Strong summer demand isn’t enough to help travel stocks recover from the pandemic.

Both Airbnb ( NASDAQ:ABNB ) and Booking.com ( NASDAQ:BKNG ) reported Q2 results this week as strong travel demand continues. Expedia (NASDAQ: EXPE ) is due to report its second quarter results later today.

Airbnb fight cancellation

Airbnb shares fell on Wednesday, despite the company reporting better-than-expected Q2 earnings per share (EPS). Although shares of ABNB initially fell 10% following the results, earlier losses were pared to push the stock into the green zone on a weekly basis.

Q2 2022 Hedge Fund Letters, Conferences and More.

Airbnb reported Q2 EPS of $0.56, which topped consensus estimates of $0.43, according to Refinitiv. Net income for the three-month period totaled $379 million, compared with a loss of $68 million in the same period last year.

Revenue came in at $2.10 billion, a 58 percent year-over-year increase, but below estimates of $2.11 billion. While this was Airbnb’s most profitable second quarter, the company’s revenue still grew by 70 percent, a slower growth than a year ago.

Airbnb says its cost-cutting efforts have helped the company weather the coronavirus pandemic and have adjusted its business as travel demand continues to recover.

“We saw some higher cancellations on the back end of the quarter compared to our forecast,” Airbnb CFO Dave Stephenson said. We believe some of the higher cancellations were related to flight cancellations around the world, but mostly in North America at the end of Q2 2022. “

Airbnb’s free cash flow has fallen quarter-on-quarter, which is likely one reason for its share price decline.

The company recorded more than 103 million nights and experiences in the second quarter, its biggest quarterly number yet, but still beating the consensus estimate of 106.4 million.

Airbnb reported $17 billion in gross booking value (GBV), a 27 percent year-over-year increase, down from the 67 percent growth the company reported last quarter.

Looking ahead, Airbnb said it will report higher revenue in the third quarter, due to currency fluctuations, particularly the strengthening of the dollar against the euro. The San Francisco, Calif.-based company said it expects Q3 revenue between $2.78 billion and $2.88 billion, topping the consensus estimate of $2.77 billion.

Booking takes a hit but shares still fall

Meanwhile, travel company Booking Holdings reported better-than-expected Q2 bookings and a record revenue forecast for the current quarter, suggesting a strong rebound in travel demand this summer.

The company reported total bookings of $34.55 billion, above the consensus estimate of $32.8 billion. Total sales stood at $4.29 billion, nearly double from the year-ago quarter, but still below analysts’ expectations of $4.33 billion.

“We look forward to Q3 earnings and are very busy working with our customers and partners to enable a very busy summer travel season,” said CEO Glenn Fogel.

Booking shares rose 5% in early afternoon trading on Wednesday before the market pared all of its gains and sent shares into the red. The pivot in the direction of price action came after management shared a not-so-positive update on earnings growth this quarter. According to Bocking, earnings growth slowed in July.

Airbnb, Booking.com and Expedia have been bracing for one of the hottest summer vacations after two difficult years of the coronavirus pandemic that led to travel restrictions around the world.

While the resurgence of travel demand is evident, there are some concerns about the outlook for the travel market for the rest of the year. After two years of battling travel restrictions due to the coronavirus, the travel industry is now dealing with high inflation and fuel costs fueled by the war in Ukraine.

In addition, the strengthening of the dollar against major currencies is weighing on the industry, just as travel demand has been at an all-time high.

Another indication of rising travel demand is Visa’s latest financial results, which saw a 28% jump in cross-border payments. The hospitality industry is also seeing growth, with Hilton Worldwide Holdings raising its full-year guidance.

Still, shares of online travel companies remain in the red this year, with Booking.com, Expedia and Airbnb all down 18%, 42% and 31%, respectively.

Marriott has confirmed strong demand

Hotels and lodging operator Marriott International said demand for travel remained strong and there were no concerns for travelers due to high inflation and fears of an economic downturn.

“At this point, we’re not seeing any signs of a slowdown in demand,” said Marriott CFO Lenny Oberg. “People want to get out there and travel.”

She added that US residents are booking leisure trips after spending years at home due to restrictions. Oberg said companies are booking vacations and trips to re-establish physical contact among remote workers or to meet with important clients.

Marriott reported a 70% jump in revenue to $5.34 billion in the second quarter, beating analysts’ estimates of $4.92 billion. The company’s financial report highlights that Americans are spending heavily on travel and services.

Marriott worldwide reported occupancy at nearly 68%, down from 7% before the pandemic. U.S. hospitality continued to gain, increasing global average daily room rates by 7% in the quarter from pre-pandemic numbers.

CEO Tony Capuno said travel to major cities had recovered compared to the start of the year. Marriott hotels in Washington, D.C., San Francisco, Los Angeles and New York City saw occupancy between 76% and 86% in the second quarter.

Capuano added that after most countries eased travel restrictions in the last quarter, demand for the company’s hotel rooms increased across all customer segments. Various aspects of driving have also been affected, from rising fuel prices to rental vehicles and car insurance policies.

Conclusion

Airbnb reported higher revenue and a stronger profit for the second quarter, but its shares still fell in response to earnings as booked nightly guidelines and experiences for the third quarter missed estimates.

Still, Airbnb shares have recovered as investors remain focused on demand. Similarly, booking stocks fell after negative results on July earnings growth.

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It has been updated August 5, 2022, 11:36 am