Wedbush’s travel data for the quarter ending in September has shown that near-term lodging trends are more negative compared to current estimates, weighed down by contracting international demand and sluggish domestic trends.
Consumer behavior is also contributing to the downturn in the lodging sector as inbound air travel from Europe to the U.S. has declined, driving tighter booking windows and favoring more domestic travel.
Analyst Scott Devitt sees these trends influencing the performance of the top names in the lodging industry, maintaining a Neutral rating on Booking Holdings (NASDAQ:BKNG), Expedia (NASDAQ:EXPE), and Airbnb (NASDAQ:ABNB).
Booking Holdings (NASDAQ:BKNG):
Weaker demand growth for alternative accommodations (-2% in in August yoy from +10% in Q2) has been partially offset by international hotel performance, maintaining mid-single digit quarter-to-date growth despite being pressured by a challenging year-over-year comparison.
Still, the implied results call for a “sharp deceleration in revenue growth in the third quarter” and a sequential deceleration in room night growth to +5.5% in Q3 (yoy) from +7.7% in the prior quarter.
Airbnb (NASDAQ:ABNB):
With Europe, the Middle East and Africa representing approximately 41% of Airbnb’s (NASDAQ:ABNB) room nights versus 30% for North America, the international trends for alternative lodging suggests the implied results are trending below management’s guidance.
“Weighting AirDNA’s booking data with Airbnb’s geographic room night mix implies a sharp deceleration in room night growth QTD through August versus the prior quarter,” Devitt says in his note to clients.
Expedia (NASDAQ:EXPE):
U.S. travel trends have been tracking below initial expectations, implying downside to current estimates of stable room night growth from the prior quarter.
At the same time, U.S. airline passenger volume has stabilized, and growth remains positive. Data shows inbound travel from Europe to the U.S. has decelerated by about 220 basis points to -1% yoy while outbound air travel from the U.S. to Europe accelerated by roughly 180 basis points.
Besides maintaining his Neutral rating for Booking.com (NASDAQ:BKNG), Airbnb (ABNB), and Expedia (NASDAQ:EXPE), Devitt reiterates a target price of $5,900, $130, and $220 for the three, respectively. This implies upside of 8.2%, 5.4% for Booking and Airbnb, but 0.20% downside for Expedia.
All three are trading in the red today with Booking Holdings (BKNG) down 1.4%, Airbnb (ABNB) down 1.3%, and Expedia (EXPE) shares down 3.6%.