(Reuters) -Shares of Expedia surged more than 17% in premarket trading on Friday, after the online travel agent raised its full-year gross bookings forecast and struck an optimistic tone on the recovery in U.S. travel demand.

Expedia is the latest travel company to hint at a rebound in demand, following weakness earlier this year when consumers fretted over the economic impact of President Donald Trump's tariff policies.

"Since the beginning of July, we've seen an uptick in overall travel demand, particularly in the U.S.," CEO Ariane Gorin said on the earnings call on Thursday.

The company expects 2025 gross bookings to grow between 3% to 5%, up 1 percentage point from its earlier forecast.

Morningstar analyst Dan Wasiolek expects bookings growth to accelerate further to 7% in 2026 as demand improves alongside policy visibility.

Tariffs had disrupted travel spending, "but it appears prospective U.S. travelers are prepared to book again," said Danni Hewson, head of financial analysis at AJ Bell.

Expedia has also been focusing on simplifying its organizational structure by eliminating roles, streamlining operations and deploying generative AI technology.

Its second-quarter margin grew by 190 basis points, surpassing the company's May guidance of a 75- to 100-basis-point increase.

The biggest fundamental takeaway is that Expedia's continued strategic focus and tighter expense controls are driving more consistent results, said Baird analyst Michael Bellisario.

Expedia also joined industry peers Marriott and Airbnb in noting strong bookings from higher-income consumers while lower-income consumers were more cautious with discretionary spending.

Expedia's shares trade at about 12.01 times their forward profit estimates, below the industry median of 14.19.

(Reporting by Aishwarya Jain in Bengaluru; Editing by Devika Syamnath)