Skift Take
Airbnb is certainly revealing strength, but is its hubris about leading the travel healing a bit overblown?
Dennis Schaal, Skift
As Airbnb narrowed its bottom line in the 2nd quarter, and saw the majority of its key metrics surpass or approach the exact same period in pre-pandemic 2019, Airbnb co-founder and CEO Brian Chesky boasted to experts about Airbnb’s “leadership” of the travel healing.
Talking to financial analysts Thursday from an Airbnb listing in Italy, Chesky stated Airbnb hasn’t been relaxing idly waiting on travel to return however has been innovating on items for both hosts and tourists. “And as an outcome, Airbnb has emerged from this crisis quicker than others, and we’re better positioned for the future of travel,” Chesky said.
At different junctures during a question-and-answer session about Airbnb’s monetary results for the 2nd quarter ending in June, Chesky stated about the travel rebound, “Airbnb is leading the way,” adding at another point, “Our Q2 results not only demonstrate our management in the travel rebound, but likewise our continued operating discipline.”
Despite Airbnb acknowledging in its shareholder letter that the delta variation will render projections about gross reservations, and nights and experiences bookings “unpredictable and non-linear,” primary monetary officer Dave Stephenson informed the financial experts that the current July-August-September quarter will see Airbnb’s “highest-ever” profits, “while the revenues are going to be the greatest ever. Therefore business stays really strong.”
Airbnb has certainly been well-positioned to thrive during the travel rebound, and Chesky argued that altering travel patterns, such as greater versatility when and where people take a trip, in part due to the remote working trend, function as tailwinds for the company.
Dan Wasiolek, senior equity expert at Morningstar, stated in response to Airbnb’s monetary outcomes that the company has actually undoubtedly seen the greatest recover amongst its peers.
“The recovery continues to be led by domestic road travel, which has benefitted entire homes, alternative accommodations, and non-urban standard hotels,” Wasiolek informed Skift. “Airbnb has seen the greatest recovery back to and above 2019 levels, which isn’t unexpected.”
But Wasiolek questioned how sustainable Airbnb’s benefits might be if remote working does not continue at current levels, “and when travel widens out … “
“The rate of enhancement is likely to come from conventional hotel operators like Hilton as that takes place, in our view,” Wasiolek stated. “That said, Airbnb is a fantastic company, with terrific earnings growth and margin expansion chance, but the valuation is tough to accommodate.”
Airbnb’s in the 2nd quarter undoubtedly had the tiniest bottom line, can be found in at $68 million, among its peers. Expedia Group had a bottom line of $301 million and Booking Holdings was $167 million in the red.
It is hard to compare this trio of companies given that their businesses are so different. Both Expedia and Booking offer a much more comprehensive variety of travel products, such as flights, trip packages, and cruises than does Airbnb. However, it should be mentioned that both Booking (852 percent) and Expedia (667 percent) saw their gross reservations rise faster than Airbnb’s (320 percent) year over year in the 2nd quarter.
Chesky pointed to Airbnb’s enhanced EBITDA (incomes prior to interest, taxes depreciation and amortization) margin in the 2nd quarter as evidence that the company has actually been able to get a manage on sales and marketing expenditures, and get more effective.
“Our adjusted EBITDA profit was $217 million,” he said. “Now this represents a 16 percent EBITDA margin. This was more than $600 million of improvement in EBITDA from a year back, and it represents 20 percent or 2,000 basis points margin growth from 2019. And this is on a comparable level of revenue.”
Airbnb’s revenue development was driven by strength in room night development, especially in North America, and greater average daily rates, Stephenson said.
He included that Airbnb has actually seen some retrenchment in demand in July, and suggested this might be since the summer season travel season has actually crested or since of the delta version.
Airbnb’s share rate was down almost 5 percent in after hours trading Thursday night.