San Francisco-based vacation rental company, Airbnb, has announced a lower-than-expected forecast for third-quarter revenue, citing concerns about the economy and a decrease in booking lead times. The news has caused the company's shares to drop approximately 14.63% after the market closed on Tuesday.

Since the beginning of the year, domestic travel within the United States has been impacted as more Americans exercise caution in their travel spending due to worries about the health of the U.S. economy. As a result, Airbnb reported quarterly profit of $555 million, or 86 cents per share, compared to the previous year's $650 million, or 98 cents per share.

For the third quarter, Airbnb estimates its revenue to range between $3.67 billion and $3.73 billion, falling short of analysts' estimate of $3.84 billion. This outlook reflects a cautious approach from travelers who are increasingly making last-minute bookings, demonstrating heightened uncertainty and a more cautious approach to spending.

The company also highlighted a decrease in booking lead times globally, which is an important metric in the travel industry. Booking lead time refers to the number of days between the reservation date and the actual date of arrival. A shorter booking window indicates a trend of consumers booking their travel plans at the last minute due to increased uncertainty.

Booking.com, a leading travel reservations provider, had also previously mentioned that lead times had reduced in the second quarter and were expected to further shrink in the third. This trend is reflective of a cautious mindset in consumers when it comes to travel spending.

While Airbnb's average daily rate (ADR) experienced a modest growth of about 2% to $169.53 in the reported quarter, the company expects ADR to continue to grow at a similar pace in the third quarter. However, its net income margin decreased from 26% to 20% year-over-year, indicating a decline in profitability.

Despite these challenges, Airbnb witnessed a rise in nights and experiences booked, totaling 125.1 million, which is a 9% increase compared to the previous year. Notably, Latin America and Asia-Pacific saw the highest growth in nights and experiences booked, with a percentage increase of 17% and 19%, respectively.

Overall, Airbnb reported a gross bookings value of $21.2 billion, marking an 11% increase from last year. The total revenue for the quarter ending on June 30 was $2.75 billion, reflecting an 11% growth from the same period last year.

As the economic uncertainty continues to impact travel decisions, it remains to be seen how Airbnb will navigate these challenges and adapt its strategies to meet evolving consumer behaviors in the coming quarters.