Business Description
Airbnb, Inc. operates a global platform that connects hosts and guests to book unique stays and experiences worldwide. The company's marketplace model facilitates these connections online or through mobile devices, allowing hosts to offer spaces and experiences that enable guests to engage with communities authentically . Airbnb's primary revenue source is service fees charged to customers for stays and experiences booked on its platform. These fees are calculated as a percentage of the booking value, excluding taxes, and vary based on factors such as booking value, duration, geography, and host type . In 2023, Airbnb reported a revenue of $9.9 billion, marking an 18% increase from the previous year, primarily driven by a 14% increase in Nights and Experiences Booked and higher average daily rates .
- Stays - Facilitates the booking of accommodations worldwide, allowing hosts to offer unique spaces for guests to stay.
- Experiences - Offers a platform for booking activities and experiences that enable guests to engage with local communities and cultures.
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Q3 2024 Summary
What went well
- Airbnb is experiencing accelerating bookings growth, with guest demand increasing throughout the quarter and across all major regions. The growth rate of Nights booked in expansion markets more than doubled that of core markets.
- Airbnb's initiatives to improve affordability and reliability are driving increased bookings and supply growth. Features like total price display, weekly and monthly discounts, and the guest favorites program have improved guest experience, leading to higher rebooking rates and supply growth exceeding demand by a couple of points.
- Airbnb plans to expand beyond its core business by launching 1-2 new businesses annually, each expected to generate $1 billion or more in incremental revenue. Starting next May, they will reimagine Airbnb experiences, positioning the company for significant future growth.
What went wrong
- Airbnb's supply growth is slowing due to the removal of listings not meeting quality standards, with supply growth over 10% year-over-year but down several points because of the removal of over 300,000 listings in the past two years.
- Regulatory challenges in key markets like New York City are impacting Airbnb's business, as the company navigates bans and increased regulations, which have led to decreased availability and potentially higher costs for travelers.
- Investments in new services are expected to front-run revenue, indicating that expenses will increase without immediate revenue growth, which could impact profitability in the near term.
Q&A Summary
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Q4 Margin Outlook
Q: Why is Q4 EBITDA margin lower, and what's next year's investment plan?
A: The Q4 guidance implies an EBITDA margin of about 27%, down several points from last year due to increased investments in product development and marketing. For 2025, we'll continue to invest in growth initiatives like core optimizations, global market expansions, and new products. While our core business becomes more efficient, we'll invest in greater service levels and launch new offerings with our spring release. -
Supply Growth and Quality
Q: How are supply growth and quality initiatives impacting the business?
A: Our supply continues to grow strongly, with over 10% year-over-year increase in Q3, although down several points due to removals. We're focused on raising the quality bar by introducing Guest Favorites and removing over 300,000 listings that didn't meet expectations. These initiatives have led to higher ratings, lower incident rates, and fewer customer service contacts. -
Long-Term Growth Algorithm
Q: What's the long-term growth plan for the core business and new verticals?
A: We're focusing on core optimizations, global market expansions, and launching new products and services to drive long-term growth. Our core business could get to 1 billion nights a year by improving quality, affordability, and usability. We'll also expand into new areas beyond travel, launching one to two new businesses each year that could generate over $1 billion in revenue. -
Attracting Next Billion Guests
Q: What investments will attract the next billion guests?
A: We'll invest in enhancing our core business by increasing quality, affordability, and usability. Expanding into global markets like Mexico, Brazil, Germany, Italy, Spain, Korea, Japan, India, and China presents huge opportunities. We'll also expand beyond accommodations into new products and services, aiming to launch one to two new businesses annually. -
Expansion Markets
Q: Which are the key expansion markets, and what's their growth impact?
A: Our core markets represent about 75% of gross booking value. Expansion markets like Brazil and Japan are significant opportunities. In Brazil, our initiatives tripled destination nights compared to pre-pandemic levels. We'll continue to scale these markets, which currently account for about 15% of the remainder, to contribute more significantly to global growth. -
Affordability and Quality Initiatives
Q: How are affordability and quality initiatives driving bookings?
