Airbnb is reporting its strongest quarter ever in the third quarter of 2021, with revenue topping $2.2 billion – a 36% jump over the same pre-pandemic period in 2019.
The revenue figure also beats Q3 2020 revenue of $1.3 billion by nearly 70% year-over-year.
According to the home-share giant’s latest earnings report, year-over-two-year revenue growth more than tripled from 10% in Q2 2021 to 36% in Q3 2021. The company attributes the sequential acceleration to continued strength in the North America, EMEA and Latin America regions, as well as high average daily rates (ADRs).
Airbnb’s net income for the quarter ending September 30, 2021, was nearly 4x that of a year ago, notching $834 million and marking its most profitable quarter ever. Net income for Q3 2021 was an improvement of $615 million – or 280% - compared to Q3 2020 and $567 million, or 213%, compared to Q3 2019.
Q3 adjusted EBITDA surpassed $1 billion for the first time, doubling from $501 million in Q3 2020 and more than tripling from $314 million during the same period in 2019.
In Q3 2021, nights and Experiences booked on the platform grew 29% year-over-year to 79.7 million.
Gross booking value - defined as nights booked prior to cancellations and alterations – for Q3 2021 was $11.9 billion, up 48% compared to the same period in 2019.
However, global cancellations remained higher than 2019 levels.
According to Airbnb, guests have used its “I’m Flexible” feature, introduced in May of this year as part of a 100-plus product refresh, more than 500 million times since it launched.
In a call with analysts, Airbnb co-founder and CEO Brian Chesky says that due to the popularity of the feature, Airbnb will continue to invest in it moving forward. To that end, four new categories will be added to feature, and the ability to search by flexible dates will expand from six months to 12 months out.
With "I'm Flexible," Chesky says conversion rates are up because travelers are more likely to find a suitable property, and it helps point demand to where there’s supply.
“There’s a new paradigm in travel, and this flexibility is here to stay,” Chesky says. “Down the road this will be a major way people are searching on Airbnb.”
Travel outside of urban destinations, including to nearby and rural locations, has grown, with gross nights booked within 300 miles of a guest’s home increasing 40% in Q3 2021, up from 32% in Q3 2019. Gross nights booked in rural destinations increased more than 40% in Q3 2021 from the same period in 2019.
Cross-border travel increased to 33% of gross nights booked in Q3, up from 27% in Q2 2021 and 20% in Q1 2021.
Meanwhile, urban travel is “gradually improving,” the company says, with Airbnb’s top 10 cities representing 6% of gross revenue in Q3 2021, down from 11% in Q3 2019.
High-density urban areas represented 46% of gross nights booked for the third quarter of 2021 compared to 40% in Q2 2021. Searches for urban areas have also grown each quarter and were 60% higher in Q3 2021 compared to Q1 2021.
Long-term stays – defined as stays of 28 days or more – remained Airbnb’s fastest-growing category by trip length and accounted for 20% of gross nights booked in Q3 2021, up from 14% in Q3 2019.
The company says more than 90% of its active listings now accept long-term stays, and the number of active listings that offer a monthly discount is up 20% from the third quarter of 2019.
On the supply side, Airbnb says changes it’s made to its Host onboarding process, as well as strong demand, has led to more people becoming interested in hosting, with active listings in non-urban Europe and North America increasing almost 15% from Q1 2021 to Q3 2021.
The company says that the marketing campaign it launched in February of this year – its first in five years – contributed to a 15% boost in traffic to its platform in the seven countries where the campaign ran compared to Q3 2019. New ads targeted toward fall travel have recently launched in the same countries.
Overall, sales and marketing expense for Q3 2021 increased 156% year-over-year to $291 million.
Chesky says marketing expenses as a percentage of revenue are down from 2019 levels, “and we should anticipate that it would be in this kind of range for the foreseeable future,” he says.
“We take a really different approach than our competitors. The full-funnel integrated marketing strategy … really starts with PR and word of mouth and is really working out,” he continues.
“We’re really happy with the adjusted marketing approach that we’ve taken. This was pre-pandemic when we began to focus on the brand Airbnb. We’ve reduced our reliance on search engine marketing and we’re really happy with those results and plan to continue the strength of that over time.”
Hotels and Experiences
As for investment in areas outside of Airbnb’s core Homes category, such as hotels and transportation, which was scaled back amid the pandemic, Chesky says “it’s really just a matter of prioritization and right now we are focused on the most perishable opportunities.”
He says Airbnb is continuing to invest in HotelTonight, which has been “growing steadily” over the past couple of years, but “it’s not as big of a priority as our core business of supporting individual hosts.”
As for its Experiences category, Chesky says he is “bullish” on the product and expects it to be a key area of growth over the next five years.
In addition to the more than 100 platform updates launched earlier this year, Airbnb will be rolling out 50 more in an announcement coming on November 9.