Travel companies, such as Airbnb and Marriott International, are bracing for a slowdown in leisure travel as U.S. consumers hesitate to book vacations amidst uncertain economic conditions. Despite strong demand in recent years that boosted the industry’s profitability, companies are now warning investors of stagnant U.S. bookings in the third quarter.
Hilton Worldwide CEO Christopher Nassetta highlighted the financial constraints facing consumers, leading to reduced disposable income and a diminished capacity for travel. The company expects growth across all travel segments but anticipates minimal expansion in leisure travel.
Hilton Worldwide raised its profit forecast for 2024, citing international revenue as a buffer against declining U.S. demand. However, industry peers like Marriott International have scaled back growth projections due to weaker demand in North America. Vacation rental giant Airbnb and online travel agency Booking Holdings have also reported sluggish growth trends in the U.S.
One noticeable shift in consumer behavior is the tendency to book trips at the last minute, indicating a decline in long-term planning. Julie Brinkman, CEO of short-term rental management platform Beyond, noted that consumers are now waiting closer to their travel dates to ensure they have the financial means to take a trip.
Following these warnings and forecasts, Airbnb shares plummeted by 13.4% and Booking Holdings shares dropped by 3.3%, reflecting investor concerns over slowing growth in the U.S. market. Room night bookings in the second quarter also showed weaker growth rates in the United States compared to other regions globally.
The travel industry is facing significant headwinds as consumer behavior and economic uncertainties impact leisure travel demand. Companies are adjusting their forecasts and strategies to navigate this challenging landscape, emphasizing the need for flexibility and adaptation in the face of evolving market conditions.