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Expedia Outshines Airbnb Amid Mixed Q3 Earnings for Online Travel Giants

Expedia Group (EXPE) saw a jump in its stock after reporting third-quarter results that exceeded profit expectations, with shares rallying over 8% to $189.01.

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Despite slightly missing revenue expectations at $4.1 billion—a 3% year-over-year increase—Expedia's overall performance surpassed market sentiment. Boosted by a 13% increase in earnings per share (EPS) to $6.13, the company raised its gross bookings growth outlook to 5% for the year. Expedia’s Vrbo platform, a direct rival to Airbnb, also saw its first booking growth in over a year, attributed to increased marketing investments.

According to RBC Capital analyst Brad Erickson, Vrbo's expansion is "game on," with more aggressive marketing bolstering its return to growth, even as travel demand faced challenges earlier in the quarter. In a notable strategic shift, Expedia added 1 million urban listings on Vrbo, competing in a market segment traditionally dominated by Airbnb.

Airbnb's Earnings Miss Sparks Sell-Off
In contrast, Airbnb (ABNB) experienced a sharp decline, with its stock plunging over 9% to $133.29 following a second straight quarter of missed earnings. While Airbnb's revenue growth of 9.9% year-over-year to $3.73 billion exceeded expectations, EPS came in below analysts’ projections. CEO Brian Chesky outlined plans for continued expansion beyond short-term rentals, signaling a broader diversification effort in its "third chapter" of growth, following its rapid rise and pandemic recovery phases.

Despite an overall rise in nights booked, Airbnb struggled with shrinking margins as it ramps up investments in global markets and new initiatives, including its Co-Host Network, aimed at enhancing the hosting experience. This margin compression remains a concern for investors as Airbnb continues scaling its services, adding regions that contribute less profitably than core markets.

Diverging Growth Paths and Future Outlook
Expedia’s Q3 results underscore its successful pivot to address prior sales challenges, buoyed by robust double-digit growth in its advertising and B2B segments. The company’s new approach to expanding Vrbo’s offerings has positioned it favorably against Airbnb, especially as both companies contend with changing booking behaviors. Airbnb’s bookings saw a steady rise each month in Q3, with travelers booking closer to departure, a trend that poses challenges for consistent growth but hints at increasing demand stability.

Looking ahead, both companies appear to have divergent trajectories. Expedia's commitment to refining Vrbo and advancing B2B initiatives is expected to support its bookings growth through the end of the year. For Airbnb, the outlook is more complex. The company's substantial international push could lead to further margin erosion in the near term but is part of its broader strategy to gain ground globally.


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