People aren’t booking Airbnbs far in advance anymore. It's causing huge problems for the company.
A comedown on “revenge travel” after the pandemic, as well as consumers who feel like they’re on shaky ground, are likely contributing to hesitancy in booking early.
People are still booking plenty of Airbnbs, they’re just waiting longer to do so than they had been in the halcyon travel days of people recovering from the early pandemic.
Airbnb beat revenue but missed earnings expectations in the second quarter, thanks mostly to an increase in income taxes. The stock was down 14% premarket following Tuesday’s earnings report after the bell.
What was probably most disturbing to investors, though, was Airbnb saying it was seeing shorter booking lead times globally and some signs of slowing demand from US guests.
But to be fair, those lead times look a lot more like what they used to, before fear over pandemic and subsequent “revenge travel” sent sent booking lead times way down, then way up.
On the earnings call, Airbnb CFO Ellie Mertz broke that down:
What you did see through the path of COVID was, initially, we saw a massive reduction in lead time, because people had no confidence in terms of their ability to book far out. That reversed in, say, the 2022 to 2023 time period, where people are so eager to travel that they were booking way in advance of their kind of normalized patterns to make sure that they had the trip on the book, they got the most attractive listing at the best price by booking early. And I think, fast forward to 2024, you're seeing up through Q2, a very much return to normal.
In other words, the second quarter of this year had similar booking lead times to the second quarter of 2019, pre-pandemic. More recently, though, particularly in July, she said, lead times have shrunk even more.
The hesitance is likely a result of the current shaky-feeling economic situation, as consumers ingest recent disappointing economic indicators like consumer spending and unemployment rates.
“From time to time, whether it be a new COVID variant, whether it be a macro headline, whether it be like last year, the outbreak of war in Israel, people from time to time have moments where they are not booking in the same timeframe that they did in prior periods and that's what we're tracking closely right now,” Mertz said.
To an extent, declines in lead times have been balanced out by “strong growth” in shorter lead booking times, for say the next weekend up to a few weeks from now.
“It's not that consumers are not necessarily going to book that trip for Thanksgiving or Christmas, it just appears that they have not booked it yet,” Mertz said.
