Airbnb reported a record $1.21 billion profit for the third quarter as bookings and average daily rates increased, and the company said Tuesday that demand for short-term rentals remains strong despite uncertainty over the economy.

The profit was still less than Wall Street expected, however, and the company said bookings growth will slow in the fourth quarter, while average daily rates will also be pressured.

Airbnb shares fell 4% in extended trading.

The third-quarter profit, which compared with $834 million in the same quarter last year, amounted to $1.22 per share. Analysts expected $1.47 per share, according to a survey by FactSet.

Revenue surged 29% from a year earlier, to $2.88 billion, slightly higher than analysts’ forecast of $2.85 billion.

Airbnb shares have dropped nearly one-third this year despite the recovery in travel, a highly profitable first half of the year, and relentlessly upbeat commentary from CEO Brian Chesky and other company leaders.

Most of the share-price decline has occurred since early May. Investors worry that higher prices for basics including housing, food and gas — plus fear of recession — will cause consumers to cut back on discretionary spending like travel.

Airbnb may face a more fundamental threat, however — a perception among many guests that bookings on the site are no longer a bargain because of high cleaning fees and misleading listings.

Chesky tweeted last month that “cleaning fees were never intentionally designed, which is why we’re now playing catch up. This is one of my top priorities — we are redesigning how pricing on Airbnb works”.

Renters have posted photos of detailed lists of chores that hosts demand. The discontent runs both ways — hosts are increasingly complaining about problem tenants.

Airbnb is fighting a long-running battle to crack down on unauthorized parties, a few of which have ended with shootings. The company also faces more efforts by local residents and governments to regulate the short-term rental market.

Many large cities in the U.S. and overseas have added expensive permit requirements to operate a short-term rental, and they fine property owners who don’t follow the rules. The trend is spreading to smaller cities. Officials in the Dallas suburb of Plano are considering tougher rules after a prostitution bust at an Airbnb in a residential neighborhood.