Expedia shares dropped about 8% before the opening bell on Friday after management attributed weaker quarterly bookings and room-night growth to two distinct but overlapping disruptions: conflict in the Middle East and a travel advisory in Mexico. Together the issues reduced growth by roughly 200 basis points, according to the company.
Company executives said international travelers have grown more hesitant to visit the Middle East following military strikes that caused airspace closures in multiple countries. Those shutdowns interrupted major transit hubs, including Dubai, and led several airlines to stop flying certain routes, creating ripple effects across long-haul itineraries.
Chief Executive Ariane Gorin noted the company’s geographic exposure was limited in absolute terms, but cancellations widened beyond the region. "While the Middle East itself represents less than 2% of our total bookings, we saw elevated traveler cancellations across Europe and Asia," she said on Thursday.
Expedia also pointed to softer demand in Mexico after violence that followed the February killing of a drug lord prompted a U.S. shelter-in-place advisory for American travelers. That advisory, together with the fallout from the Middle East conflict, produced the combined headwind that management quantified.
Analysts said the impact was larger than anticipated. Michael Bellisario of Baird highlighted that the roughly 200-basis-point hit exceeded expectations and observed that rival Booking Holdings experienced a similar negative effect despite greater regional exposure. BTIG analyst Jake Fuller commented on Expedia’s exposure mix, saying, "We thought Expedia’s mix would shield it from the disruption hitting others, but we were wrong with both the Middle East and Mexico." He added that Expedia’s broader operational execution remains strong and warned the market debate should not obscure that point.
Airbnb also reported on Thursday that it was seeing higher cancellations linked to the conflict and expects that disruption to continue to weigh on results later in the year. Both companies nonetheless identified a recovery in U.S. travel as a bright spot after a bifurcated, K-shaped market slowed demand for budget and mid-scale lodging segments.
Market valuation metrics cited in connection with the companies show differing forward profit multiples. Expedia was cited trading at 11.70 times forward profit estimates, Booking at 15.03 times, and Airbnb at 26.91 times. Truist analyst Gregory Miller said he was not particularly worried that Expedia maintained its full-year guidance, noting that the decision was understandable given current macro uncertainty.
Market context
The immediate effects on bookings and room nights were quantified by Expedia as a roughly 200-basis-point combined drag. The disruption stems from two sources: Middle East airspace closures and route suspensions, and a Mexico-related U.S. advisory following violent incidents in February. Analysts pointed to similar impacts across peers while flagging Expedia’s continued operational strengths.