Lingering effects of COVID-19. Recessionary fears. A war in Ukraine. If 2022 didn’t look promising for the travel industry, 2023 doesn’t look much better.
So why was Airbnb CEO Brian Chesky chattering Tuesday like a schoolboy with a Valentine from every kid the class? Just look at the numbers on the chalkboard.
Fourth quarter revenues of $1.9 billion were up 24% from the same period in 2021. Net income for those three months was $319 million, making it the company’s most profitable fourth quarter ever. Adjusted EBITDA was $506 million in Q4 – another company record – and generated a full-year total of $2.9 billion.
After ticking off all the obstacles his company — and travel in general — faced in 2022, Chesky couldn’t be blamed for sounding a little giddy.
“Through all of this, people continue to travel,” he said. “And 2022 was a record year for Airbnb.”
Tuesday’s report capped a year of record-setting financials for the U.S.-based home-sharing and alternative accommodation giant. Revenue eclipsed $1.5 billion for the first time in the first quarter of 2022. The company followed that up with the most profitable second quarter in its history, and the third quarter was Airbnb’s most profitable quarter ever.
Company officials anticipate more of the same in 2023, with strong demand for early summer bookings across the first few weeks of the year indicating more good things ahead.
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“Consumer confidence to travel remains really high,” Chesky said in concluding a call with financial analysts to discuss the results. “I think part of that is no matter what happens in the world, people want to travel. For many people, the office is now Zoom. The mall is now Amazon. The theater is now Netflix. Travel is going to become a very important way that people experience the world this year. Therefore, this is going to be an exciting year for Airbnb and traveling all around the world.”
Guest demand remained strong throughout 2022, the company reported, with all regions seeing significant growth in 2022 as guests increasingly crossed borders and returned to cities on Airbnb.
“This was the bread and butter of Airbnb before the pandemic,” Chesky said. “Now both segments continue to accelerate while non-urban and domestic travel remain strong.”
Strong growth in Nights and Experiences booked – the total of nights booked for stays and seats booked for experiences after cancellations – drove nearly $13.5 billion in gross booking value for the quarter, a 20% increase year over year. For the full year, those figures saw a 35% increase to $63.2 billion.
Supply growth
While demand is growing, so is supply. The company ended the year with 6.6 million active listings — 900,000 more than it had at the beginning of the year, excluding China.
“Why are listings accelerating in growth?” Chesky said. “We believe there are probably two factors that drove this growth. First, demand drives supply. Hosts are attracted to supplemental income that they can earn on Airbnb, which is often critical during tough times. Second, our product improvements are working. Over the past two years we’ve made it more attractive and easier to become a host.”
He shared a story of his experience when in November he listed his guest room, remodeled with an eye to the nostalgia of Airbnb’s founding. He joked of having dinner with his guests followed by “Chesky’s Chips, chocolate chip cookies from a cherished family recipe — that I got off Google.”
The experience provided firsthand insights into what help prospective hosts needed before listing their homes – or guestrooms – on Airbnb, he said.
“It’s been an amazing way to connect with people,” he said. “But I also believe that companies that make the best products make products for themselves. And Airbnb will only be as successful as our hosts. And the best way to understand our hosts is to be one.”
He said the introduction of Airbnb Setup — where respective hosts can connect with “superhosts” for free one-to-one guidance all the way through their first reservation — led to a 20% increase in new active hosts compared with before the launch.
But along with growth, the CEO also spoke of the importance of holding down costs as a reason for the company’s success in 2022.
“During the height of the pandemic we made some very difficult choices to reduce our spending, making us a leaner and more focused company,” he said. “We’ve kept this discipline ever since. Over each of the past two years we’ve only modestly increased our head count. In fact, compared with 2019, our head count is actually down 5% while our revenue is up 75%.”
Another example of saving costs: Airbnb reported $350 million in Q4 sales and marketing expenses, down from $409 million year over year. The reduction is, in part, a strategy to frontload marketing expenses in the first half of the year to capitalize more on summer tourism. (Over all of 2022, sales and marketing costs were up by $330 million from the previous year.) But it’s also a reflection of Airbnb’s standing in the market.
“Airbnb kind of stands in a class of its own. We’re a noun and a verb used all over the world. … We’re known as an affordable way to travel,” Chesky said. “Ultimately, 90% of our traffic comes direct. That’s because we have something that’s unique. … What we’re really focused on doing: We’re obsessing over providing the very best experience for guests. And if we do that and perfect that experience and do really great marketing, I think we’ll do very well.”