A: We've implemented total price display, leading to over 300,000 listings reducing or removing cleaning fees. Introduced discounts, with two-thirds of hosts offering them. We've highlighted 2 million Guest Favorites listings, leading to 200 million nights booked. Removed over 300,000 listings not meeting quality standards. These efforts have kept Airbnb prices stable while hotel prices have risen. -
New Services Revenue Impact
Q: Will new services drive revenue growth next year?
A: We'll be aggressive in launching new offerings in over 100 cities. There will be some incremental revenue next year, but we see these as multi-year journeys with a five-year horizon to reach scale. Investments will precede revenue, with expenses appearing at the beginning of the year. -
Experiences Offering
Q: What's the plan for expanding and scaling the Experiences offering?
A: We can offer something unique and scalable without significant capital investment. We'll position Experiences first to travelers but also for locals, increasing engagement and frequency of use. Investments in technology are mostly already made, and we'll market all offerings under one brand. -
Regulatory Challenges and Hotels
Q: How are regulatory challenges like NYC impacting strategy, and will you lean into hotels?
A: In cities with strict regulations like New York City, we're focused on working with authorities to find solutions. We've seen positive outcomes in Paris, where Airbnb helped accommodate 700,000 guests during the Olympics. We're optimistic about a path forward in NYC and are adding more hotels to Airbnb, as hotels don't have to lose for Airbnb to win.
Key Metrics
Revenue by Segment - Quarter | FY 2020 | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | FY 2021 | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | FY 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | FY 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Q4 2022 | - | - | - | - | - | - | - | - | |||||||||||
Q1 2023 | - | - | - | - | - | - | - | - | |||||||||||
Q2 2023 | - | - | - | - | - | - | - | - | |||||||||||
Q3 2023 | - | - | - | - | - | - | - | - | |||||||||||
Q4 2023 | - | - | - | - | - | - | - | - | |||||||||||
Q1 2024 | - | - | - | - | - | - | - | - | |||||||||||
Q2 2024 | - | - | - | - | - | - | - | - | |||||||||||
Q3 2024 | - | - | - | - | - | - | - | - | |||||||||||
Revenue by Geography - in Millions of USD | FY 2020 | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | FY 2021 | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | FY 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | FY 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
North America | 925 | 1,192 | 1,478 | 1,043 | 4,638 | 1,015 | 1,308 | 1,572 | |||||||||||
EMEA | 458 | 941 | 1,533 | 683 | 3,615 | 567 | 1,048 | 1,726 | |||||||||||
Latin America | 235 | 163 | 178 | 248 | 824 | 307 | 185 | 199 | |||||||||||
Asia Pacific | 200 | 188 | 208 | 244 | 840 | 253 | 207 | 235 | |||||||||||
- United States | - | - | - | - | - | - | - | - | |||||||||||
- France | - | - | - | - | - | - | - | - | |||||||||||
- International | - | - | - | - | - | - | - | - | |||||||||||
Total Revenue | 1,818 | 2,484 | 3,397 | 2,218 | 9,917 | 2,142 | 2,748 | 3,732 | |||||||||||
KPIs - Metric / Quarter | FY 2020 | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | FY 2021 | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | FY 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | FY 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
Nights and Experiences Booked (millions) | 121.1 | 115.1 | 113.2 | 98.8 | - | 132.6 | 125.1 | 122.8 | |||||||||||
Gross Booking Value (billion USD) | 20.4 | 19.1 | 18.3 | 15.5 | - | 22.9 | 21.2 | 20.1 | |||||||||||
Lodging Taxes Collected and Remitted (million USD) | - | 352 | 370 | - | - | 508 | 400 | 442 |
Executive Team
Questions to Ask Management
- Given that you removed over 300,000 listings last year to improve quality, reducing supply growth, how do you plan to achieve sufficient supply growth to meet rising demand without compromising on quality, especially in markets where supply is already constrained?
