Travel recovery is accelerated by a jump in cross-border travel and looser China Covid restrictions
According to Airbnb, the number of tourists looking for a vacation in a foreign country is on the rise. This is due to Airbnb’s first year of profitability.
The company reported that cross-border trips increased 49% year-on-year in the fourth quarter 2022, while stays in “high density urban areas” rose 22% compared to the same period 2021.
The company stated that outbound travel from Asia-Pacific showed the most significant growth worldwide, due to China’s lifting of Covid-19 travel restrictions. The number of nights booked by travelers from the region increased 40% in the last quarter 2022, compared to the same period 2021.
In a letter to shareholders, Brian Chesky, co-founder and chief executive of China, wrote that “We see China’s recent removal of travel restrictions in an encouraging sign for continued recovery for the area.”
For the first time since the pandemic, more than half of all bookings were made in gross areas.
Two years ago, the shared accommodation company went public. It posted $1.9bn in revenue for the last quarter of 2022, an increase of 24 per cent year-on-year and slightly ahead of analysts’ estimates at $1.86bn. FactSet reports that this was 24% more than what it had been expecting.
Its net income for the entire year was $1.9bn. This compares to a loss of $353mn in 2021. The fourth quarter net income was $319mn, as compared to $55mn last year.
According to the company, it has repurchased stock worth $1.5bn over the past five month.
Wall Street expected a slightly higher gross booking value, which is the total value of all bookings. It reached $13.5bn in the quarter, up 20% on 2021. The total number of nights and experiences booked was 88.2mn. This is slightly lower than analysts’ expectations for 89.7mn.
After-hours trading saw shares rise by around 11 per cent on Tuesday.
Airbnb predicted “continued high demand” for the current quarter. It stated that Europeans are making reservations earlier this year than they did in 2022. It stated that it expects revenue to be between $1.75bn-$1.82bn in the current quarter, which is higher than Wall Street’s expectations.
Chesky stated that “Consumer confidence in travel remains high.” “We are particularly encouraged by European customers booking summer travel earlier in the year. We also appreciate the market share gains in Latin America and the ongoing recovery within Asia-Pacific.”
The average price of food continued to rise significantly after the pandemic. Although the company’s “average daily rates” fell 1 per cent year-on-year, consumers have not seen any benefit. ADR, excluding foreign currency impact, was still up 5% year-on-year at $153. ADR is now up 35% compared to the pre-pandemic prices of the fourth quarter of 2019.
Airbnb stated that it expects rates to drop in the current quarter because of a higher number of shorter stays and cheaper stays, as well as the introduction of pricing and discounting tools.
According to the company, it has significantly increased its supply of rooms. This addresses a concern of investors. Year on year, there have been 900,000.
The company stated that this increased the number of available listings on Airbnb to 6.6mn. This is a 16 per cent increase over 2021. This figure does not include lost listings when Airbnb’s China-based business was closed in 2022.
While other tech companies lost thousands of workers due to market declines, Airbnb claimed it kept its headcount low with 5% fewer employees than in 2019.
Airbnb stated that it will reinvest in products outside of its core accommodation business. This includes its experiences platform, where individuals or companies can offer activities and excursions to travellers. After being launched in 2016, experiences were pushed to the side during post-lockdown recovery.
Chesky stated that “Airbnb Experiences” is something that the company is beginning to ramp up, but cautioned investors not to expect much in the near term. I believe you’ll see more interest in this product over the next few years.”