeling powerless in politics?

Equip yourself with the tools you need for an informed decision this election. Get the Elections Toolbox with shareable party manifesto guide.