Airbnb shares are climbing after the company reported stronger-than-expected third-quarter revenue and steady travel demand despite economic uncertainty. The company continues to invest in international markets and new services, while its “Reserve Now, Pay Later” feature is gaining traction among users.
BNN Bloomberg spoke with Dan Wasiolek, senior equity analyst at Morningstar, who said Airbnb’s growing presence in global markets, along with its use of artificial intelligence and innovative travel offerings, is setting the stage for sustained growth and margin expansion over the next several years.
Key Takeaways
- Morningstar expects Airbnb’s international expansion and experiences segment to drive faster growth starting in 2026.
- North American bookings rose five per cent year over year, outperforming major hotel operators facing flat demand.
- The Reserve Now, Pay Later feature has strong uptake, with 60 per cent of eligible users opting in, helping drive new bookings.
- Airbnb’s fair value estimate stands at US$154 per share, about 20 per cent above current levels, reflecting long-term optimism.
- Margins are expected to expand again by 2026 as heavy investment spending winds down
Read the full transcript below:
ANDREW: Shares in Airbnb are higher in pre-market trading after the company posted stronger-than-expected revenue. It introduced new features during the quarter, including improved maps, updated cancellation policies and, this seems to be working out well, Reserve Now, Pay Later. Let’s get more from Dan Wasiolek, senior equity analyst at Morningstar. Dan, thanks very much for joining us. What jumped out for you in the quarter?
DAN: Yeah, thanks for having me. So, I mean, you alluded to some of it, but what jumped out is that demand is improving, profitability is improving, and they’re executing and expanding into new markets, which is increasing their total addressable market. We think that could triple over the next several years. So there was a lot to like in the quarter.
ANDREW: It’s fascinating. I mean, we hear about consumers being under pressure, but people are still travelling. Actually, could you tell us how much of their business is tied to the U.S.? Is it a huge portion of their revenue?
DAN: Yeah, it’s a significant portion. North America accounts for about half of their total business, though they don’t break out U.S. numbers specifically. They’re in about 220 countries. But to your point about the Reserve Now, Pay Later feature — they noted that in North America, which is their most mature region, nights booked were up five per cent year over year. That’s significant because when you look at hotel operators in the U.S., they’re seeing flat to slightly negative volume growth recently. So within travel, Airbnb is outperforming in the U.S., despite some economic uncertainty.
ANDREW: Yeah, it’s interesting. I noticed that Six Flags and other leisure stocks have warned of weaker-than-expected growth, and their price cuts aren’t paying off. Bloomberg Intelligence suggests Airbnb could see more cancellations with the Reserve Now, Pay Later option. I guess it depends on the small print, but do you think that’s a risk?
DAN: Yeah, it was mentioned a bit on the conference call. They’ve tested this before and officially launched it in the U.S. in August. Based on their beta testing, they think cancellations will be relatively minor. It’s something to monitor, but about 60 per cent of people offered the feature are taking Airbnb up on it. It also evens the playing field, since when you book a hotel you typically don’t pay until your stay. So this makes sense for Airbnb and puts them more on par with competitors.
ANDREW: The stock has been trading around US$120, and your fair value estimate is about US$154, right?
DAN: That’s right. We’re at US$154, so the stock’s trading at about a 20 per cent discount. I think the market has been focused on Airbnb’s investment in expanding international markets and adding hotel-like services and experiences. We think that’s attractive for long-term growth and profitability, but in the near term it’s lowered operating margins compared to 2024. The market can be short-term oriented, but we take a longer view and see this as an opportunity for investors.
ANDREW: And what does “experiences” mean in this context?
DAN: It’s things to do. The leader in that space is a company TripAdvisor owns called Viator. It’s a huge market — about US$300 billion, with only 30 per cent online penetration — and Viator only has a low single-digit share. Airbnb can do well here because of its individual hosts who know their local areas. We think the company could generate about US$10 billion in bookings from experiences and services by the end of this decade.
ANDREW: You mentioned hotels. How is Airbnb working with hotels? They’d seem to be arch enemies.
DAN: Yeah, well, they are adding hotels, but their strategy focuses on boutique and unique hotels in areas where Airbnb doesn’t have much supply. Their commercials suggest that Airbnb is the best fit for many travel experiences, but they acknowledge that sometimes a hotel is a better fit. It’s still a big expansion opportunity — for every 10 bookings in the U.S., only one is an Airbnb stay. That’s a huge market opportunity for their core alternative accommodation business, and it explains why they’re adding some hotel listings around the edges.
ANDREW: What about rivals like VRBO? I know their market share is smaller, but are they a competitive threat to Airbnb?
DAN: Actually, Airbnb’s main competitor in vacation rentals is Booking Holdings, which is stronger internationally. VRBO is the number-three player. You can think of market share roughly as Airbnb with 50 per cent, Booking Holdings around 30, and VRBO at about 10 per cent. VRBO, owned by Expedia, recently reported 10 per cent revenue growth after a lot of platform reinvestment, but they’ve been losing share. So Airbnb remains the leader by a wide margin.
ANDREW: Fascinating, Dan. Anything else we should watch for from Airbnb over the next year — any surprises investors might not be aware of?
DAN: Yeah, I think the stock has been weighed down by near-term investment, but they guided higher on EBITDA margins for the year. Margins are still below 2024 levels, but management said they’re through the heaviest investment period. As we move into 2026 and beyond, margins should start expanding again.
ANDREW: Thank you very much, Dan. Really appreciate it.
DAN: All right. Thank you.
ANDREW: That’s Dan Wasiolek, senior equity analyst at Morningstar.
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This BNN Bloomberg summary and transcript of the Nov. 7, 2025 interview with Dan Wasiolek are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.
