The frequent refrain was: “Airbnb is in a different business than ours.”
Sure, Airbnb doesn’t own assets, it doesn’t manage them and it doesn’t — well, not exactly — brand them. But, like Xerox or Kleenex or Uber, when searching for accommodations beyond a traditional hotel, more than likely one will hear: “Let’s Airbnb it.”
Today, the travel ecosystem is far less balkanized and different types of assets — from traditional accommodations (hotels) to what are deemed “alternative accommodations” (from yurts to cabins) — are all part of it and vying for customer spend.
The entire conceit behind Airbnb is simple: a way for property owners to achieve an additional stream of revenue by leasing their home or boat or treehouse out on a nightly basis. Kinda like hotels do. Airbnb, then, is merely the conduit between those owners and the buying public. Kinda like an online travel agency.
Yes, Airbnb is a tech company. And its founder and CEO Brian Chesky isn’t shy about that. When discussing labor on the company’s fourth-quarter earnings call, he said this: “We’re one of the few tech companies that isn’t doing layoffs, we’re not cutting, we’re not freezing.”
What many once looked at as a travel company is not. Like Expedia, like Booking.com, Airbnb is a tech distributor that connects consumers to accommodations. It does a very good job of doing just that and, in time, there is no reason why the Marriotts and Hiltons of the world shouldn’t display their product on the site, just like they currently do on the OTAs.
Q4 KILLING
Airbnb is, to reiterate, very good at what it does and its fourth-quarter numbers were evidence. Revenue rose to a Q4 record of $1.9 billion from $1.53 billion at the same time a year ago, while net income of $319 million was its most profitable fourth quarter ever.
Product is where Airbnb is able make hay. It ended the year with 6.6 million global active listings, 900,000 more than it had in the beginning of the year, excluding China. Consider a company like Wyndham Hotels & Resorts, which has around 9,000 hotels globally, or Marriott International, which has around 1.5 million rooms globally.
Accretion in the hotel industry is much slower than it is for Airbnb, which is able to plug new supply into its system almost on a daily or hourly basis, unlike hotel companies, where new development or acquisitions/conversions take time.
Like the traditional hotel industry, Airbnb is touting sustained demand and a slow return back to urban markets. Rates have been strong for its network, but Airbnb did warn it would wane some in 2023. There is an expectation that average daily rates will fall throughout the rest of the year, which executives attributed to the mix of rental supply across different regions and its effort to address affordability through “new and improved pricing and discounting tools” that will “drive greater affordability and value for guests.”
Cross-border gross nights booked increased 49%, while high-density urban nights booked grew 22% compared to Q4 2021, Airbnb noted.
On staffing, Airbnb said it expects to “continue hiring at a judicious pace in 2023” and that compared with 2019 its head count is down 5% while revenue is up 75%.
$$$ CLEAN
One issue at the forefront concerning Airbnb has been the perception of exorbitant cleaning fees that can sometimes cost more than the actual rate. A June 2022 NerdWallet analysis of 1,000 U.S. Airbnb reservations with check-in dates in 2022 or 2023 found that the median cleaning fee per listing for a one-night stay was $75.
Toward the end of 2022, Airbnb made it easier to search results to display total price, including all fees. Cleaning fees are more common on Airbnb properties in the U.S. compared to outside it.
By David Eisen
