new York Travel platform Airbnb does not expect to be affected by the tech market downturn. “Of course, the economic environment is weakening at the moment. But two things remain true: people want to travel further. And the hosts want to keep earning extra money,” said Airbnb boss Brian Chesky in an interview with Handelsblatt.
There will be no layoffs. We had the last layoffs in 2020 during the Covid pandemic, and that’s the way it stays.” Airbnb recently only hired new people on a moderate scale: “We are disciplined and efficient.”
The room broker has a record quarter behind it. Because the travel boom in the summer after most Covid measures were lifted caused sales to jump by almost a third to 2.9 billion dollars. Profits rose by almost half to 1.2 billion dollars. For the final quarter, Airbnb expects sales to fall to $1.9 billion, partly due to the strong dollar.
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Chesky is now focusing on bringing new hosts to the platform. His argument: By renting out living space, Airbnb hosts should be better able to cope with high inflation. The founder calculates that 46 percent of the four million Airbnb hosts worldwide would have used money from rentals to be able to pay the rising energy and living costs. “The worse the economy is, the more interested people are in renting out space,” says Chesky.
New tools for hosts
Airbnb presented ideas in New York on Tuesday with which the platform wants to attract new hosts and drive brokerage business. An algorithm should check guest requests for potentially dangerous patterns, such as last-minute reservations for just one night by newly registered users.
The sum insured for hosts will be tripled to $3 million. And identity verification will be extended to the 35 most popular countries.
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A new feature called Airbnb Set-up connects interested parties who want to offer living space with so-called superhosts, i.e. experienced Airbnb hosts. These give tips on setting up the profile and, according to Airbnb, should also explain the local legal situation.
“Accommodations are offered in 100,000 locations worldwide on Airbnb,” says Chesky. “Local laws are different in every place. Superhosts help new hosts understand them.”
Founded in San Francisco in 2008, the platform went public in December 2020. The share did not reach its record high of $212 in February 2021, and the price has been bogging down at around $100 since the summer. Chesky thinks that’s underrated: “We produce more free cash flow as a percentage of sales than almost any other company in Silicon Valley: 40 percent.”
Airbnb has already repurchased $1 billion worth of stock. According to Chesky, the agreed share buyback program totaling two billion dollars will continue to be implemented. There are currently no dividend plans.
Charm offensive towards politics
Airbnb has long been accused of making housing shortages in popular cities, driving up rental prices. According to a new EU draft law, cities should receive more aggregated data from Airbnb and other providers. According to an EU spokeswoman, short-term rentals via Airbnb, Booking.com and Co. make up a quarter of all tourist accommodation, but at the same time they often operate under the radar.
In the future, hosts in the EU should register their accommodation with the authorities. In individual European cities, including Amsterdam, Hamburg and Berlin, there is already a registration requirement, although not always in digital form. Those who do not participate risk penalties.
The room rental platform does not have any increasing numbers at the moment. And still want to go public.
(Photo: Reuters)
Airbnb founder Chesky welcomes such advances: “We have long hoped for a uniform, digital registration requirement for hosts.” So far there have been “fragmented, inconsistent regulations from city to city. If there was a standardized, easy-to-understand system, that would be good.”
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Chesky emphasizes that dialogue and cooperation with politicians has been a priority for years. This distinguishes Airbnb from other rapidly growing platforms such as Uber. The transport service provider had repeatedly disregarded laws during its expansion; the founder Travis Kalanick, who attracted attention with a series of scandals, had to leave the company.
“We certainly had a slightly different approach in the early days. If Travis was secretary of defense, I was secretary of state,” says Chesky. It is public knowledge that Uber has fought “a lot of battles”. Airbnb has always seen legal disputes as a last resort. “At Uber, they were often the first choice.”
Airbnb approached regulators early on and listened. “Everyone was nervous because we were new. Sometimes they didn’t understand our model. We explained a lot and were often able to clear up the concerns,” says Chesky.
Analysts’ view
The analysts’ view is more sober. The experts at the US bank Goldman Sachs fear a “possible slowdown in growth until 2023.” Looking ahead to 2023, they are “remaining concerned” that demand for travel could decline again. It is also unclear what “an environment after the pandemic could look like”, for example with regard to hybrid work. Goldman’s price target is $98 and JP Morgan’s is $105.
If Catherine Powell, head of Airbnb’s global hosting division, has his way, the changed travel behavior should play into the group’s cards. “Many workers today can live and work anywhere in the world, at least temporarily. Airbnb makes it possible.”
In the opinion of long-term users, the platform is increasingly moving away from the original “bed and breakfast” idea. On the Internet, loyal users complain that commercial providers are increasingly crowding out private hosts.
Powell counters: “Most of the hosts are private individuals, normal people.” The number of newly advertised private rooms has risen by more than 30 percent within a year. And there could be a new feature in the future: for example, a tick for offers with private hosts present.
In any case, Chesky wants to set a good example: From 2023, the founder wants to offer a room in his private house in San Francisco on Airbnb. Isn’t he afraid that journalists will log in and rummage through his office? “I don’t have to accept your request,” says Chesky.
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