Airbnb
[Credit: Airbnb]

Airbnb reports defiant outlook in “inflection year” despite Q4 losses

US: Airbnb has projected a defiant outlook for the year ahead which it views as an “inflection point” for the business, despite posting an unexpectedly high loss for the fourth quarter of 2023 in its latest earnings report.

Much of Airbnb’s optimism for the year ahead is rooted in the strong demand the company is observing in key markets across the world, fuelling a boost to international travel plans as domestic tourism slows. The home-sharing platform reported notably sustained demand in Asia-Pacific [China seeing a 90 per cent year-over-year surge in demand] and Latin America, driven by an uptick in American traveller numbers, while it targets building its offering in countries such as Germany, Brazil and South Korea that offer opportunities for sizeable future growth.

Booking trends

Strong Q4 travel demand worldwide translated into a 12 per cent rise in nights and experiences booked to 98.8 million – a record for a fourth quarter in Airbnb earnings reports.

At the same time, long-term stays lasting 28 days or longer [a segment that CEO Brian Chesky previously quoted as the largest growing across Airbnb’s business] continued to grow, and trips with a duration of three months or longer increased by almost 20 per cent on the equivalent quarter in 2022.

Airbnb attributed the latest figures to sustained cross-border travel and longer duration bookings in 2023. However, the company urged caution as it expected the incremental rise in nights booked in Q3 to moderate in Q4 due to the almost unprecedented levels of international travel demand and marked rebound in urban markets over the summer – a slowdown which is likely to continue into the first quarter figures.

Challenges

Elsewhere, Q4 revenue saw a 17 per cent YoY uptick on 2022 levels to $2.2 billion, although it represented the slowest pace of growth for any quarter across the year. Airbnb, though, anticipates that revenue will dip down to between $2.03 billion and $2.07 billion in the current quarter as travellers scale down on trips due to soaring costs and the continuing economic and geopolitical instability in markets around the world.

Following the news in December that Airbnb had agreed to pay $621 million [€576 million] to tax authorities in Italy due to overhanging allegations that it had failed to collect a mandatory 21 per cent of landlords’ rental income as per a 2017 law, the firm posted a net loss of $349 million for Q4.

In more mixed news, Airbnb shares fell by five per cent in extended trading hours, despite climbing nine per cent as the earnings were initially announced.

Opportunities for “long-term growth”

As part of the earnings call, Airbnb launched a $6 billion share buyback programme as part of a broader company capital allocation strategy to expand beyond its core services in the near future. The company’s total share repurchases totalled $2.25 billion for 2023 as a whole.

Supply growth will be increasingly crucial to the firm’s long-term goals of pushing into new areas to drive growth. For the first time, Airbnb said that it had passed the milestone of five million hosts on its platform, while there was an 18 per cent rise in active listings to 7.7 million in the fourth quarter.

Double-digit supply growth was observed in all global regions where Airbnb is active, with the biggest increases in inventory being reported in Asia-Pacific and Latin America. As well as Germany, Brazil and South Korea, the home-sharing platform is eyeing making similar inroads in “under-penetrated international markets” such as Switzerland, Belgium and the Netherlands in Europe, and more areas in Asia.

Chesky said that this supply growth was “a long-term indication of growth and Airbnb”, pointing out that 36 per cent of the platform’s newest hosts are prior guests. It comes after Airbnb unveiled a ‘Guest Favorites’ filter in its November Winter Release, a tool which will operate alongside Airbnb’s existing Superhosts filter to promote high-quality host standards on its platform and tempt traditional hotel guests over to the short-term rental category.

Looking ahead, Airbnb will prioritise continuing to develop its core services before pushing into new growth areas beyond travel as part of a “multi-year strategy”.

2024 to be a year to “reinvent” Airbnb

Chesky in particular sees 2024 as a year when his company can “reinvent” itself for hosts and guests, after facing challenges in 2023 ranging from regulatory obstacles in key markets such as New York City to the authority repayments in Italy and shrinking profit margins.

Having reported strong free cash flow for the most recent quarter, the CEO says that Airbnb will be able to “do things we never could have imagined”, including making further advances in artificial intelligence [AI] and completing strategic acquisitions.

In November, Airbnb acquired stealth AI company GamePlanner.AI in a transaction estimated to be worth just under $200 million. At the time, the firm said that it would use the expertise of GamePlanner.AI to accelerate select AI projects and integrate its tools into its own platform, while it already uses AI in large language models, computer vision models and machine learning, and an AI-powered Photo Tour tool.

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