Consumers around the world are willing to "succumb" to high prices and are voting for holidays abroad this summer, according to figures released by the big three online travel companies.
Airbnb Inc., Expedia Group Inc. and Booking Holdings Inc. announced their second-quarter results last week, which paint a different picture of what is generally described as an ideal summer trip. But all three agree on this: prices are higher this year – from flights to hotels and short-term rentals – and tourists are voting Europe.
This appears to have benefited Booking, which makes almost 90% of its revenue in Europe.
The Norwalk, Connecticut-based company, which owns discount booking site Priceline and Kayak, said its revenue rose 27 percent and total gross bookings rose 15 percent. Average daily rates for accommodations rose about 9 percentage points from a year earlier, the company said.
"In the long run, people will always want to travel," CEO Glenn Fogel told Bloomberg TV. "And you can basically make an estimate that travel will grow faster than GDP." Fogel expects a "record travel season in the third quarter."
Back to… abroad
Although ticket prices remain high for international routes, travelers appear to still be willing to shell out for the overseas experiences they missed out on during the height of the pandemic. For example, as Bloomberg points out, for Americans the strong dollar makes traveling to Italy even more attractive.
Hot tourist towns are also returning to the charts, after several summers of vacations in more rural, domestic settings.
Global airlines such as United Airlines Holdings Inc. and Delta Air Lines Inc. raised their annual forecast for international bookings gains and said they see strong demand continuing into the fall. Marriott International Inc. raised its earnings estimates for the rest of 2023, with hotels in Asia and Europe driving revenue growth. At the same time, US-focused carriers such as JetBlue and Alaska Air are being forced to cut prices for domestic travel.
Airbnb
The higher prices are also reflected in Airbnb accommodation prices, where average daily rates have jumped 42% since 2019 to $166 at the end of June.
But it's all about location: Average daily rates in North America fell 1% in the second quarter compared to a year earlier, while in Europe, the Middle East and Africa they rose 8%.
That didn't seem to deter travelers, who booked 115,1 million nights and experiences through Airbnb in the second quarter, up 11 percent from already elevated levels last year.
San Francisco-based Airbnb said people were traveling longer distances and cross-border overnight bookings rose 16% during the quarter. In particular, travel to Asia Pacific was up more than 80%, and nights and experiences booked in North America by international visitors were up about 20% from a year earlier. Overall consumer demand improved during the second quarter, with overnight stays up 10% year-on-year in April and 15% year-on-year in June. Airbnb also said more travelers are returning to cities, its traditional stronghold, with bookings for high-density urban home listings up 13 percent.
Expedia
For Expedia, whose platforms include flight bookings, hotel stays, car rentals, activities and vacation rentals, some of the recent travel trends haven't been so beneficial, and it reported revenue that came in below analysts' estimates. A shift in consumer demand toward urban markets and shorter stays have impacted Expedia's Vrbo vacation rental business, Chief Financial Officer Julie Whalen said.
The Seattle-based company makes most of its revenue domestically and does not have the same international reach as Airbnb. "However, given the size and strong growth of our hotel business," Whalen said, "we were pleased to be able to deliver record lodging bookings overall."
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