Airbnb posts best quarter yet on relentless travel demand | Tech US News


Airbnb co-founder and CEO Brian Chesky appeared on stage at the Skift Global Forum in New York in September 2022. Source: Skift.

Airbnb co-founder and CEO Brian Chesky appeared on stage at the Skift Global Forum in New York in September 2022. Source: Skift.

Sustained high rates of short-term rentals and vacation homes drove Airbnb to record revenue and profit in the third quarter, it reported Tuesday. The lodging booking agency continued to cash in on pent-up travel demand from consumers as the pandemic receded.

Airbnb’s net revenue rose 46 percent year over year to $1.2 billion, its highest quarter ever, in the period ended Sept. 30.

The San Francisco-based company generated third-quarter revenue of $2.9 billion, which was also a company record. The revenue mark was up 29 percent compared to a year ago.

Airbnb had 90 million guest arrivals, another record. They generated 99.7 million “nights and experiences” booked, a figure that was up 25 percent year-on-year.

Wall Street Skeptics

Despite the record results, however, investors pushed down Airbnb’s share price in after-hours trading. Why? Investors were worried about a potential weakening of the company’s fourth-quarter forecasts, which fell short of their expectations.

Analysts noted that executives said reserves would “moderate slightly” from third-quarter levels.

“As the impact of the pandemic recedes but macro conditions persist, we expect a continued, albeit choppy, recovery in cross-border travel to be a further tailwind for future results,” the company said in a statement. Executives also noted that a strong U.S. dollar relative to other currencies was a headwind to their performance.

On a call, executives cautioned analysts not to judge the company’s performance against an unreasonable one-hit standard since Covid restrictions were lifted in many countries a year ago. They said analysts were ignoring that Asia Pacific has yet to recover, which provides another engine for growth.

“If you really go back to 2019 [for pre-pandemic performance]we’re actually seeing stable and growing booking demand here from 3 to 4,” said David Stephenson, chief financial officer. “The decline [deceleration] what we see from Q3 to Q4 is really a buy [comparison] in the fourth quarter of last year, where we had very strong demand after Delta and before Omicron. So this is really kind of a difficult trade-off year after year.”

Hosts who discovered Airbnb during the pandemic have remained “as strong, if not stronger” in “stickiness” and “engagement” than those who joined the platform before the crisis, executives said.

Analysts who thought long-term stays of a month or more would be a pandemic problem may be surprised by Airbnb’s results on Tuesday.

“We’ve seen many companies require their employees to return to the office,” said Brian Chesky, co-founder and CEO. “And at the same time, long-term stays are still 20 percent of the total gross nights booked on Airbnb.”

airbnb plus short term living room rental nashville source airbnb

airbnb plus short term living room rental nashville source airbnb

Continued resilience

Chesky argued that Airbnb has shown since its founding after the financial crisis that it can grow steadily during economic downturns as individuals turn to it to generate additional income through hosting.

The company has continued to hold down its online marketing costs, claiming that 90 percent of its traffic comes directly or through non-paid channels, a combination higher than that enjoyed by online rivals such as Booking Holdings and Expedia Group.

Conversion rates, or the rate at which an Airbnb visitor becomes a buyer, have increased in recent years with a “metronomic improvement,” meaning that efforts to inspire travelers attract more viewers and temporarily lower conversion rates only to translate into increased bookings and an upturn in conversions.

Since last year, when it launched “AirCover,” a form of basic insurance that indicates a listed property will be as advertised, the company has seen its Net Promoter Score, a measure of guest satisfaction, rise. The company plans to expand what the product covers soon.

Adaptation to economic softness

Airbnb executives have acknowledged that some economies are softening or heading into recession as they take steps to improve the price competitiveness of Airbnb accommodations and ease on-board supply.

On pricing, the company does not plan to make wholesale changes to its structure. But it’s planning to add more transparency, as previewed by Skift. The goals are for owners and hosts to have a better understanding of the prices that are actually paid for accommodation.

The company will also update its search rankings to increase the prominence of properties that past guests have told Airbnb provide “great value.” The company will also offer more discount tools. The company may also lower its cut, or commission, on multi-month bookings to help them price more competitively.

“If we do all of this, I think the prices will be even more competitive,” Chesky said.

To help increase supply, the company will launch new tools on Nov. 16 that it hopes will make it easier for people to list homes for rent on Airbnb.

On supply growth, the company said its active listings grew about 15 percent in the quarter compared with a year ago, after excluding properties in mainland China that it spun off in July after exiting that market. The company did not provide a specific number of active listings, other than to say that 90 percent of its listings are from hosts and that it has “more than 4 million hosts,” the same number it reported a year ago.

“The one area where I haven’t seen consumers pull back as much is travel,” Chesky said. “As the mall is now Amazon, the movie theater is now Netflix, people still want to get out of the house. They still want to have meaningful experiences.”

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