It’s a tough moment to predict the future of the travel industry. Just look at Airbnb’s stock.
The company had a huge second quarter, with revenue soaring nearly 300% as spring and summer bookings jumped. But shares remain almost 30% below the all-time high they hit in February.
Some of the apprehension may come from Airbnb’s rich valuation. The home-sharing startup is now worth $96 billion, which Bank of America points out is 13 times the bank’s estimates for 2022 revenues.
But the company is also in limbo due to uncertainty about the outlook, a problem made worse by the spreading Delta variant.
Deutsche Bank noted Monday that cases have now been rising globally for eight consecutive weeks, according to data from Johns Hopkins University. Australia and China are among countries that have recently tightened restrictions to try to stem a rise in infections.
Airbnb explicitly outlined its concerns in a letter to shareholders that accompanied its latest results.
“In the near term, we anticipate that the impact of Covid-19 and the introduction and spread of new variants of the virus, including the Delta variant, will continue to affect overall travel behavior, including how often and when guests book and cancel,” the company said. As a result, it continued, future bookings “will continue to be more volatile and non-linear.”
Consumer sentiment tumbles
Another warning sign: The University of Michigan said Friday that its influential consumer sentiment index plunged 13.5% from July to August, hitting a level of 70.2. That’s the most bearish reading for the measure since December 2011.
“There is little doubt that the pandemic’s resurgence due to the Delta variant has been met with a mixture of reason and emotion,” said Richard Curtin, the survey’s chief economist.
The travel industry is still doing its best to plan for the future. Hyatt announced Sunday that it’s buying Apple Leisure for $2.7 billion.
The move is a bet on the future of luxury travel, which has been recovering more rapidly. It will double Hyatt’s global resort footprint, and expand the company’s presence in Europe by 60%.
Airbnb, meanwhile, is still projecting that third-quarter revenue will be its strongest on record. Long-term stays at its properties by remote workers as the Delta variant delays the return to the office are poised to help its business.
“The company noted several positive trends that could continue post Covid, including longer stays and a growing percentage of bookings for non-traditional travel,” Bank of America’s analysts wrote in a research note.
Yet the advent of highly infectious coronavirus variants makes it hard to say with confidence whether a strong summer season will continue into the fall — dampening investors’ enthusiasm.
