How does a stronger U.S. dollar affect online travel trends?

Rather than FX volatility, investors are prioritizing execution strategies, including cost-saving measures, value-added services, and product enhancements

A stronger U.S. dollar is expected to weigh on online travel companies' revenue growth in 2025, with currency fluctuations reducing gross bookings and reported revenue by 2-3%. However, investors have largely accounted for this foreign exchange (FX) impact and are shifting their attention toward companies' product development and execution strategies.

Key takeaways

FX headwinds: The strengthening U.S. dollar will create a 2-3% drag on gross bookings and revenue for major online travel firms. Booking Holdings, with high European exposure, is expected to face the most significant impact.

Sector fundamentals remain strong: Despite currency challenges, travel demand remains steady, and companies are focused on innovation to drive engagement.

Growth initiatives: Booking Holdings is advancing its "Connected Trip" initiative, Airbnb is expanding alternative accommodations in emerging markets, and Expedia’s Vrbo platform saw 14.5% YoY gross booking growth in Q4.

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