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Investing.com -- Shares in Airbnb Inc (NASDAQ:ABNB) fell roughly 2% at market open Friday after Truist Securities downgraded the stock to Sell from Hold due to soft summer leisure trends and concerns over valuation.
The brokerage also cut its price target to $106 from $112, warning that both U.S. and European demand appear weaker than investors currently anticipate.
“We believe soft summer leisure trends, both for the U.S. and Europe (difficult y/y comp in Europe due to last summer’s events) are not being fully anticipated by analysts and investors,” Truist analysts led by C. Patrick Scholes said in a note.
They also flagged valuation as a headwind, noting they “do not believe the premium valuation multiple vs. other not too dissimilar asset-lite hospitality companies such as Hilton (NYSE:HLT) is fully deserved.”
Truist’s downgrade is part of a broader recalibration of expectations across the lodging sector, as analysts lower their 2025 Revenue per Available Room (RevPAR) forecasts.
The broker sees third-quarter RevPAR down 3% to 1% for U.S. mid and upper-end hotels, below consensus estimates of flat growth. Limited service hotels are expected to perform worse, with RevPAR seen falling between 4% and 2%.
The analysts cite a combination of weaker consumer and business confidence, cuts in government travel, and reduced inbound international demand as key factors behind the softer booking trends.
While the softness isn’t considered severe, Truist said RevPAR is tracking roughly 150 basis points below current Street expectations for the third quarter.
“To be clear, the softness we observe is not anywhere near the demand collapse like what occurred during Covid nor is it GFC-esque but rather RevPAR growth for 3Q and into 4Q simply looks “soft” to the tune of approx. 150 bps. below current Street expectations,” the analysts explained.
Park Hotels & Resorts (NYSE:PK) was also downgraded to Hold from Buy, due to its high leisure exposure—especially in Hawaii—and elevated leverage.
Truist said tourism expectations in Hawaii have deteriorated, with the University of Hawaii Economic Research Organization noting that weakness is “primarily due to actual and threatened U.S. tariff hikes that are much larger than anticipated, as well as adverse effects on increased federal policy uncertainty around trade, immigration, spending and tax cuts.”
Despite a stable trend in average daily rates (ADR), Truist warned that the industry’s historical tendency to cut prices to stimulate demand during periods of weakness could return if softness continues.