Tariff Impact Causes Us to Reduce Online Travel Fair Value Estimates

Shares of our online travel coverage dropped 5%-9% on April 3 after President Donald Trump announced a 10% baseline tariff on all imports, with select countries facing higher tariffs.

Why it matters: Tariffs are likely to hurt travel demand due to a weaker economic outlook, which had already been evidenced by a recent softening in US consumer sentiment.

• The Index of Consumer Sentiment dropped for a third consecutive month in March, to its lowest level since November 2022, as expectations for personal finances, unemployment, and inflation deteriorated, according to the University of Michigan.
• US travel demand growth has outstripped GDP, with revenue per available room increasing an average of 3.3% versus 2.4% for GDP during 1988-2019. But it is not immune from economic slowdowns, as shown in revPAR dropping 2% in 2008 amid a slight GDP decline.

The bottom line: We cut our fair value estimates for the online travel companies by 3%-4%, to $4,600 for wide-moat Booking, $152 for wide-moat Airbnb, $204 for narrow-moat Expedia, and $18 for no-moat Tripadvisor. Of these, we highlight Airbnb, which trades in 4-star territory.

• We think investors are discounting Airbnb’s network advantage, which we see driving strong international alternative accommodation and experience bookings, leading to 11% revenue growth on average during 2026-34.
• Our updated revenue growth outlook for 2025 is 3.5% for Booking BKNG (versus 8% previously), 5% for Airbnb ABNB (10%), 3% for Expedia EXPE (6%), and 4% for Tripadvisor TRIP (6%).