Barclays favors the online travel sector's 2Q earnings window, with BKNG remaining the top pick
AI summary card
Barclays favors the online travel sector's 2Q earnings window, with BKNG remaining the top pick
The report believes online travel stocks offer attractive risk/reward under low expectations, recovering demand, easing airfare pressures, and mid-to-high teens P/E valuations. BKNG is the preferred name, while ABNB and EXPE also benefit from improving U.S. domestic travel.
- Travel demand is recovering as summer begins, with TSA/CBP passenger volumes, OTA site traffic, and revPAR all indicating an improved demand backdrop.
- Airfare and capacity pressures caused by tensions in the Middle East eased in the latter part of 2Q, suggesting that prior management guidance may have been conservative.
- BKNG remains the report's top pick, with 318m room nights modeled for 2Q, up 3% year over year; 3Q room-night growth is expected at 5-7%, with bookings and revenue growth of 6-8%.
- ABNB benefits from improved product velocity, the World Cup, boutique hotels, and RNPL; 2Q net nights and experiences booked are expected at approximately 146m, with GBV of approximately $27b.
- EXPE benefits from improving domestic travel because of its highest U.S. domestic exposure; 2Q bookings are expected at $33b and revenue at $4.17b.
- TRIP remains event-driven. The sale of TheFork could create room for buybacks or asset dispositions, but core Tripadvisor faces pressure from SEO and Google AI Overviews.
Report interpretation
Overview
This is a Barclays preview and stock review of 2Q26 earnings for the U.S. online travel sector, covering Booking Holdings Inc., Airbnb Inc., Expedia Inc., and Tripadvisor Inc. The report's core conclusion is that the online travel sector is entering a more favorable earnings window, with low expectations, improving travel demand, easing Middle East conflict impacts, declining airfares, and undemanding valuations together supporting sector allocation value.
Core views
The report's central view is to increase exposure to online travel at this stage, with a particular preference for BKNG. Barclays believes management guidance issued amid Middle East tensions and higher fuel prices may have been cautious, while demand, fares, capacity, and site traffic all improved in the latter part of 2Q. In terms of relative exposure, ABNB and EXPE benefit more from U.S. domestic travel and the World Cup; BKNG has greater European and international exposure but still offers solid growth and valuation advantages; TRIP faces structural pressure from declining SEO traffic and Google AI Overviews.
Analysis framework
The report combines earnings previews, comparisons of company guidance with consensus estimates, high-frequency industry data tracking, valuation multiples, and scenario analysis. At the industry level, it focuses on TSA domestic passenger volumes, CBP international arrivals, airfare prices, seat capacity, OTA website and app traffic, revPAR, and travel demand generated by the World Cup. At the company level, it assesses 2Q bookings, revenue, room nights, GBV, EBITDA, 3Q guidance, and the probability of full-year guidance reaffirmation.
Methodology notes
Compares Barclays' forecasts for key 2Q26 and 3Q26 operating metrics with market consensus estimates and company guidance ranges.
Used to assess whether market expectations are too low and whether companies have room to exceed earnings or guidance expectations.
Tracks travel demand indicators including airfares, capacity, TSA/CBP passenger volumes, OTA traffic, and revPAR.
The report uses these data to assess whether the impact of the Middle East conflict is fading and whether domestic and international travel demand is recovering.
Values ABNB, BKNG, and EXPE using target P/E multiples applied to FY27 or FY27E GAAP EPS.
The ABNB target price of USD 125 is based on 20x FY27 estimates, the BKNG target price of USD 210 is based on 18x FY27E GAAP EPS, and the EXPE target price of USD 264 is based on 14x FY27E GAAP EPS.
Uses a sum-of-the-parts valuation for TRIP.
The TRIP target price of USD 9 is based on 2x EBITDA for Hotels & Other, 6x EBITDA for Experiences, and a fixed USD 400m enterprise value for TheFork.
Provides upside and downside price targets or drivers for the covered companies.
Used to illustrate the effects of travel demand recovery, margin leverage, asset sales, marketing spending, and recession risk on valuation.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Booking Holdings Inc. (BKNG)The report's top online travel pick, rated Overweight with a USD 210 target price.
- Strengths
- Solid industry leadership; the report calls it the “gold standard” among travel stocks. Bookings growth is expected to track the industry, while concerns about margin pressure may be overstated.
- Weaknesses
- Higher European and international exposure than peers makes it more sensitive to geopolitical events and cross-border travel volatility; it has lower relative exposure to strong U.S. domestic trends.
- Comparison
- BKNG trades at approximately 16x FY27E GAAP EPS versus approximately 14x for EXPE. The valuation gap is narrower than historically, leading the report to favor BKNG's risk/reward.
- Risks
- Google expanding its travel services, direct-booking channels taking OTA share, pressure on take rates and margins, and macro demand coming in below expectations.
- Airbnb Inc. (ABNB)Rated Equal Weight with a USD 125 target price; benefits in the near term from U.S. domestic travel and improved product velocity.
- Strengths
- Global leader in alternative accommodations with a strong brand, a high proportion of direct traffic, and a strong supply-side moat. Following C-suite changes, improved execution and product velocity, hotels, experiences, services, and RNPL could provide upside.
- Weaknesses
- Growth has already slowed, GAAP EPS valuation is relatively full versus peers, and expansion beyond the core business has historically delivered limited results.
- Comparison
- Compared with BKNG, ABNB has greater relative exposure to U.S. domestic trends and the World Cup, but less valuation tolerance.
