Expedia Group announced on Friday that the decline in travel demand within the United States contributed to their first-quarter revenues falling short of expectations. Similarly, a report by Bank of America highlighted a decrease in spending on flights and accommodations through their credit card transactions, which saw continued declines in recent months.
These reports reflect a broader concern within the U.S. travel and tourism sector, potentially pointing to the first slowdown since the post-pandemic surge of “revenge travel,” which had sustained a strong interest in travel since COVID-19 restrictions were eased.
Expedia, which operates popular services such as Hotels.com, VRBO, and its namesake online agency, observed a decline in travel activities involving both international and domestic travelers. Similar observations were reported last week by Airbnb and Hilton in their respective quarterly earnings releases. Meanwhile, significant U.S. airlines revised their financial forecasts in April and announced plans to cut down on scheduled flights, attributing the decision to a decrease in economy-class leisure bookings.
Economic uncertainty and anxiety over President Donald Trump’s trade tariffs have been cited by the U.S. Travel Association as contributing factors to this pullback in travel activity. In fact, American consumer confidence in the economy dipped for the fifth consecutive month in April, reaching its lowest point since the pandemic outbreak.
According to Bank of America, while their credit card users were ready to spend on certain leisure services, such as dining out, spending on more costly discretionary purchases like airfare and hotels continued to decline. This downturn is possibly linked to waning consumer confidence and apprehension over economic stability.
Internationally, issues arising from tariffs and concerns over tourist detentions at U.S. borders are believed to have discouraged citizens of other countries from visiting the U.S., according to tourism experts. Official figures from the U.S. government indicate that as of the end of March, 7.1 million international visitors had entered the U.S. this year, representing a 3.3% decline compared to the same period in the previous year. However, these statistics exclude land crossings from Mexico and Canada, where there has been notable discontent over Trump’s comments on making Canada the 51st state. Consequently, government statistics from both nations have shown a stark decrease in U.S.-bound crossings from Canada.
Expedia’s CFO, Scott Schenkel, noted a 7% drop in the net value of bookings into the U.S. during the first quarter, with a remarkable nearly 30% decrease in bookings from Canada. On a call with investors, Expedia CEO Ariane Gorin commented on the slowed U.S. demand, which worsened in April compared to March. Gorin mentioned that while travel to the U.S. is under pressure, some rebalance is occurring, with Europeans opting to travel more to Latin America instead.
Headquartered in Seattle, Expedia reported a 3% revenue increase, amounting to $2.99 billion for the quarter, which fell short of the $3 billion anticipated by Wall Street analysts as per a FactSet survey. Following this announcement, Expedia’s shares dropped by over 7% during Friday’s trading session.
Airbnb indicated that international visits to the U.S. account for merely 2% to 3% of their business. Nonetheless, even within these modest numbers, a declining interest in U.S. travel was noted. Ellie Mertz, Airbnb’s CFO, noted a prominent example in Canadian travelers, who are opting for domestic, Mexican, Brazilian, French, and Japanese destinations over the U.S.
Hilton, in response to the shifting industry dynamics, adjusted their full-year revenue per available room forecast, an important industry benchmark. In late April, Hilton trimmed their growth expectation to between 0% and 2%, down from a prior 2% to 3% forecast.
Hilton’s President and CEO Christopher Nassetta shared with analysts that there has been a noticeable decline in international travel to U.S. hotels, particularly from Canada and Mexico over the first quarter. Despite these challenges, Nassetta remained hopeful for improvements in the second half of the year, expressing a belief that economic uncertainty may diminish, helping to unveil the economy’s underlying robustness.