Q1 2024 Summary
Published Jan 10, 2025, 5:10 PM UTC- Airbnb is experiencing strong growth in mobile app usage, with U.S. app downloads increasing 60% year-over-year in Q1, and global nights booked in the app increasing 21% year-over-year, now representing 54% of nights booked during the quarter, up from 49% last year. This increased engagement through the app leads to higher conversion rates and is driving bookings growth.
- Significant opportunity in underpenetrated international markets, with Airbnb focusing on countries like Mexico, Brazil, Germany, Italy, Spain, Japan, Korea, China, and India. In Q1, gross nights booked in expansion markets grew twice as fast as core markets. International expansion is expected to unlock more growth, and despite lower ADRs, these markets are accretive and expand Airbnb's total addressable market.
- Strong supply growth enhancing affordability and quality, with active listings for accommodations growing 17% year-over-year even after removing thousands of listings that did not meet guest expectations. Supply growth is outpacing demand growth, which helps improve affordability and allows Airbnb to focus on quality improvements, benefiting both guests and hosts.
- Airbnb's supply is growing faster than demand, which could lead to downward pressure on prices and impact margins.
- The company's Q2 guidance reflects softer growth and margin pressures due to factors like reversal of prior positive calendar effects, increased marketing expenses, and non-recurring credits not repeating.
- Expansion into lower Average Daily Rate (ADR) markets may lower overall ADRs and require increased investment, potentially affecting revenue growth and profitability.
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Growth Guidance and Demand Trends
Q: Why is Q2 room night growth flat, and what about the rest of the year?
A: Stable growth continues into Q2, reflecting consistent booking trends despite tough comparisons and the Easter shift impacting revenue and margins. Lead times remain stable, and with a strong booking backlog, Q3 revenue is expected to accelerate above Q2 levels. -
Margins and Profitability Outlook
Q: How will investments affect margins, and what's the outlook for EBITDA margin?
A: Q2 margins face headwinds due to the Easter shift, non-recurring payment credits from last year, and increased marketing spend. For the full year, Airbnb guides to a 35%+ EBITDA margin, allowing flexibility to invest in high-ROI areas like marketing and product development to drive incremental growth. -
Supply Growth vs. Demand Growth
Q: Will supply growth exceeding demand lower prices and boost demand?
A: Yes, supply growing faster than demand leads to more competitive pricing, enhancing affordability for guests and encouraging demand. This dynamic supports long-term growth by offering better value. -
Average Daily Rates and Value Initiatives
Q: How are ADRs trending, and what about value initiatives?
A: ADRs are relatively flat; in March, Airbnb's like-for-like prices were down 2%, while hotel prices were up 3%. Value initiatives like total price display and discounts are working, making Airbnb more affordable than hotels. -
Investment Priorities and AI Deployment
Q: What are the top investment priorities, including AI plans?
A: Investments focus on perfecting the core business, international expansion, and expanding beyond accommodations. Generative AI is enhancing customer service and will eventually power an AI concierge, improving search and the overall guest experience. -
International Expansion and Market Penetration
Q: Are underpenetrated international markets meeting expectations?
A: Yes, markets like Latin America and Asia Pacific offer lower ADRs but contribute positively to growth without impacting take rates. International expansion is delivering strong economics and is a key growth area. -
Quality of Supply Improvements
Q: How is Airbnb ensuring high-quality listings?
A: Initiatives like Guest Favorites and Quality Highlights identify top listings and encourage hosts to improve. Hundreds of thousands of low-quality listings have been removed, and many hosts return after making enhancements. -
Marketing Efficiency and ROI
Q: What's driving high ROI in performance marketing?
A: Improved execution, expanded target audiences, better keyword coverage, and enhanced landing pages have increased ROIs in performance marketing channels. There's potential to lean in further given these efficiencies. -
Experiences and Icons Initiative
Q: Is Icons a step toward expanding experiences?
A: Yes, Icons expands Airbnb's brand beyond stays to experiences, generating increased app traffic and positioning the brand more aspirationally. It's paving the way for future growth in this area. -
Bookings Trends and Lead Times
Q: How are booking lead times affecting Q3 outlook?
A: Lead times are stable year-over-year, and a strong backlog for Q3 bookings supports expectations of revenue acceleration above Q2. -
User Profiles and Community Features
Q: Are new profile features a move toward community building?
A: Yes, enhancements like photos and travel stamps are initial steps toward richer profiles, aiming to strengthen community, trust, and personalized experiences. -
Extenuating Circumstances Policy Changes
Q: What's the impact of changes to the extenuating circumstances policy?
A: Clarifications to the policy aim to balance guest and host interests, with no meaningful impact on the business expected.