Expedia's Revenue Stumble Signals Deeper U.S. Travel Woes

Expedia Group’s first-quarter 2025 earnings report has sent shockwaves through the travel industry, revealing a stark reality: the U.S. travel market is in decline, and Expedia’s reliance on it has become a liability. With revenue rising just 3% year-over-year to $2.99 billion—below both internal forecasts and analyst expectations—the company’s struggles underscore a broader crisis in domestic and international demand. CEO Ariane Gorin attributed the miss to “weaker than expected travel demand in the U.S. and into the U.S.,” a phrase that encapsulates the twin challenges of faltering domestic bookings and plummeting inbound tourism.

Domestic Demand: A Foundation of Weakness

Two-thirds of Expedia’s business is tied to the U.S., yet domestic demand remains stubbornly疲软. The decline stems from declining consumer sentiment and economic uncertainty, with travelers hesitating to commit to non-essential trips. This softness is compounding Expedia’s challenges in a market already crowded with competitors like Airbnb and Booking Holdings. Meanwhile, the company’s guidance cuts—reducing full-year revenue growth projections to 2–4% from 4–6%—reflect a stark acknowledgment of the headwinds.

International Travel: The Resurgence of the “Trump Slump”

The bigger issue lies abroad. International inbound travel to the U.S. dropped sharply in Q1 2025, with Canadian bookings falling 30% and European arrivals down 17%. This mirrors—and surpasses—the “Trump Slump” of 2017, when restrictive visa policies and geopolitical rhetoric caused a 4% drop in international visitors. Today’s iteration is more severe, fueled by lingering political tensions. Canadian travelers, the largest source of U.S. inbound tourism, are deterred by President Trump’s “51st state” rhetoric and tariff disputes. By March 2025, Canadian road trips to the U.S. had collapsed by 32%, and air travel fell 13.5%, per Statistics Canada.

The U.S. Travel Association (USTA) warns that each 1% drop in international visitors translates to a $1.8 billion annual revenue loss. If current trends persist, the U.S. could face a $21 billion shortfall in 2025—a blow to an industry that contributed $2.9 trillion to the U.S. economy in 2024.

Stock Performance and Analyst Backlash

Investors have reacted swiftly. Expedia’s shares fell 8% on the earnings release and are down 16% year-to-date, as fears over the company’s exposure to U.S. travel risks mount. Analysts like J.P. Morgan’s Doug Anmuth and Piper Sandler’s Thomas Champion criticized Expedia’s overreliance on the domestic market, calling the outlook “discouraging” and warning of further declines. Their skepticism is warranted: Expedia’s revised guidance assumes only 2–4% bookings growth in Q2, a cautious stance given the industry’s struggles.

Meanwhile, broader travel sector data paints a grim picture. Airlines and hotels are also reporting softer demand: Hilton downgraded its revenue outlook, while Airbnb noted travelers are booking closer to departure dates—a sign of caution. In Las Vegas, visitor numbers fell 7% in Q1 2025, translating to 9.7 million fewer visitors, while California projects a 9.2% drop in international arrivals.

Systemic Risks and the Path Forward

The USTA estimates that the U.S. travel industry’s $1.3 trillion in direct traveler spending is at risk. With tariff-related uncertainty and geopolitical tensions eroding consumer confidence, Expedia’s problems are not isolated. The company’s CFO, Scott Schenkel, emphasized that the outlook reflects “cautious expectations amid macroeconomic pressures,” but even this may prove optimistic.

The real question is whether the “Trump Slump” can be reversed. For Canadian travelers, the answer lies in easing political rhetoric and trade disputes. For Europeans and others, it requires addressing the shift toward alternative destinations like Latin America. Without meaningful policy changes or a rebound in consumer sentiment, the U.S. travel industry—and its largest online booking platform—faces prolonged headwinds.

Conclusion: A Cautionary Tale for Investors

Expedia’s earnings miss is more than a blip; it is a symptom of systemic weakness in U.S. travel demand. With international arrivals down 7% in Q1, Canadian bookings plummeting 30%, and domestic confidence waning, the company’s revised guidance of 2–4% annual revenue growth reflects a reality investors must now confront. The $21 billion revenue shortfall projected by the USTA and Expedia’s 16% year-to-date stock decline () serve as stark reminders of the risks ahead.

In a sector where every percentage point of demand loss translates to billions in lost revenue, Expedia’s struggles are a bellwether. Until the U.S. addresses the political and economic factors driving this decline, investors should brace for further volatility—not just in Expedia’s shares, but across the broader travel industry. The road to recovery is long, and the destination remains uncertain.