Airbnb shares slumps as weak forecast signals slowing travel demand

(Reuters) -Shares of Airbnb slumped nearly 14% on Wednesday after the online travel company forecast third-quarter revenue below estimates, citing slowing demand in the United States and shorter booking windows.

Domestic travel in the United States has been pressured since the start of the year as more Americans have grown cautious about travel spending on worries about the health of the economy.

Airbnb became the latest online travel company after Booking to warn it was experiencing shorter booking lead time globally which refers to the number of days between the reservation date and actual arrival.

A shorter booking window can indicate consumers are booking travel at the last minute due to increased uncertainty and caution in spending.

Airbnb Chief Financial Officer Elinor Mertz said on a call with analysts on Tuesday that softness in long booking lead times was a big factor in its forecast.

"While travel has been resilient for a long time coming out of the pandemic, trends observed by ABNB, along with what BKNG noted last week — i.e. softness in Europe, some trade down of travel in the U.S., and normalization of booking windows — should weaken investor sentiment around online travel broadly," J.P. Morgan analysts wrote in a client note.

Jefferies analysts noted that Airbnb's "disappointing" outlook for nights followed by Booking is "likely to heighten concern of slowing growth."

The company said it expected moderating growth in nights booked in the third quarter.

According to Jefferies, Airbnb's third-quarter outlook implied nights growth of 6%-8% year-on-year, which would be a deceleration from 8.7% in the second quarter.

Baird Equity Research analysts said the brokerage remained "neutral" on Airbnb's shares as more evidence emerged of consumers tightening their belts on travel, or at least delaying their travel planning.

(Reporting by Kannaki Deka in Bengaluru; Editing by Maju Samuel)