Airbnb’s ongoing battle with hotels for travelers has taken a noticeable turn

What’s on deck:

But first, let’s just book a hotel.

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The big story

Plenty of vacancy

Airbnb took a noticeable step back in its ongoing battle with hotels.

The short-term rental giant’s stock is down almost 13% after lowering its third-quarter revenue projections and acknowledging it’s seeing signs of slowing demand from US guests during last week’s earnings call.

Execs quickly pointed to an economy that’s seen consumers pull back on their spending habits. But Airbnb’s struggles are also a product of travelers opting for hotels instead, writes Business Insider’s Dan Latu.

That’s quite a change from just a few years ago when Airbnb was booming as people looked to escape cities for extra space and fresh air. But the intervening years haven’t always been kind to Airbnb.

A laundry list of chores and rules coupled with high cleaning fees sullied the experience for some. Bait-and-switch scams were another concern. But even if you were willing to look past all that, you might not even be able to book an Airbnb as an increasing number of cities have banned the platform.

The Airbnb-to-hotel conversion has been taking place for a while. But lowering its projections for a third quarter — a time when consumers are known to travel — felt like a turning point.

Airbnb isn’t alone in facing a bit of a reckoning.

Apps that relied on low prices to grow fast and build loyalty have been forced to adjust their business model. The death of the so-called millennial lifestyle subsidy — for which Airbnb was a key player — resulted in consumers rethinking things.

So yes, customers have pulled back on spending in a way that has impacted Airbnb. But it’s also a result of how Airbnb runs its business as opposed to just wider economic forces.

Still, weakening consumer spending is a lot easier to point to than acknowledging the competitor might be eating your lunch. A tough economy can be useful for businesses in that way, like how companies were able to raise prices on the premise of inflation going up.

And if you can’t beat them, join them.

Airbnb signaled it might look to its rival for some inspiration. The company’s chief business officer told Bloomberg it’s looking at offering luxury services for guests in a bid to win hotel converts back.

News brief

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In other news

What’s happening today

• The Home Depot and other companies are reporting earnings.
• “Made by Google” event to launch Google’s latest devices, including the Pixel smartphone.

The Insider Today team: Dan DeFrancesco, deputy editor and anchor, in New York. Jordan Parker Erb, editor, in New York. Hallam Bullock, senior editor, in London.