Airbnb gives optimistic outlook buoyed by international trips

AIRBNB ended 2023 stronger than analysts had expected and gave an optimistic outlook for the start of this year, fuelled by growth in international markets and suggesting that the post-pandemic travel boom has yet to run out of steam.

The shares jumped more than 8 per cent in extended trading.

Revenue for the three months ending in March will be US$2.03 billion to US$2.07 billion, surpassing analysts’ average estimate of US$2.02 billion. The number of nights and experiences booked is expected to moderate compared with the fourth quarter, however, due to a particularly strong growth rate a year ago, the home-sharing company said on Tuesday (Feb 13) in a letter to shareholders.

“Guest demand remains strong – especially among first-time bookers,” Airbnb said. The company had warned in November that it was seeing “greater volatility” globally early in the last quarter, due to economic and geopolitical issues. But then, bookings accelerated throughout the rest of the year.

Airbnb’s results suggest there is still pent-up travel demand, especially in regions that were slower to return to normal life after Covid-era lockdowns. Airlines, hotels and other travel companies, including Airbnb, saw record demand over the summer, a phenomenon dubbed “revenge travel”, as people proved willing to swallow high fares for flights and lodging to fulfil their lost pandemic itineraries.

Revenue in the fourth quarter jumped 17 per cent to US$2.22 billion, ahead of the average analyst estimate of US$2.16 billion, according to data compiled by Bloomberg. Nights and experiences booked increased 12 per cent to 98.8 million, also ahead of expectations for about 11 per cent growth. Airbnb said the results were boosted by a “modest increase” in the average daily rate and a favourable foreign exchange rate.

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Chief executive officer Brian Chesky sees markets outside the United States as one of Airbnb’s biggest growth opportunities and the San Francisco-based company is planning to boost its presence in about a dozen countries such as Switzerland, Belgium and the Netherlands in the coming years. Airbnb has been working to adapt its app to the local market and raise awareness to drive traffic and is starting to see the effort pay off.

Gross nights booked in Brazil nearly doubled compared with the same pre-pandemic period in 2019, the company said. The Asia-Pacific region was one of the last globally to emerge from Covid lockdowns and cross-border travel is continuing to recover there. Nights and experiences booked increased 22 per cent in the area from a year earlier and Latin America saw similar growth.

Airbnb said it is “particularly excited for the upcoming Paris 2024 Olympic Games”. It is already seen an increase in supply and demand and the current backlog of nights in Paris during the summer is more than double a year ago. The company has said it expects to host half a million people in the City of Lights.

The company posted an unexpected net loss of US$349 million in the fourth quarter, due to non-recurring tax withholding expenses and lodging tax reserves of about US$1 billion as a result of a 2017 Italian tax law that it fought and later settled last December. Excluding that, the adjusted net income was US$489 million.

Airbnb, which went public in 2020, also announced a new share repurchase programme to buy back as much as US$6 billion of the company’s stock.

The shares have gained 31 per cent in the past 12 months and closed on Monday at their highest price in almost two years.

Airbnb’s results contrast with Expedia Group, which owns the Vrbo vacation-rental site. Last week Expedia gave an outlook for gross bookings in the current quarter that disappointed investors, sending its shares tumbling the most in almost four years.

In December, Airbnb elevated chief financial officer Dave Stephenson to the role of chief business officer dedicated to long-term growth plans, which includes overseas expansion. The appointment marked an inflection point for the company as it was about to embark on its “next chapter”, Chesky said. He has spent the last year refining the company’s offerings to make listings more affordable and reliable for guests and to encourage more people to host.

Now, Chesky said he is ready to “expand beyond our core business and reinvent Airbnb”. It will be a “gradual, multi-year journey”, and he said he’d share more about it later this year.

With overall growth settling into a more moderate pace, Wall Street has been eager to hear from the company about its plans to re-accelerate growth by activating new revenue streams and increasing user engagement.

Chesky has hinted that the new ventures would include further integrations of artificial intelligence and third-party services into its products, which would allow more personalised travel recommendations for guests and better user experience for hosts. BLOOMBERG