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Airbnb drops as fears about a slowdown in travel demand are renewed by a slower growth outlook

Airbnb shares fell more than 7% Thursday, after the company announced slower growth for the second half of this year. This disappointed investors who had expected a rebound in demand following strong forecasts by major travel companies.

Vacation home rentals' gloomy future was a setback for the industry. It had seen a rise in consumer confidence in July and expected budget-conscious Americans would return to vacations, despite inflation and tariffs.

United Airlines and Hilton Worldwide forecast a strong growth in revenue for the fourth quarter last month. Booking Holdings, an online travel agency, also reported positive quarterly results last week.

The initial tariff shock in April led to a large drop in bookings, said Danni Hewson. She is the head of financial analyses at AJ Bell.

Investors are now focusing on the results of Expedia Group, which will be released after the bell. This will help them gauge the health and performance of the US travel industry.

Airbnb's weak growth forecast was due to the comparisons made with the previous year, which saw strong bookings from Asia and Latin America. The company anticipates that night bookings will moderate in the fourth quarter. The implied take rate or the ratio between revenue and gross bookings is expected to be flat in the third-quarter.

Booking Holdings has seen an increase of 11.4% in the same time period, while Airbnb and Expedia have each fallen by 0.6%.

Airbnb has a much higher price-to-earnings ratio of 28.41 compared to Booking, which is trading at 22.69. Expedia is at 11.57. (Reporting and editing by Ronojoy Mazumdar, Shinjini Giguli, and Kanchanachakravarty from Bengaluru)

(source: Reuters)