AIRBNB shares tumbled after the vacation home-rental company gave a cautious forecast for revenue in the second quarter, suggesting rising prices and a murky economic outlook are beginning to weigh on consumer appetite for trips.

The San Francisco-based home-sharing company expects revenue of US$2.35 billion to US$2.45 billion in the three months ending in June, representing an increase of 12 per cent to 16 per cent from a year earlier and its slowest pace of growth yet. Analysts were projecting US$2.4 billion according to a Bloomberg survey. Airbnb said it expects earnings before interest, tax, depreciation and amortisation, excluding some costs, to be similar to the second quarter last year.

Airbnb had benefited over the past few years from shifts in work and lifestyle due to the pandemic. But the post-Covid rush to travel is losing steam, and some consumers are reining in leisure budgets amid persisting inflation and an unsteady economy. Airbnb said the number of nights and experiences booked in the current period will look unfavourable compared with a year ago, when there was a surge in demand following the outbreak of the Covid-19 Omicron variant. As a result, the company expects year-over-year growth in nights and experiences booked to increase at a slower pace in the second quarter than revenue.

The shares fell 10 per cent to US$114.25. They had gained almost 50 per cent so far this year through the close of trading.

The forecast came on the heels of a quarter that set records in several metrics. Revenue in the three months ended Mar 31 increased 20 per cent to US$1.82 billion, Airbnb’s highest ever for that period. That compares with analysts’ estimates of US$1.79 billion. Adjusted earnings before interest, taxes, depreciation and amortisation were US$262 million, better than Wall Street’s estimates and also a record first quarter. Earnings per share were 18 US cents, while analysts were expecting 17 US cents.

Companies from airlines to hotels have been increasing prices as consumers have so far shown a willingness to pay. Personal consumption expenditures were up 3.7 per cent in the first three months of this year, the most in almost two years. But people may be starting to draw the line. Bank failures, a rising rate of inflation, elevated mortgage payments and a softening labour market, especially in high-income sectors such as tech, could see tourists start to pull back on spending.

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Airbnb said in the first quarter average daily rates were US$168, about the same “sustained elevated”, level from a year ago. Price appreciation was offset by the impact of foreign exchange, people’s willingness to pay, and a shift in bookings into urban and other types of rentals. But Airbnb sees “slightly lower” daily rates in the second quarter, in part due to new host pricing tools introduced last week and the shift to more urban rentals.

Chief executive officer Brian Chesky said in an interview last week that the strong demand he’s expecting for this summer could be even better if not for the economic uncertainty. Airline prices are still expensive, he noted, and “when the cost of flights goes up, that impacts our business”.

Airbnb’s results follow robust results and optimistic commentary from its online travel peers. Booking Holdings and Expedia Group both reported double-digit increases in gross bookings in the first quarter. Booking, whose properties include restaurant reservation platform OpenTable and discounted flight website Priceline, said bookings reached the “highest quarterly levels ever”. Expedia chief executive officer Peter Kern said there’d been “a structural change in how consumers are thinking of spending and travel is at the top of the list”.

In a call with investors to discuss results, Chesky said price affordability is the top priority for Airbnb. He said the hope is that the substantial supply on the platform will help ease price pressures.

Airbnb has been taking steps to keep prices on rentals from exploding. The company rolled out more than 50 new features and upgrades in part to increase price transparency and affordability. In an effort to ensure the platform has places to stay at reasonable prices, the company launched Airbnb Rooms with an average rate of US$67 per night. Guests stay in homes with hosts and share common spaces like living rooms, kitchens and backyards. Airbnb is also implementing a series of changes including lower fees, adding the ability to pay in instalments through a new partnership with Klarna Bank, and a new discount tool for hosts to offer the best deals.

The company also announced on Tuesday (May 9) that it authorised a new share repurchase programme of as much as US$2.5 billion. BLOOMBERG