Travel corporations may very well be in trouble with a recessionary period could likely on the horizon, in line with Wolfe Research. Analyst Deepak Mathivanan downgraded the web travel sector to market underweight from market weight, citing a possible demand decline because the economy contracts. Which means a worse outlook for giant names corresponding to Booking Holdings , Airbnb , TripAdvisor and Expedia . “Every recession is different by way of magnitude and impact on consumer spending in various categories,” he said in a note to clients. “Our downgrade thesis on travel is actually not predicated only on macro trends. Nonetheless, we struggle to see travel demand exhibiting high levels of resiliency and growth during a slowing economy in 2023.” Travel saw a resurgence in 2022 because the pandemic receded and consumers shifted spending away from goods to services and experiences. But Mathivanan said consensus estimates don’t yet reflect the magnitude of impact an economic slowdown may have on online travel stocks in 2023 — as consumers grow increasingly wary about spending amid growing recessionary fears. The stocks can even be hurt by less efficient customer support acquisition channels these corporations have moved into over the past 12 to 18 months, Mathivanan said. On a more technical basis, the businesses’ valuations will feel pressure as outlook estimates are negatively revised. Booking was downgraded to look perform from outperform due to its high exposure to Europe, which is anticipated to see a greater macro contraction in 2023. The stock has lost 14.9% to date this yr. Airbnb, meanwhile, won’t only face macro challenges, but can even struggle with company-specific issues corresponding to outsized growth moderating and an elevated valuation, Wolfe Research. The corporate can even feel margin pressure as the common each day rate of its rentals declines. The stock, which was down 4.4% on Wednesday, was held at peer perform. It has dropped 44.1% for the reason that start of 2022. Expedia, however, is taken into account low cost in comparison with historical levels, but Mathivanan downgraded the stock to underperform from peer perform since it could suffer from what he calls “sub-par” marketing efficiencies and product mix. Marketing underutilization could also hurt margins, he said. The worst performer of the bunch this yr, Expedia has lost 46.4% compared with the beginning of 2022. It shed 4.3% on Wednesday. Also downgraded to underperform, he said Tripadvisor is seeing its value proposition “erode” because the travel research space grows. Its core auction marketplace and margins could each feel pressure amid a broader slowdown in travel, he said. — CNBC’s Michael Bloom contributed to this report.