Airbnb ended 2023 stronger than analysts expected, but hinted that demand this quarter will not be as strong as in the past. The company’s shares fell in after-market trading on Tuesday.
The revenue for the three months to March will come in at 2.03 billion USD to 2.07 billion USD, beating analysts’ average expectations of 2.02 billion USD. But the number of nights booked is expected to decline from the fourth quarter due to particularly strong growth a year earlier, the home-sharing company said in a letter to shareholders.
Travel was particularly strong last year after the wave of the omicron variant of Covid-19 subsided, but the company is starting to see demand normalize as the pandemic emerges, Chief Business Officer Dave Stevenson told analysts.
After the results were announced, the company’s shares fell 5% in extended trading, after initially rising 11%. They have added 30% over the past 12 months and hit their highest level in almost two years on Monday. The home-sharing platform also posted a surprise net loss in the quarter because of a one-time tax related to a long-running dispute with Italian authorities.
Still, Airbnb’s quarterly results beat analysts’ expectations on many metrics, and CEO Brian Chesky is optimistic about where the company is headed, especially in international markets.
“There are tremendous opportunities ahead of us”, commented Brian Chesky. After adjusting his service in recent years to accommodate travel trends since the pandemic, the company’s CEO said he’s now ready to “expand beyond our core business and transform Airbnb”. It will be a “gradual, multi-year journey”, he said, promising to share more information later this year.
Brian Chesky hinted that the new ventures will include even greater integration of artificial intelligence and third-party services into the company’s products. This will enable more personalized travel recommendations for guests and a better experience for property owners as users of the platform.
In November, the company warned it was seeing “greater volatility” globally in the latest quarter due to economic and geopolitical issues. But bookings grew for the rest of the year. “Guest demand remains strong, especially among first-time bookers”, Airbnb said in the letter.
The company’s results show there is still pent-up demand for travel, particularly in regions with a slower return to normal life after Covid-era lockdowns. Airlines, hotels and other travel companies, including Airbnb, reported record demand over the summer, a phenomenon dubbed “revenge travel” as people found themselves willing to accept higher flight and accommodation prices to fulfill their lost during the pandemic routes.
Fourth-quarter revenue rose 17% to 2.22 billion USD, beating analysts’ expectations of 2.16 billion USD. Nights and experiences booked rose by 12% to 98.8 million USD, also beating expectations for growth of around 11%. Airbnb said the results were supported by a “modest increase” in average daily rates and favorable foreign exchange rates.
Airbnb’s growth rate is slowing. Chart: Bloomberg LP Airbnb’s growth rate is slowing. Graphics: Bloomberg LP
Brian Chesky sees markets outside the US as Airbnb’s biggest growth opportunity, and the San Francisco-based company plans to boost its presence in about ten countries, including Switzerland, Belgium and the Netherlands, in the coming years. Airbnb is working to tailor its app to the local market and raise awareness to increase traffic and begin to see its efforts pay off.
Gross nights booked in Brazil have almost doubled compared to the same period before the pandemic in 2019, the company said. The Asia-Pacific region was the last in the world to emerge from the Covid shutdowns, and cross-border travel there continues to recover. Bookings of nights and experiences are up 22% in the region compared to a year earlier. Similar growth was reported in Latin America.
Airbnb said it was “particularly excited about the upcoming Olympics in Paris this year”. The company is already reporting an increase in both supply and demand, and so far her bookings for overnight stays in Paris this summer have more than doubled compared to a year earlier. The company said it expects to welcome half a million people to the City of Lights.
Airbnb reported a net loss of 349 million USD in the fourth quarter because of a one-time tax payment of about 1 billion USD resulting from a 2017 Italian tax law that the company fought and later settled in December. After its exclusion, adjusted net income reached 489 million USD.
Airbnb, which went public in 2020, also announced a new 6 billion USD share buyback program.
Airbnb’s results contrast with those of Expedia Group, which owns vacation rental site Vrbo. Last week, the company announced gross bookings expectations this quarter that disappointed investors. Its books posted their biggest drop in almost four years after the results were announced.