- With your core markets comprising about 75% of your gross booking value and expansion markets only about 15% of the remainder, what specific strategies are you implementing to accelerate growth in these new regions, and how will you overcome challenges like local regulations, cultural differences, and competition?
- As you plan to aggressively launch new services in over 100 cities next year, how are you managing the risks associated with such a broad rollout, and what measures are in place to ensure these new offerings achieve both scale and profitability without significant additional investments?
- Given the anticipated margin compression in Q4 due to increased investments in product development and marketing, how do you plan to balance the need for growth with maintaining profitability, and what are your EBITDA margin targets for the coming years as you expand into new markets and services?
- Despite initiatives like the Cohost network to make hosting mainstream, how do you address the potential limitations in attracting new hosts who lack time or resources, and what strategies are in place to ensure the Cohost network can unlock millions of new listings without sacrificing host quality and guest experience?
Past Guidance
Q3 2024 Earnings Call
- Issued Period: Q3 2024
- Guided Period: Q4 2024
- Guidance:
- EBITDA Margin: Implied margin in the 20s, around 27% to 28%, indicating margin compression due to increased spending in product development and marketing .
- Investment Philosophy for 2025: Focus on growth initiatives, core optimizations, global market expansions, and new products and services, with relatively capital-light investments .
Q2 2024 Earnings Call
- Issued Period: Q2 2024
- Guided Period: Q3 2024
- Guidance:
- Revenue Growth: Revenue increased by 11% year-over-year to $2.75 billion .
- EBITDA Margin: Minimum of 35% for the full year, slightly down from nearly 37% in 2023 .
- Marketing Expenses: Expected to grow faster than revenue in Q3 as part of growth strategy .
- Booking Trends: Shorter booking lead times globally and signs of slowing demand from U.S. guests .
- Geographical Performance: Strength in Latin America and Asia Pacific, fastest-growing regions .
- Supply and Demand Dynamics: Mix shift away from North America, potentially lowering global ADR .
Q1 2024 Earnings Call
- Issued Period: Q1 2024
- Guided Period: Q2 2024
- Guidance:
- EBITDA Margin: Full-year margin of at least 35% .
- Q2 Room Night Growth: Expected to be flat due to stable booking trends and calendar effects .
- Q2 Revenue and Margins: Softer than consensus expectations due to Easter timing and non-recurring credits .
- Q3 Revenue: Expected to accelerate above Q2 outlook, supported by strong booking backlog .
Q4 2023 Earnings Call
- Issued Period: Q4 2023
- Guided Period: Q1 2024
- Guidance:
- EBITDA Margin: Minimum of 35% for the full year .
- Take Rate Expansion: Expected due to increased revenue and decreased gross booking value, influenced by Easter timing .
- Room Nights Growth: Expected moderation from 12% growth in Q4 2023 due to harder comps and Easter timing .
Competitors
Competitors mentioned in the company's latest 10K filing.
- Online travel agencies (OTAs), such as Booking Holdings (including the brands Booking.com, KAYAK, Priceline.com, and Agoda.com)
- Expedia Group (including the brands Expedia, Vrbo, HomeAway, Hotels.com, Orbitz, and Travelocity)
- Trip.com Group (including the brands Ctrip.com, Trip.com, Qunar, Tongcheng-eLong, and SkyScanner)
- Hopper
- Fliggy (a subsidiary of Alibaba)
- Despegar
- MakeMyTrip
- Internet search engines, such as Google, including its travel search products
- Baidu
- Listing and meta search websites, such as TripAdvisor, Trivago, Mafengwo, AllTheRooms.com, Hometogo, Holidu, and Craigslist
- Hotel chains, such as Marriott, Hilton, Accor, Wyndham, InterContinental, OYO, and Huazhu, as well as boutique hotel chains and independent hotels
- Property management companies, such as Vacasa, Sonder, Inspirato, Evolve, Awaze, and other regional property management companies
- Online platforms offering experiences, such as Viator, GetYourGuide, Klook, Traveloka, TUI Musement, and KKDay