Airbnb said it's benefiting from both a return to pre-pandemic travel trends and the adoption of new behaviors, resulting in a growth spurt for the home-sharing giant.
The San Francisco-based company reported increasing momentum in the shift of travelers back to major cities around the world and shorter stays as more workers head back to the office and a more normal routine resembling life before COVID-19. Even so, Airbnb is still raking in a record number of nightly bookings as it adopts features that encourage longer stays and other pandemic-related shifts now embedded in the global tourism industry.
Airbnb, which marked the first profitable first quarter in its history with $117 million in net income, reported that nightly bookings in "high-density urban" areas rose by 20% in the first few months of this year compared to the same time in 2022. The profit signals potentially stronger competition for some hotels and short-term apartment rental companies from Airbnb.
As travelers return to cities and global urban centers, the company is aggressively investing in expanding its roster of listings to meet demand that has so far been able to withstand macroeconomic concerns such as inflation, a potential recession or dwindling savings accounts as consumers pay higher interest rates on loans.
"Over the course of the pandemic, we were not as focused on international expansion, and that's because we were mainly focused on recovery and some of the new travel segments like longer-term stays," Airbnb CEO Brian Chesky told analysts on the company's earnings call Tuesday. "Over the last three years, we've gotten really, really focused on back to basics and our company is significantly more profitable. Now is a good time for expansion."
In addition to doubling down on international expansion, Airbnb is honing its focus on boosting the number of listings on its platform to meet rising demand while keeping costs lower than traditional hotels, a factor Chesky said will keep the company competitive and attractive for price-sensitive guests.
What's more, Airbnb is planning to bring on more listings through its partnerships with some of the country's largest multifamily developers and landlords. That effort is all in a bid to expand the company's presence in major cities as well as make it easier for renters to list their units on the platform. Airbnb launched the strategy late last year, teaming up with major real estate players including Greystar and Equity Residential to bring on 175 multifamily buildings in 30 markets across the United States.
In fewer than six months, the program has ballooned to include more than 250 properties with "many more to come," Chesky wrote in the company's latest shareholder letter. "We have seen strong interest in Airbnb-friendly apartments across the country from both individuals looking to host and buildings looking to join the program."
Asked whether the company plans to expand the program internationally, Chesky replied: "A hundred percent, yes. We believe that this can be expanded all over the world. We wanted to use the U.S. as a proof of concept, and obviously that was the first place to start. But assuming this works, and all indications are it is going to work, the response has actually exceeded our expectation, at least from landlords."
Anomaly Status
The global tech industry has been slogging through a severe retrenchment as a result of growing too quickly in response to pandemic-related demand that has since fallen off. Airbnb, however, is a different story.
The company already survived its own reckoning phase when the pandemic's quick arrival dragged global travel and spending to a grinding halt. At its lowest point in 2020, Airbnb reported $335 million in revenue in the second quarter of 2020, a 72% drop compared to the same time a year earlier. It rebounded quickly in the second half of the year, and the company reported revenue of more than $1.34 billion in the third quarter and $859 million for the fourth quarter. All told, Airbnb's full-year revenue for 2020 was almost $3.4 billion, a 30% decline from 2019.
Now, however, continued demand among travelers trying to put the pandemic in their rearview mirrors helped push Airbnb's revenue for the first quarter up to $1.8 billion, a 20% hike compared to the same time last year. Guests collectively booked more than 120 nights on the platform for the period ended March 30 — a record quarterly high for Airbnb — representing nearly $20.5 billion in gross booking value.
And Airbnb executives said they don't expect the momentum to die down anytime soon.
"We are looking forward to another strong summer travel season," Chesky wrote in the company's shareholder letter. Airbnb is estimating quarterly revenue of up to $2.45 billion through the end of June, representing a year-over-year increase of more than 15%.
Even with some guests returning to cities and their pre-pandemic lifestyles, Airbnb is planning to leverage its growth over the past few years to propel further expansion.
When it comes to longer-term stays, he said "what the pandemic did is it probably accelerated some inevitable growth in this huge opportunity for us. And I also think we're never going back to the way the world was before the pandemic. I do think there is a bit of a post-pandemic equilibrium that you're starting to see, but I remain extremely bullish on long-term stays. I think this is going to be one of the big growth opportunities for Airbnb over the next five years, and the reason why is because people are permanently more flexible."