SAN FRANCISCO: Shares of Airbnb Inc tumbled after the company gave a disappointing outlook for a third consecutive quarter and warned of slowing demand from US vacationers - a sign that travel momentum is tapering off despite the peak summer season.

Airbnb expects “sequential moderation” of growth in the key measure of nights and experiences booked during the current period, the company said on Tuesday in a letter to shareholders.

Airbnb posted an 8.7% gain in that category during the second quarter, falling short of investors’ estimates.

And the third quarter increase will be even smaller. Analysts had been projecting an 11% boost.

The shares plunged more than 16% in extended trading on Tuesday. If the declines hold, the stock could notch its biggest intraday drop on record.

This sets up the slowest pace of growth since 2020 following an especially brisk vacation season in 2023. Even as the pandemic retreats, headwinds have dogged the broader industry.

Last week, Booking Holdings Inc gave worse-than-expected guidance, blaming “mild moderation” in the European travel market and “mild indication” of some consumers opting for lower-star hotels and shorter stays, particularly in the United States.

“We are seeing shorter booking lead times globally and some signs of slowing demand from US guests,” Airbnb said in the letter.

Latin America and Asia Pacific continue to be its fastest-growing regions, it added.

The company’s revenue for the current quarter will be US$3.67bil to US$3.73bil, also short of analysts’ consensus of US$3.84bil, with the company blaming foreign exchange challenges.

Its second quarter revenue beat estimates, jumping 11% to US$2.75bil. But the 8.7% increase for nights booked compared with an 9.8% estimate.

Airbnb, which specialises in shared homes and vacation rentals, saw a slight acceleration in growth of North American nights booked in the second quarter.

It highlighted the week of July 4 as the “single highest week of revenue ever” in the region.

The company also saw particularly strong gains among larger parties after honing its marketing materials in the United States to convince more groups to choose multi bedroom homes over hotel rooms.

Nights booked for groups of more than five people jumped 16% and was the fastest-growing segment in the region for a fifth quarter, Airbnb said.

The continued recovery in international travel has been a bright spot for Airbnb and the industry at large, with Latin America and Asia Pacific being key growth markets for the company.

By contrast, Airbnb said the more than doubling of nights booked in Paris during the Olympic Games in the second quarter made a “relatively small” contribution to the company’s business in Europe, the Middle East and Africa, which saw “stable” gains.

 - Bloomberg