- Risks
- A recession weakening travel demand, accelerated marketing spending to defend share, and unresolved regulatory disputes restricting available listings or markets.
- Expedia Inc. (EXPE)Rated Equal Weight with a USD 264 target price; its 2Q setup is favorable because it has the highest U.S. domestic OTA exposure.
- Strengths
- The highest exposure to U.S. core OTA demand and benefits from improving domestic travel trends. B2B is a near-term growth highlight, while an improving ADR environment supports unit economics and earnings leverage.
- Weaknesses
- It has benefited less from the post-pandemic recovery than other OTAs, lower marketing efficiency may be harder to improve, and valuation is considered broadly fair.
- Comparison
- EXPE has stronger domestic exposure than BKNG, but the report still favors BKNG because of its leadership quality and risk/reward.
- Risks
- A recession causing further deceleration in bookings growth, or increased marketing spending to compete for share and pressure margins.
- Tripadvisor Inc. (TRIP)Rated Underweight with a USD 9 target price; remains event-driven.
- Strengths
- After-tax proceeds from the sale of TheFork could fund greater buybacks. Viator remains a long-term core highlight, while an asset sale, spin-off, or strategic alternative could unlock value. Licensing AI training data could also create a new revenue stream.
- Weaknesses
- The core Tripadvisor business faces high SEO dependence, traffic diversion from Google AI Overviews, and pressure in the hotels business; 2Q EBITDA margins may remain under pressure.
- Comparison
- Compared with BKNG, ABNB, and EXPE, TRIP has weaker online travel traffic trends. Double-digit traffic declines and structural SEO risks make it less attractive as an investment.
- Risks
- Reduced budgets from OTA partners, rising customer acquisition costs, lower monetization from mobile traffic migration, and investments outside hotels weighing on margins.
Key data
- BKNG 2Q room-night forecast318mUp 3% year over year, at the midpoint of company guidance; the report considers this potentially slightly conservative.
- BKNG 2Q bookings growth6% Y/Y; +4% ex-FXBroadly in line with market consensus.
- BKNG 3Q expectationsRoom-night growth of 5-7%; bookings and revenue growth of 6-8%; EBITDA growth of 8-12%The report expects the company to reaffirm full-year guidance.
- ABNB 2Q net nights and experiences bookedApproximately 146mUp 8% year over year, broadly in line with consensus; the report considers this potentially conservative.
- ABNB 2Q GBVApproximately $27bUp 13% year over year.
- ABNB 2Q EBITDA$1.24bThe report believes there may still be upside based on the 1Q beat and 2Q guidance.
- EXPE 2Q bookings$33bSlightly above the midpoint of the guidance range.
- EXPE 2Q revenue$4.17bSlightly above the midpoint of the guidance range.
- EXPE 2Q room-night growth+6%Above the 5% market consensus.
- TRIP 2Q revenue forecast$498mBroadly in line with consensus.
- TRIP Experiences businessBookings growth of 7%; revenue growth of 4%The report considers Experiences to remain a bright spot.
- U.S. domestic airfare pricesUp 31% year over year as of 6/22Still above last year but down from the peak.
- International airfare pricesUp 19% year over year as of 6/22The trend improved in the latter part of 2Q.
- BKNG and EXPE FY27E GAAP EPS valuationBKNG 16x; EXPE 14xThe report believes the valuation gap between the two has narrowed materially versus history, making BKNG's risk/reward more attractive.
Impact & implications
The report's investment implications are positive: the online travel sector may benefit in the near term from low 2Q earnings expectations and improving 3Q guidance. ABNB and EXPE, with higher domestic travel exposure, have near-term tailwinds, while BKNG's industry leadership, consistent execution, and relatively reasonable valuation make it the top pick. AI disintermediation, Google traffic diversion, macroeconomic recession, and rising marketing spending could still weigh on longer-term valuations.
Risks
- A resurgence in Middle East geopolitical tensions could push fuel prices, airfares, and capacity constraints higher again.
- Travel demand could deteriorate in a macroeconomic recession, affecting bookings, revenue, and margins.
- Google travel products, AI travel assistants, and AI Overviews could bypass OTA or metasearch experiences, creating disintermediation risk.
- Higher direct-booking penetration could pressure OTA take rates and margins.
- Increased marketing spending to defend market share could cause margins to fall below expectations.
- If ABNB regulatory disputes remain unresolved, supply could be restricted in certain markets.
- TRIP's core business is highly dependent on SEO and Google traffic, and continued traffic declines would weigh on revenue.
What to watch
- Whether 2Q26 results demonstrate that prior management guidance was conservative.
- Whether BKNG reaffirms full-year guidance and whether its 3Q room-night, bookings, revenue, and EBITDA growth guidance meets the report's expectations.
- Whether ABNB's product velocity, RNPL, boutique hotel, and experiences businesses continue to generate incremental growth.
- Whether EXPE's B2B business and U.S. domestic OTA demand remain strong.
- Whether subsequent TSA and CBP data confirm passenger recovery driven by the World Cup and improving fares.
- Whether domestic and international airfare prices and seat capacity continue to improve.
- Whether OTA website and app traffic continues to grow after tensions ease.
- The impact of Google AI Overviews and agentic AI travel experiences on TRIP and the OTA traffic funnel.
- The use of proceeds after TRIP's sale of TheFork, the intensity of buybacks, and whether strategic transactions emerge involving Viator or other assets.