Airbnb expects “sequential moderation” of growth in the key measure of nights and experiences booked during the current period, the company said Tuesday in a letter to shareholders.

Airbnb posted an 8.7% gain in that category during the second quarter, falling short of investors’ estimates. And the third-quarter increase will be even smaller. Analysts had been projecting an 11% boost.

The shares plunged more than 16% in extended trading on Tuesday. If the declines hold on Wednesday, the stock could notch its biggest intraday drop on record.

Airbnb saw a slight acceleration in growth of North American nights booked in the second quarter. This sets up the slowest pace of growth since 2020 following an especially brisk vacation season in 2023.

Even as the pandemic retreats, headwinds have dogged the broader industry.

Last week, Booking Holdings Inc gave worse-than-expected guidance, blaming “mild moderation” in the European travel market and “mild indication” of some consumers opting for lower-star hotels and shorter stays, particularly in the US.

“We are seeing shorter booking lead times globally and some signs of slowing demand from US guests,” Airbnb said in the letter. Latin America and Asia Pacific continue to be its fastest-growing regions, it added.

The company’s revenue for the current quarter will be US$3.67 billion to US$3.73 billion, also short of analysts’ consensus of US$3.84 billion, with the company blaming foreign exchange challenges.

Its second-quarter revenue beat estimates, jumping 11% to US$2.75 billion. But the 8.7% increase for nights booked compared with an 9.8% estimate.

Airbnb, which specialises in shared homes and vacation rentals, saw a slight acceleration in growth of North American nights booked in the second quarter. It highlighted the week of July 4 as the “single highest week of revenue ever” in the region.

The company also saw particularly strong gains among larger parties after honing its marketing materials in the US to convince more groups to choose multibedroom homes over hotel rooms.

Nights booked for groups of more than five people jumped 16% and was the fastest-growing segment in the region for a fifth quarter, Airbnb said.

The continued recovery in international travel has been a bright spot for Airbnb and the industry at large, with Latin America and Asia Pacific being key growth markets for the company.

By contrast, Airbnb said the more than doubling of nights booked in Paris during the Olympic Games in the second quarter made a “relatively small” contribution to company’s business the Europe, the Middle East and Africa, which saw “stable” gains.

The company has been investing in less-mature overseas markets. That’s included the introduction of limited-edition stays inspired by local cultural icons. The effort will likely weigh on margins in the near term, as Airbnb sees marketing costs rise faster than revenue in the third quarter.

CEO Brian Chesky has said that the company he co-founded in 2007 is ready to expand beyond its core offerings. He spent the past year refining Airbnb’s existing product to make listings more reliable and affordable for guests, and to encourage more people to sign up as hosts.

That work has been paying off. The number of active listings on Airbnb surpassed 8 million in the second quarter, even as it took steps to remove more than 200,000 lower-quality listings. Chesky said the company hopes to attract more inventory by introducing a new co-hosting marketplace in October.

The marketplace would match people who have homes — but don’t have time to be a host — with those who have the time but don’t have a property.

Airbnb will also relaunch its Experiences business for tours, classes and workshops next year, he added, with an emphasis on better marketing and affordability. The company will make it easier to discover the feature on the app as well.

Other executives have also hinted at new guest-related services in the past few months. Chief Business Officer Dave Stephenson has signalled that new services on tap for next year could include luxury amenities such as personal chefs, midweek cleaning and in-home massages.

Chesky has also said he will share more details on the company’s use of artificial intelligence later in the year.