The impact of remote and flexible work around the world is creating a new business category for Airbnb, prompting the home-sharing giant to ramp up investments in an emerging segment that sits somewhere between travel and permanent housing.
The San Francisco-based company reported a continued spike in the number of long-term stays booked on its platform, a slice of its business that has been fueled by a growing population of travelers who are able to work from anywhere.
Defined as bookings for one month or longer, those longer stays now make up nearly 20% of Airbnb's total business, significantly higher than the 13% share it held prior to the pandemic and a portion company executives expect will grow even larger.
"Zoom is here to stay and flexibility is here to stay," Airbnb CEO Brian Chesky told analysts on the company's earnings call Thursday. "It's a whole new category between travel and housing and it's one of the most underrated markets for Airbnb."
Company executives said they would deploy more capital toward the segment, an investment made possible by tightening the reins on some of its own expenses such as moderating headcount growth and cutting back on real estate costs. Airbnb will continue to closely manage its fixed expenses — an effort that began in early 2020 when the pandemic's quick arrival dragged global travel and spending to a grinding halt.
In the years since, however, Airbnb's business has rebounded far beyond its pre-pandemic levels, boosted first by the pent-up travel demand that triggered a worldwide hospitality boom and now with its relative affordability in relation to prices across the traditional hotel market.
Longer Stays
The 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.
Continued demand among travelers — whether they're able to work remotely or are tacking a few extra days onto a business trip — has helped push Airbnb's revenue for the second quarter up to $2.5 billion, a nearly 20% hike compared to the same time last year. Guests collectively booked more than 115 nights on the platform for the period ending June 30, representing upward of $19 billion in gross booking value.
The period marked Airbnb's most profitable second quarter in the company's nearly 15-year history.
While company executives say they have yet to see any indication of a tourism pullback, Airbnb's growth in the number of nights booked on its platform has been slowing since the height of the post-pandemic surge last summer. To keep its momentum going, the company is adding more listings to juice supply and widen its pricing range. It has partnered with some of the country's largest multifamily developers and landlords, for example, to expand the company's presence in major cities as well as make it easier for renters to list their units on the platform.
But longer-term stays will be a significant expansion driver for the company in the decade ahead, Chesky said, largely due to the flexibility among travelers that hasn't before existed.
"It's hard to predict how it will change, but what I can say with a fair amount of confidence is that in the next decade, it will be much higher than 18%," the CEO said of how longer stays will make up a larger portion of Airbnb's business. "More than ever, you’ve got hundreds of millions of people that have a job via a laptop with some incremental flexibility that didn’t exist 10, 20 years ago. More and more people traveling for entire seasons, and some may move away from their HQs but then come back and work for extended periods."
That newfound demand has created an entirely new category that isn't quite travel, but also doesn't resemble classic housing demand that involves real estate and leases, Chesky said.
"This is something that didn't exist in any meaningful way when we started Airbnb," he said. The company "will be the leading place to do it, since there really isn't another global player that can provide anything like it. For the long-term, we're very bullish on it and have more features and upgrades in the works that will get more people and unlock new listings."