Airbnb boosted by travel rebound and corporate belt-tightening

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Airbnb credited the global travel industry’s recovery, as well as its own belt-tightening, for record earnings in the third quarter, nearly quadrupling its profits compared with the same period last year.

The accommodation booking platform comfortably exceeded Wall Street’s expectations on revenues and net income, despite taking slightly fewer bookings than expected over the July-September period, typically its most lucrative quarter.

Net income of $834m was up 280 per cent on the pandemic-affected 2020 period — and 212 per cent higher than the same quarter in 2019.

Analysts had expected $475m, according to S&P Capital IQ. Revenue in the third quarter was up 67 per cent year-on-year to $2.1bn, beating consensus estimates by about 9 per cent.

Shares in Airbnb were down more than 4 per cent in initial after-hours trade, before quickly returning to positive territory.

“We reached a major milestone of one billion cumulative guest arrivals as more people got vaccinated and travel restrictions were relaxed,” said Brian Chesky, co-founder and chief executive. “Host earnings reached a record $12.8bn in the quarter, and active listings continued to grow.”

Long-term stays continued to be the fastest-growing segment of Airbnb’s business, now making up about 20 per cent of all bookings, by value, in the third quarter.

Based on bookings placed on the website for future dates, Airbnb offered investors strong guidance for the remainder of the year and into 2022.

It said bookings for Thanksgiving were up 40 per cent on 2019. It said revenues for the quarter would come in between $1.39bn and $1.48bn, more optimistic than Wall Street’s projections.

The company said 100,000 cities had at least one Airbnb booking during the pandemic, with 6,000 receiving their first ones. Recovery in the Asia-Pacific region lagged behind North America and Europe, the company said, due to lower cross-border travel.

Gross booking volume — the total value of all bookings — reached $11.9bn, with 79.7m nights and “experiences” booked. Experiences, Airbnb’s excursion business, is a tiny fraction of total bookings.

While the total number of bookings was marginally lower than analysts had predicted, according to data from FactSet, Airbnb said it had managed its largest margin “by far”, on an adjusted earnings before interest, taxes, depreciation and amortisation basis, at 49 per cent. That compares to 30 per cent in the third quarter of 2019.

The average daily rate for a stay was $149.15, up 15 per cent on last year, and 33 per cent on 2019. Airbnb said this was primarily due slower recovery in countries with lower prices, particularly China. In addition, Airbnb said it is seeing a continued shift to bookings for “entire homes, and non-urban destinations, all of which tend to have higher ADR”.

Reduced fixed costs — such as its move to cut a quarter of its workforce during the pandemic — was also credited for the improvement.

Other companies have reaped the benefits from the bounce back in travel this quarter. Gross travel bookings at Booking Holdings, the parent company of sites including Priceline and Kayak, jumped 77 per cent from a year ago. Expedia, which owns vacation home-rental site Vrbo, said bookings rose 117 per cent as it swung to a third-quarter profit.

Peter Kern, vice-chair and chief executive of Expedia, said: “With early positive signs in Q4 and many countries announcing new openings to international travellers, we are feeling increasingly confident about a continued recovery.”

Additional reporting by Mamta Badkar in New York

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