Expedia Group Inc. shares fell as much as 8% in pre-market trading after the company reported that geopolitical conflict in the Middle East and a travel advisory in Mexico cut quarterly bookings growth by two hundred basis points.
"In March, we did see the impact of the conflict in the Middle East," Chief Executive Officer Ariane Gorin said in an interview. "While the Middle East is only about 2% of our business, we saw cancellations across Europe and Asia."
The online travel platform forecast second-quarter gross bookings to be in the range of $32.5 billion to $33.1 billion, the midpoint of which is slightly below analysts' average estimate of $33 billion, according to LSEG data. For the first quarter, Expedia reported an adjusted profit of $1.96 per share on revenue of $3.43 billion, beating analyst estimates.
The travel industry is grappling with the dual impact of regional instability and soaring fuel costs. The conflict that began in late February has doubled the price of jet fuel and forced airlines to cancel thousands of flights, according to a report from Business Travel News Europe. The crisis has led to airfare increases of up to 15 percent as carriers pass on costs from fuel surcharges and longer flight routes to avoid conflict zones.
Other major travel companies have also signaled a hit to profitability. Airbnb Inc. said it expects a 100-basis-point headwind to nights booked in the second quarter due to the war, though it issued an upbeat revenue forecast. Peer Booking Holdings and hotel operators Marriott and Hilton have also flagged a hit to profitability.
The disruption is reshaping travel patterns, with Gulf carriers like Emirates and Qatar Airways losing as much as 20 percent of their share among some corporate clients, according to consultancy firm Areka. Carriers including Lufthansa, Air India, and Singapore Airlines are gaining that traffic as travelers shift to alternative hubs.
The drop in Expedia's stock price puts it on track for its lowest level since March. Investors will be watching for commentary from other travel executives for signs of whether the consumer demand that has buoyed the sector since the pandemic can withstand the rising costs and geopolitical uncertainty.
This article is for informational purposes only and does not constitute investment advice.
