Expedia and AirBnb say Americans are showing “strength” and booking flights

Vacation rental companies love the view these days.

Strong domestic demand prompted Expedia Group (EXPE) and Airbnb (ABNB) to issue rosy forecasts on Thursday. Airbnb expects fourth-quarter sales to grow 7% to 10% year over year, according to its letter to shareholders. Expedia raised its full-year outlook and now expects revenue to be 6% to 7% higher than last year.

The parent company of Vrbo and Hotels.com said third-quarter overnight stays in the U.S. rose by high single digits, the fastest growth for Expedia in more than three years. Bookings came not just from the wealthy, but also from the “underclass,” CFO Scott Schenkel told investors on a conference call Thursday.

Schenkel’s comments contradict a trend identified by a number of companies and analysts in recent months, in which low- and middle-income households have seen their spending cut back due to concerns about the labor market and inflation and the wealthy, who are benefiting from a frothy stock market, are more comfortable holding on to it.

Airbnb bookings in North America rose by mid-single digits year over year in the third quarter. The company achieved “useful acceleration” in the U.S. in part because it introduced a feature that allows consumers to pay their bill in installments, Chief Financial Officer Eli Mertz told investors on a conference call Thursday.

“We are encouraged by the continued momentum,” Mertz said, according to a transcript made available by AlphaSense. “Although annual operations are challenging, we are seeing strength in longer lead time bookings.”

The upbeat outlook is notable at a time when flight cuts are expected, at least briefly, to disrupt domestic travel. Because of the government shutdown, 40 U.S. airports began reducing capacity by 4% today and are scheduled to reduce it by 10% by Nov. 14, Transportation Secretary Sean Duffy said Thursday. Duffy said the move will ensure safety and keep the system running amid a shortage of air traffic controllers, who are currently unpaid.

Schenkel said air travel revenue represents a relatively small portion of Expedia’s total revenue, and he told investors that the company should be able to meet its goals even if the segment performs poorly.

“While we, like everyone, hope for a quick and safe resolution to the situation, whatever the case may be, we will be here for our travelers,” he said, according to the text of the message.

Consumer groups offer ideas for those with air traffic concerns

Several major hubs are part of the flight reduction mission, presenting the risk of widespread disruption. The 40 airports involved account for roughly 69% of all passengers screened by TSA in October, according to Deutsche Bank estimates.

Analysts said airlines will likely prioritize flying longer and more profitable distances on regional routes. People with upcoming travel plans may want to give themselves an extra day to travel, stay away from evening flights, and avoid using third-party booking services, according to the Public Interest Research Group. The Consumer Rights Group has published a primer on travelers’ rights here.

Analysts said the flight cuts may temporarily increase passenger revenue per available mile — an industry revenue measure — but would likely be a drag on profit margins.

“If the cuts continue during the Thanksgiving holiday travel period, we believe the financial impact will be significant, especially for some of the weaker airlines,” Deutsche Bank said.