Short-term rental properties listed on Airbnb enjoyed record demand in the second quarter, but analysts on a earnings conference call with executives were more focused on how the company might handle an economic recession and the corresponding dip in travel demand.
Airbnb CEO Brian Chesky said he doesn't expect any dip in travel demand within Airbnb's ecosystem, adding that the company was "founded during a recession" and a downturn could actually be "a big opportunity for us."
"In the 2008 financial crisis, people were worried about being able to pay their bills, pay for their homes ... and so they turn to hosting, and we think a lot of people may turn to hosting once again," Chesky said.
Chief Financial Officer Dave Stephenson said there is still so much pent-up demand globally that travel could have an upward trajectory even in bad economic circumstances.
"We have so many different kinds of supply in so many places around the world," he said. "We have any kind of place for anyone that wants to travel. And there's just so much pent-up demand for travel — just sort of demand for travel in general. People like to spend money on the experience of traveling and getting out of their home."
With that in mind, Chesky said the focus of Airbnb's business in the near to medium term is not on preparing for a demand shock but on growing its base of hosts to service continued demand growth, as bookings for the second half of the year continue to outpace the same period in 2021.
"Our strategy, No. 1, is we want to unlock the next generation of hosts," he said. "We have 4 million hosts on Airbnb, and I think that millions more can turn to hosting, especially during these economic times."
Executives said the "vast majority" of new Airbnb hosts are individuals and not large-scale property managers, which they believe will help recession-proof their supply to an extent.
"Therefore, the vast majority of their listings are either their primary home or maybe a secondary home," Stephenson said. "They don't get rid of those in a recessionary environment."
Executives said the travel environment is exceptionally strong, with the potential to grow stronger as international travel restrictions continue to fade away.
In a letter to shareholders Tuesday, the company reported its strongest second quarter ever, with a 24% increase in booking demand compared to the second quarter of 2019.
Chesky said the company more than weathered the storm during the pandemic, reshaping to focus not just on urban and international travel but on more suburban and "non-urban" destinations.
"It's good to remember that before the pandemic our bread and butter was cross-border travel and urban travel ... and of course the pandemic occurred and that got primarily shut off and yet our business recovered because people were using Airbnb differently," he said. "I think really the key important thing here is that our model is obviously incredibly adaptable."
He said the company expects significant tailwinds through the second half of 2022 amid signs that urban travel is resurging.
"There's a lot of new use cases [for Airbnb], but the thing I'm pretty excited about is a lot of the older use cases, like cross-border and urban, are coming back," Chesky said.
He said the company has pushed to streamline its cost structure and grow more profitable, better positioning itself for long-term demand shocks. Airbnb recorded net income of $379 million on $2.1 billion in revenue for the second quarter, making it the most profitable second quarter in the company's history.
Analysts also repeatedly asked about Airbnb's decision to wind down its business in China. The company announced it will end its listings within the country but continue to court outbound international travelers from that country once they begin traveling abroad again, which Stephenson described as "the most valuable and important part of China."
"What we've done is we've shifted all the resources that we were applying and splitting between both domestic and outbound travel, and we focused all that on outbound, which we think is the greater prize and the most important part for the long term," he said.
Airbnb's stock was trading at $116.34 as of press time, down 32.6% year to date. The Nasdaq composite was down 22% for the same period.