Booking Slumps in Another Sign of Moderating Growth in Travel

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(Bloomberg) — Booking Holdings Inc. shares slumped after the company indicated that the pace of growth is moderating globally, putting a damper on the market’s expectations for a strong summer travel season.

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The company reported bookings in the second quarter that topped analysts’ estimates and forecast record revenue in the current period. But, on a call with analysts, Chief Financial Officer David Goulden said that “compared with June, growth rates in July moderated in all regions with North America showing the smallest change.” 

The shares gave up earlier gains in extended trading and fell 3.4%.

Booking’s results resembled those of Airbnb Inc., which on Tuesday reported its highest revenue in the second quarter and the best-ever profit for that period in addition to predicting record sales again in the current quarter. But it was punished by the market for a forecast of nights and experiences booked in the third quarter that fell short of analysts’ high expectations.

Similar to Airbnb “it’s tough to find incremental buyers of online travel names that are pointing to slower growth” with fears around the economic environment in 2023 remaining persistent,” said Lee Horowitz, an analyst at Deutsche Bank.  

Chief Executive Officer Glenn Fogel acknowledged those concerns but said he remains “as confident as ever” about consumers’ desire to travel. 

Booking reported total sales that nearly doubled to $4.29 billion in the second quarter, but that was less than analysts’ average projection for $4.33 billion. Other measures were more optimistic. Total gross bookings, which represent the total value of all travel services booked by customers, excluding cancellations, totaled $34.55 billion, beating analysts’ estimates. 

For months, Fogel and his peers from Airbnb and Expedia Group Inc. had been anticipating one of the hottest summer seasons ever after two years of pent-up demand following Covid-19 restrictions. But chaos in the travel market, from canceled flights to lost luggage and soaring prices, has injected some doubt about the outlook for the rest of the year. 

Travel Time | Booking's total transactions soared in the second quarter © Bloomberg Travel Time | Booking’s total transactions soared in the second quarter

The travel industry has had to navigate two years of uncertainty marked by ongoing Covid surges, rising costs for fuel, and the war in Ukraine. The latest hurdle is a surging dollar, which has appreciated significantly against all major currencies just as the peak season was getting underway. Norwalk, Connecticut-based Booking, which gets almost 90% of its sales from overseas, is more vulnerable to currency fluctuations than its rivals. 

Booking, the biggest US online travel company, also owns flight aggregator Kayak and travel booking site Priceline, as well as an alternative accommodations platform. Signs that travel is picking up were evident in Visa Inc.’s results, which showed a 28% surge in cross-border payments, beating the company’s own estimates. Hotels are on the upswing too, with Hilton Worldwide Holdings Inc. raising its full-year outlook, casting away doubts about weak consumer sentiment impeding travel plans.  

Despite evidence of strong demand throughout the year, the online travel companies have seen their shares slump. Booking is down 18% this year while Expedia has slumped 42% and Airbnb has lost 31%.

Booking reported net income of $857 million, compared with a loss of $167 million a year earlier. Adjusted earnings per share were $19.08 compared with analysts’ estimates of $17.52. 

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