Airbnb Inc. (NASDAQ:ABNB) saw its stock fall about 2% at Friday’s market open after Truist Securities downgraded the travel platform to Sell from Hold, citing sluggish summer booking trends and an overly rich valuation.

In a note to clients, Truist reduced its price target for Airbnb shares to $106 from $112, warning that demand across the U.S. and Europe is falling short of what investors currently expect. “We believe soft summer leisure trends, both for the U.S. and Europe (difficult y/y comp in Europe due to last summer’s events) are not being fully anticipated by analysts and investors,” wrote analysts led by C. Patrick Scholes.

The firm also questioned Airbnb’s valuation, suggesting it may be trading at too much of a premium relative to peers in the hospitality sector. They added, “We do not believe the premium valuation multiple vs. other not too dissimilar asset-lite hospitality companies such as Hilton (NYSE:HLT) is fully deserved.”

Truist’s downgrade reflects a wider reassessment across the lodging industry. The firm now expects Revenue per Available Room (RevPAR) for U.S. mid- and upper-tier hotels to decline between 1% and 3% in the third quarter—below consensus projections of flat growth. More modest hotels could fare even worse, with RevPAR anticipated to drop 2% to 4%.

Analysts attributed the softness to a mix of weaker consumer and corporate sentiment, cutbacks in government travel, and softer international inbound demand. Still, they emphasized that while bookings are underwhelming, they’re not in freefall.

“To be clear, the softness we observe is not anywhere near the demand collapse like what occurred during Covid nor is it GFC-esque but rather RevPAR growth for 3Q and into 4Q simply looks ‘soft’ to the tune of approx. 150 bps. below current Street expectations,” the note stated.

Truist also downgraded Park Hotels & Resorts (NYSE:PK) to Hold from Buy, citing its heavy reliance on leisure travel—particularly in Hawaii—and its elevated debt levels. The firm pointed to deteriorating tourism sentiment in Hawaii, quoting the University of Hawaii Economic Research Organization’s view that the weakness is “primarily due to actual and threatened U.S. tariff hikes that are much larger than anticipated, as well as adverse effects on increased federal policy uncertainty around trade, immigration, spending and tax cuts.”

Despite steadiness in average daily rates (ADR), Truist cautioned that the industry may revert to discounting if current demand trends persist.

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