Mar 29, 2023
Airbnb Sees Travel Demand More Resilient Than a Fendi Bag
(Bloomberg) -- Airbnb Inc., which reported its first profitable year in 2022 two years after the pandemic brought the business to the brink of extinction, is now focused on improving its core product for the millions of guests and hosts who have flocked to the home-sharing platform.
“What we’re working on now are the most perishable opportunities — the things that are most critical,” Chief Financial Officer Dave Stephenson said in an interview. “For us right now, it’s continuing to make it easier to host, continuing to make the core service for our hosts and guests better.”
The San Francisco-based company reported $8.4 billion in revenue last year and $1.9 billion in net income. Airbnb has benefited from travelers eager to take vacations after years of Covid-19 travel restrictions, and expects business to stay strong despite rising inflation and a cloudy economic outlook. The company said in its last earnings report that bookings in January grew 20% over 2019.
“Demand for travel and getting out of your homes and experiencing other places with other people is just a much more resilient than buying a new Fendi bag,” Stephenson said. He described the market as “less of a rebound” after the pandemic and “more of a revaluation of priorities.”
To meet that demand, Airbnb has been working to add more supply. At the end of last year, it had 6.6 million listings, up 900,000 from a year earlier. The company has taken steps to make hosting easier, including pairing its “superhosts” with first time hosts to give them tips on creating a listing.
Airbnb also envisions leaning into the ecosystem of thousands of independent companies that offer services to help guests or hosts, such as co-hosting abilities, fridge stocking and cleaning services. “I think those are areas you could see getting into over time because they’re very adjacent to the core and they’re uniquely enabling a connection between our guests and hosts,” he said.
Like the company’s hosting and experiences model, such offerings would likely take the form of a marketplace that the company would build itself, Stephenson said, while acknowledging that acquisitions “are on the table.”
Airbnb does have significant cash holdings, which it could tap for potential deal making, or use to invest in its business. The company reported cash and cash equivalents of $7.38 billion for 2022.
For Airbnb, the challenge is not access to funding, but deciding how to spend its money, Stephenson said. “The bigger thing for us is to establish what’s the right way to deploy the cash, because we’re clearly in growth mode,” Stephenson said, adding that the company doesn’t have plans to raise additional funding any time soon. Airbnb spent about $1.5 billion on repurchasing its stock last year, and will likely allocate a similar amount to share buybacks this year, Stephenson said.
Airbnb has partnered with some of the largest apartment landlords in the country to allow tenants to list their units on the platform when they’re not using them. Prospective renters can browse apartments on Airbnb’s website and use a calculator to see how much income they could generate through part-time hosting. Since rolling out the initiative last fall, Airbnb has added dozens of properties across more than 30 markets, Stephenson said. Each property owner takes a 15%-to-25% cut of the revenue.
Ellie Mertz, vice president of finance, said the project “is one more lever in terms of building out our long-time supply.” Airbnb continues to see the length of the average stay increase. Long-term stays of 28 nights or longer account for about 21% of the total, the company said in its fourth-quarter results.
As the lingering effects of Covid recede, Airbnb is seeing guests return to more cross-border travel. The Asia Pacific region is the last to begin to rebound as travel remains more limited in the area, but Airbnb said it’s gearing up for the resumption of regional flights that will fuel outbound travel from China after it shuttered its domestic business in the country last year.
--With assistance from Nina Trentmann.
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