About two years ago, Airbnb’s business dropped 80%. Its initial public offering (IPO) stalled. Some people had doubts the company would last through the COVID-19 pandemic, CEO, Brian Chesky said on Tuesday.
But, Airbnb, the home-sharing platform, scored 102.1 million in bookings to boost its Q1 2022 earnings ending March 31. This is the first time the 14-year-old business has hit the 100 million mark in bookings from its ‘Nights and Experiences’ offering.
‘Nights and Experiences’ – detailing the services available to users on the platform – helped Airbnb exceed the 100 million mark and surpass pre-pandemic growth metrics. Figures posted by users in North America, Europe Middle East and Africa (EMEA) and Latin America drove the growth.
The business shared the figures on Tuesday, via a shareholder letter.
According to the letter, the 102.1 million bookings represent a 59% year-on-year (YoY) increase when compared to Q1 2021. It’s also 26% better than the 75.5 million bookings recorded in Q1 2019.
How did Airbnb do it?
Brian Joseph Chesky, the co-founder and CEO of Airbnb, wrote on Twitter how the company rebounded and even ended up having its “most productive two-year period” in its history.
Chesky said the company “simplified” its business and started “prioritising the everyday people who host their homes and offer experiences.”
We cut the vast majority of our projects, shuttered our business units, and made the painful decision to do a layoff.Brian Chesky
He goes on: “We significantly improved our cost structure, decreasing our cost of revenue (merchant fees and servers), and tightly managed our fixed costs.
“Next, we changed our approach to marketing. When travel stopped, we paused all performance marketing and shifted our focus to PR (there have been 1M+ stories written about Airbnb since then).”
Before saying the company will introduce, on May 11, the biggest change to Airbnb in a decade, Chesky talks about upgrades and changes the company made to attract more people.
“In 2021, we completely overhauled our product as the world became more flexible. We made 150+ upgrades and improvements, including launching the “I’m Flexible” feature, which has been used more than two billion times.”
What do the 102.1 million bookings mean?
In the first quarter (Q1) of 2020, Airbnb faced a decline in demand off the backs of the coronavirus pandemic. People had to pick safety over vacation and home rentals. Reduced demand meant a 0% increase in revenue for the quarter.
By the end of the quarter, Airbnb’s revenue stood at $842 million. Fast-forward to 2022, revenue has grown to $1.5 billion.
The revenue in the first quarter surged 70% from a year earlier, despite pandemic concerns, “macroeconomic headwinds” and the war in Ukraine, the company said.
Analysts expected the number of bookings to come in at 100.87 million, according to StreetAccount.
Beyond an increase in bookings, average daily rates improved.
Airbnb said the average daily rates (ADR) in the first quarter were $168, a 37% increase compared to the same quarter in 2019, pre-pandemic, and 5% compared to the first quarter of 2021.
But, the growth doesn’t stop with ADR. Shares moved upwards too. Airbnb’s shares rose more than 5% in after-hours trading, after dropping 5% during normal hours.
Increasing confidence in travels
Relaxed lockdowns and less stringent COVID-19 protective measures come across as favourable conditions for Airbnb.
With these conditions in place, travellers are becoming more confident. They are booking trips further in advance. At the end of April, the company had 30% more nights booked for the summer travel season than at the same time in 2019.
The COVID-19 pandemic has greatly influenced the way people work and travel. Workers are no longer restricted to their desks; remote and hybrid work models are the norm now. So, this means more people can travel across the world and deliver value to their workplaces from anywhere.
The only challenge to the confidence, according to the company, includes “additional Covid outbreaks, any impact to travel from the conflict in Ukraine, and consumer price sensitivity.”
In a 32-page letter, the company also gave an update on its humanitarian efforts in Ukraine. According to the letter, Airbnb has offered free, temporary housing for up to 100,000 refugees fleeing the war.
To date, more than 14,000 people have received temporary accommodations through Airbnb in Europe, and more than 34,000 people signed up to offer their homes to refugees, the company said.
After people began booking listings in Ukraine with no intention to stay as a way to support hosts, the company waived guest and host fees. Airbnb said that approximately 600,000 nights were booked in Ukraine in the quarter with a total GBV of about $20 million.
Staying on course
Airbnb expects growth to stay strong in the current quarter. The company said revenue will fall between $2.03 billion and $2.13 billion, topping analysts’ average estimate of $1.96 billion. The low end of the company’s tech-driven range of solutions would represent a growth of 52%.
With demand, Airbnb seeks to enjoy more demands from North America, EMEA and Latin America. Specifically, in Europe and Latin America where the number of nights stayed for the Easter holiday in April topped 2019 levels.
In the EMEA and North America, Airbnb is also expecting substantial demand in Q2 2022. A projection that suggests a rise in consumer confidence to travel beyond the summer months. From these indicators, Airbnb seems on course for another run with growth.
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