Shares of Booking Holdings (BKNG 0.86%) were slipping Monday as the fallout from travel-related sanctions on Russia continued. Over the weekend, the European Union and Canada closed their airspace to Russian planes, and Russia retaliated by closing its airspace to planes from several European countries.
The West has undertaken a series of suffocating economic measures in response to Russia's invasion of Ukraine, and Booking, which derives a majority of its revenue from the European market, is feeling the impact.
As of 1:33 p.m. ET, Booking shares were down 4.3%.
So far, it's unclear what the full effect will be of the economic sanctions that the U.S., the European Union, and others are imposing on Russia, but the value of the Russian ruble has fallen by about 25% against the dollar since fighting broke out, and efforts to paralyze the Russian banking system could further depreciate its currency and impact international banks doing business in Russia.
Europe also depends on Russian oil and natural gas to meet a large fraction of its energy needs, though there is no indication yet that this part of their trade relationship could change.
Russia is not a major tourist destination, but it is the most populous country in Europe, so a decline in travelers coming from Russia, who are essentially under a ban at this point, could at least have a mild impact on Booking's business.
The broader risk here involves the fallout this conflict will have on the European economy, as well as the potential for other consequences, like the war spreading or a refugee crisis across the continent.
On Booking's fourth-quarter earnings call last week, CEO Glenn Fogel attempted to tamp down investors' fears about how all this would impact the company, saying that Russia and Ukraine together constitute a very low single-digit percentage of total bookings as destination markets. Still, travel restrictions and economic risks seem to be the real factors driving the stock lower now.
Fogel also said the company was seeing strong bookings in Western Europe for travel this summer, a sign that its business in the region has not been heavily impacted yet. However, the war remains a risk that investors should be factoring into their calculations, especially as intensifying economic sanctions could make it worse.
While most of the travel company's business should be unaffected by the war in Ukraine, investors should still pay attention to it.