Airbnb clocks first profitable year on strong travel demand

The optimistic outlook followed what was already a robust performance in 2022. Airbnb said it had net income of $1.9 billion, marking its first profitable full year according to generally accepted accounting principles. In the fourth quarter, Airbnb reported revenue increased 24% to $1.9 billion, beating the average analyst estimate of $1.86 billion, according to data compiled by Bloomberg. Earnings per share were 48 cents.

Airbnb has been a major beneficiary of the work and lifestyle changes wrought by the pandemic. The company recorded its highest revenue and most profitable quarter ever in the period from July to September, fueled by pent-up travel demand after two years of Covid-19 restrictions.

Now, it’s starting to see some of the trends it benefitted from — such as people renting large rural homes for weeks or months at a time — reverse and travelers opt for shorter stays in big cities and more international destinations. High airline prices and a potential looming economic slowdown are also adding to consumers’ considerations when weighing a trip. But it doesn’t seem to be putting off travelers yet, as the company said “consumer confidence to travel remains high.”

Airbnb’s results follow those last week of fellow online travel giant Expedia Group Inc., which was also upbeat about the current quarter and said lodging bookings in January grew 20% over pre-pandemic 2019. Expedia however, delivered disappointing revenue and profit in the fourth quarter as a result of Hurricane Ian and winter storms in December.

Airbnb reported 88.2 million nights and experiences booked in the three months ended Dec. 31, a 20% increase from a year earlier but missing the average analyst estimate of 90.1 million. Airbnb said the quarter had its highest number of active bookers yet, “demonstrating guests’ excitement to travel on Airbnb despite evolving macroeconomic uncertainties.”

More hosts are joining the platform, too. Excluding listings from China, the company ended last year with 6.6 million active listings, an increase of 900,000 compared with 2021. Airbnb has worked to add more housing supply, rolling out features and tools that make it easier for new hosts to list their homes. It also partnered with large apartment landlords that allow their tenants to sublet their apartments, and who then receive a cut from the booking.

“I think this is a program that’s going to grow quite a lot,” Chief Executive Officer Brian Chesky said on the call, adding that it’s a strategic move for the company to develop relationships with some of the biggest landlords in the US.

Long-term stays, or those lasting 28 days or more, accounted for 21% of gross nights booked in the fourth quarter, about the same as in the same period a year ago. Those type of stays became popular during the pandemic as workers found new flexibility to work remotely, often seeking out locations in small towns and mountains. Gross nights booked in high-density urban areas, traditionally the strongest part of Airbnb’s business, increased 22% in the fourth quarter. Airbnb also said it saw cross-border travel to all regions increase from a year earlier.

A shift back to more urban destinations also often means a lower average daily rate than the whole-home rentals popularized during the pandemic. The company said it expects average daily rates in the first quarter to be softer than last year, a trend that will continue for the remainder of 2023. Part of that trend can be attributed to the company’s pricing transparency and discounts, Airbnb said, which it expects to drive “greater affordability for guests.”

Shares of Airbnb have rallied more than 40% this year, outpacing Expedia and Booking Holdings Inc., which have increased about 31% and 23%, respectively. Airbnb closed up 3.8% to $120.87 on Tuesday.