US: Airbnb posted a mixed set of results in its fourth quarter earnings report, with a noticeable uptick in revenue and nights and experiences booked but a sizeable downturn in net income.
Despite a softer start to the quarter fuelled by shorter booking lead times, nights and experiences booked rose by eight per cent year-over-year to 122.8 million and bookings returned to double-digit growth by the end of Q3. The increase was driven by significant growth in key gateway and expansion markets, including 19 per cent in Asia-Pacific [APAC] and 15 per cent in Latin America, as well as record upticks in active listings.
Worldwide, the firm reported a “slight acceleration” in nights booked across the EMEA region, with the Summer Olympics in Paris [France] providing a major boost.
In the United States, demand improved after a slower start than would have been expected for a summer season. Domestic trips brought in the highest proportion of reservations, while non-urban destinations [e.g. leisure] and larger group travel both saw growing cut through during the quarter.
In Asia, Airbnb highlighted its “encouragement” with outbound China business after its recovery from the Covid-19 pandemic and strictly enforced lockdowns.
Nights and experiences booked look likely to accelerate again into Q4, according to the platform.
In addition, Airbnb reported a ten per cent YoY increase in Q3 revenue to $3.7 billion, up from $3.4 billion a year ago. The company has attributed this to “solid growth in nights stayed and a modest increase in average daily rates [ADRs]”, helping it to narrowly beat analyst estimates on Thursday.
Like revenue, Airbnb’s third quarter gross booking value also soared by ten per cent compared to last year’s figure, rising to $20.1 billion.
Despite these achievements, the company reported a sharp decrease in net income [profit] for Q3, dropping from $4.4 billion in Q3 2023 to $1.37 billion [less than the predicted $1.39 billion] in the most recent quarter, representing a 37 per cent net income margin.
This was primarily down to a large jump in quarterly sales and marketing expenses [27.5 per cent to $514 million] as Airbnb prioritised investments in under-penetrated international markets such as Brazil and Japan. The firm also put the lower figure down to the recognition of certain non-cash tax expenses.
As a result, Airbnb shares fell by four per cent in volatile after-hours trading, sinking to a low of $133.58 from a peak of $148.36.
Brian Chesky, co-founder and CEO of Airbnb, said: “We had another strong quarter at Airbnb, with bookings growth accelerating throughout Q3 and into Q4. I’m especially proud of the growth across our expansion markets, app bookings, and Guest Favorite listings, and I’m looking forward to another strong holiday travel season.”
In August’s Q2 earnings report, Airbnb had predicted a moderate increase in nights booked for Q3 and a continuation in shorter booking lead times around the world – potentially a sign of spending caution and global market uncertainty.
As per its 2024 Winter Release last month, Airbnb unveiled its much-anticipated Co-Host Network to help its hosts who have little time on their hands find the best local hosts to manage their property, thereby driving more bookings for their listing and maximising their income. The Network, one of 50 upgrades revealed by Airbnb to make it a “more personalised app”, launched initially with 10,000 co-hosts in ten countries, including the USA, UK, Australia, Brazil, Canada, France, Germany, Italy, Spain and Mexico.
In recent months, chief business officer Dave Stephenson revealed that Airbnb was aiming to expand beyond its core offering and diversify into “services that will make it better for guests to stay in Airbnbs”. The firm is reportedly considering adding luxury-style services such as personal chefs, massages, mid-stay cleaning, easier check-ins, spa services and refrigerator stocking in order to woo travellers back to short-term rentals from hotels, and Stephenson suggested that a formal announcement on the expansion could come “early next year”.
Looking ahead to its fourth quarter results in several months’ time, Airbnb said that Q4 was already “off to a great start”, highlighting a predicted eight to ten per cent rise on revenue from the equivalent quarter a year ago, as well as a projected increase in nights booked.
The home-sharing platform is also expecting a “modest” rise in average daily rates [ADRs] and an improved quarter overall, backed up by “strong demand trends” in both its core and expansion target markets.
