Airbnb Turns First Profit and Guides Higher on Robust Travel Demand

Feb 15, 2023
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Airbnb is growing after a record-breaking 2022 fueled high travel demand. While it was expected that high inflation levels and the looming economic slowdown would hurt its core home-sharing business, that appears not to be the case. If the company’s revenue outlook for the first quarter is anything to go by, then Wall Street should expect better results.

Robust Travel Industry

The San Francisco-based company is benefiting from the lifestyle changes brought about by the pandemic. After years of travel restrictions, people are increasingly traveling, all but fueling demand for house rental services. People are also opting for shorter stays in big cities and, most importantly, international destinations they could not access at the height of the pandemic.

High airline prices and economic slowdown are not putting any pressure on travelers going by the number of people looking for house rental services on the platform. For the three months that ended December 2022, Airbnb recorded 88.2 million nights and experienced bookings on its platform. It was a 20% year-over-year increase affirming the pent-up travel demand.

While the company did have its highest number of active bookers in the fourth quarter, the momentum is showing little progress. Nevertheless, despite growing macroeconomic uncertainties, people are still excited about traveling and booking on Airbnb.

In addition, Airbnb is fending off competition going by the number of hosts joining its platform and listing their homes for listing. Last year, the company registered 900,000 increases in active listings to 6.6 million, excluding listings from China. The increase could be attributed to the home-sharing company adding exciting features resonating well with hosts.

For instance, the company rolled out a tool that allows hosts to list their homes easier. It also enabled a feature in partnership with landlords that lets tenants sublet their apartments, which has fueled more bookings on the platform.

Airbnb Q1 Guidance

The solid underlying fundamentals are the catalyst behind Airbnb unleashing a revenue outlook for the first quarter that came above analysts’ estimates. The home-sharing company expects revenue for the first three months of the year to range between $1.75 billion and $1.82 billion, slightly above consensus estimates of $1.68 billion.

Additionally, it projects bookings on nights and experiences to increase by 20%, the same pace experienced in the fourth quarter. The impressive first quarter guidance comes amid strong demand in the market, with most travelers making booking further in advance. However, it is one of many companies benefiting from the robust travel industry. For example, Expedia is upbeat about delivering impressive Q1 results, with lodging bookings increasing by 20% in January.

Airbnb Outperformance

Airbnb has turned its first full year of profit after recording a record net income of $1.9 billion for 2022. Revenue in the fourth quarter was up by 24% to highs of $1.9 billion, above consensus estimates of $1.86 billion.

The company’s sentiments have improved significantly in the market owing to the robust travel industry. The stock is already up by more than 40% for the year after rallying by more than 10% as investors reacted to the positive Q1 outlook