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The end of Airbnb? Once-popular rentals site's shares tumble 14% thanks to retro travel trend
Airbnb stock has nosedived a staggering 14 percent in after-hours trading on Tuesday following a disappointing second-quarter earnings.
The once-thriving vacation rental giant is showing signals of trouble as it sees 'signs of slowing demand' from US customers - as many travelers in recent months have turned to tried-and-tested hotels and motels for their vacation stays.
The company failed to meet analyst expectations with earnings of just 86 cents per share, versus the expected 92 cents.
While revenue did climb 11 percent year-over-year, Airbnb's net income plummeted to $555 million - a whopping 15 percent drop from the $650 million reported in the same quarter last year.
Airbnb is now warning of signs of slowing demand from US customers, hinting at a potential shift in travel trends toward the more classic form of travel: Hotels.
Airbnb stock has nosedived a staggering 14 percent in after-hours trading on Tuesday following a disappointing second-quarter earnings
The company said it was experiencing 'shorter booking lead times globally and some signs of slowing demand from US guests' (Pictured: Airbnb CEO Brian Chesky)
The company said it was experiencing 'shorter booking lead times globally and some signs of slowing demand from US guests.'
But one sector of Airbnb is gaining momentum as the company claims users booked 125.1 million 'Nights and Experiences,' its highest second-quarter result.
'We saw continued growth across all regions compared to Q2 2023, with Asia Pacific and Latin America again leading the way,' Airbnb said in a letter to shareholders as reported by CNBC.
Airbnb has also claimed to have removed more than 200,000 'low-quality listings' since it launched its 'quality system' last year.
With recent incidents of renters installing cameras and enforcing strict rules, more Americans are flocking back to old-school hotels.
In 2020, Airbnb CEO Brian Chesky claimed 'Travel as we knew it is over and it's never coming back' as a result of the coronavirus pandemic.
Chesky, who co-founded the holiday rental site in 2008, said that there will be a 'redistribution of where people travel… instead of to only a few cities, to thousands of local communities'.
Airbnb is now warning of signs of slowing demand from US customers, hinting at a potential shift in travel trends toward the more classic form of travel - hotels (Pictured: Mirage hotel in Las Vegas)
He also revealed how deeply the pandemic affected his business, that 'we spent 12 years building Airbnb's business and lost almost all of it in a matter of four to six weeks'.
At the time, he was upbeat about the market and pointed out that 'Airbnb has more hosts' than before the start of the Covid-19 crisis' and had the same volume of bookings in the US in May and early June as the year before 'without any marketing'.
On top of that, a 2023 study revealed that booking a private holiday rental with Airbnb or Vrbo is not the bargain that many may assume it is – and it is potentially much more expensive than a hotel.
The private booking options were an average of 19 per cent more expensive than hotels. One-bed listings on Airbnb and rival Vrbo outstripped the average cost of a hotel room – excluding five-star hotels – in 38 of 50 UK and world destinations.