By Callum Keown

Airbnb stock moved lower Friday after the short-term lodging company warned of a slowdown in bookings because of mounting economic uncertainty.

Shares fell 1.7%, despite a first-quarter beat for both earnings and revenue. The drag was second-quarter revenue guidance that fell short.

The travel industry has given mixed messages in the past few weeks about demand -- both from Americans and overseas tourists.

But Airbnb, which operates in more than 220 countries, was clear with its message about demand on a conference call after it posted first-quarter earnings late Thursday.

The market needs clarity after the bigger U.S. airlines, including Delta Air Lines, American Airlines, and JetBlue Airways, withdrew full-year guidance. Conversely, cruise operator Royal Caribbean hiked its profit forecast earlier this week and said demand remains strong.

For Airbnb, demand right now depends on the income of the traveler and the length of stay.

More affluent Americans, for example, are carrying on as normal.

Growth in Airbnb's more expensive bookings was "very stable and very healthy," Chief Financial Officer Ellie Mertz said on the earnings call. "We are seeing the higher-income traveler somewhat unimpacted by the current macro conditions."

Late bookings -- those for trips in a few days or a couple of weeks -- are also going. But bookings with longer lead times of a month or more aren't doing as well, Mertz said.

"We do have some U.S. consumers that are waiting and seeing before they book their summer travel," she said.

'Wait and see' is better than mass cancellations, for those looking for optimism.

Also, Airbnb said consumers aren't trading down to cheaper vacations or opting for shorter trips -- another positive.

However, the company warned of a different demand dynamic in the second quarter -- possibly weaker in the U.S. and stronger in Europe and Latin America. The reason: broader economic uncertainty.

The number of nights and experiences booked through the platform jumped 8% to 143 million in the first quarter; Airbnb expects that growth to moderate in the current quarter -- mostly because of domestic travelers.

Foreign tourists avoiding the U.S. is another problem for the travel industry. The number of overseas visitors fell 11.6% in March, according to the government's International Trade Administration.

Airbnb is having an avoidance problem, too.

"We absolutely have seen a decline in popularity of foreign travelers coming to the U.S.," Mertz said. "It's less popular to come to the U.S. from a year ago, also relative to the beginning of the year."

Still, the drop isn't a major concern for Airbnb because overseas visitors to the U.S. account for 2% to 3% of its overall business.

The pullback by Canadians highlights the trend, Mertz said. But more important, for Airbnb and online travel agents, is that Canadians haven't stopped traveling -- they're simply going to other countries, such as Mexico, Brazil, France, and Japan.

Ultimately, the potential slowdown in bookings will be the main concern for investors.

But it isn't too late for that to change ahead of the peak summer season -- travelers just need a bit more economic certainty.

Write to Callum Keown at callum.keown@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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May 02, 2025 11:03 ET (15:03 GMT)

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