Airbnb: staying put | Financial Times

Airbnb boss Brian Chesky is extremely fond of the word resilience. It popped up six times during an earnings call on Thursday — Airbnb’s first as a public company. A “resilient model” was one of the features highlighted in the company’s listing document too. Claims of corporate fortitude are clearly intended to ameliorate Airbnb’s record $4.6bn annual loss.

Closed borders and social distancing are still hammering the global travel industry. But a rise in local stays has helped Airbnb avoid a full wipeout. In the final three months of 2020, sales fell 22 per cent year over year to $859m. Expedia and Booking Holdings reported 60 per cent-plus declines in the same quarter. Airbnb’s heavy losses include $2.8bn in stock payments linked to its December listing, something that should not be repeated.

The good news is that the pandemic has imposed more order to a business that had been growing in all directions. Experiences, luxury stays, property design and flight booking plans have been put on the backburner. Marketing costs have been slashed. Meanwhile, the company’s revenue was equal to 14.2 per cent of gross bookings last year, up from 12.7 per cent in 2019.

This should please investors who worried that Airbnb’s ambitions would weigh on margins for years to come. Rival Booking Holdings reported a 40 per cent ebitda margin pre-pandemic. Airbnb is more than a decade old but has yet to report a full year of profits. Its growth prospects are bright — hence the share price tripling since its debut. But a share price rally and unproven profitability are a precarious combination. 

Airbnb should continue to focus on the home stays that made its name. Its platform, which facilitates bookings between guests and hosts and takes a cut on both sides, has created a new market it believes could be worth $2tn. Uneven vaccination rollouts make it difficult to predict exactly when the travel sector will rebound. But pent-up demand for holidays is about to unleash a bookings bonanza. 

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