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Airbnb Inc.
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== Company overview == Airbnb operates a global alternative accommodation (short-term stay, vacation rental) marketplace, allowing hosts to offer stays and experiences to guests through the company’s platform across the web and mobile devices. Listings on the platform include private rooms, entire homes, luxury villas, treehouses, igloos, and a wide variety of experiences, in roughly 100k cities across 220+ countries/regions. Airbnb generates revenue through service fees, net of incentives and refunds, charged to both hosts and guests that are recognized upon check-in. Gross Bookings Value (GBV) represents the total dollar value of all bookings made on the platform in a period. GBV is inclusive of host earnings, service fees, cleaning fees, and taxes, net of cancellations and alterations. In 2019, the geographic split of nights/experiences booked based on listing region was 43% EMEA, 29% North America, 18% APAC, and 10% LatAm. With differences in average daily rate across regions, this split of nights/experiences resulted in a GBV mix of 38% EMEA, 42% NA, 13% APAC, and 7% LatAM in 2019. Total Nights & Experiences grew 31% y/y in 2019 to 327mn, driving GBV to $38bn (+29% y/y) led by healthy growth across regions. The majority of the platform’s bookings have come from nights. In 2019, revenue grew 32% to reach $4.8bn representing a bookings margin of 12.7% (vs. 12.4% in 2018). Adj. EBITDA losses widened to $253mn with margins (as % of GBV) deteriorating by 130 bps to -0.7% on investments in growth initiatives and technical infrastructure. Over the longer-term, the company expects EBITDA margins of greater than 30% (as % of sales) on greater scale and operational efficiencies. '''Growth''' Gross Booking Value growth is primarily a function of Nights / Experiences bookings growth and gross daily rates. # Nights / Experiences growth. Owing to declines in bookings in 9M20 driven by COVID-19, Goldman Sachs Investment Research expects 2020 Nights / Experiences to decline by 44% and grow at a CAGR of 40% between FY20-23E benefiting from the following factors: ## Listings growth. With the platform unlocking the potential for hosts to earn supplemental income by listing rooms/homes, the number of active listings increased 30% in 2019 to 5.7mn. By making the onboarding process seamless and empowering hosts with information and tools to manage their listings, Airbnb continues to see strong growth in the number of hosts on the platform and high retention among hosts. In 2019, the number of hosts grew 21% while 84% of revenue came from stays with existing hosts (at least one completed guest check-in before Dec-2018). As of 9M20, active listings have stayed stable at 5.6mn with deterioration in host revenue retention owing to bookings decline. ## Guests growth. Through the platform, guests look to experience unique stays that were difficult to access before Airbnb, experience places the way locals do, live in spaces that feels like home, and are competitively priced vs. hotels. The company has seen strong guest growth, reaching 54mn in 2019 (+30% y/y vs. +40% in 2018). The company enjoys strong guest loyalty owing to its large global network, unique experiences offered, and product innovation. 69% of the total revenue last year came from stays by repeat guests with at least one prior booking. For the 9M20 period, the platform has still seen 14mn new active bookers with deterioration in guest revenue retention owing to bookings decline. ## Global coverage. Guests get to choose authentic experiences (including cabins, farms, boats, castles, yurts, igloos, treehouses, lighthouses, private islands) from a wide coverage of listings spanning roughly 100k cities across 220+ countries and regions, many of which are not served by hotels. As per a report commissioned by Airbnb in 2018, at least 2/3rds of guest arrivals took place outside traditional tourist districts even in popular destinations. Expanding further and primarily increasing depth in earlier stage geographies will be a tailwind for growth long-term. ## Opportunities in length of stay. Long-term stay was one of the fastest growing categories for the company in 2019. During the 9M20 period, while short-term stay bookings declined ~81% y/y in April, long-term stay declined only 13% in this month and saw y/y growth between May and September 2020. 24% of the total nights booked on the platform were long-term stays (vs. 14% in 2019 and 13% in 2018). Beyond the current pandemic, Goldman Sachs Investment Research sees opportunities for the lines between work and travel to blur further as work-from-home enables longer-term stays. # Gross daily rate. Gross daily rate rose 16% y/y in 3Q20 to $130 owing to faster recovery in North America and mix-shift towards entire home listings in non-urban destinations which have higher daily rates. Goldman Sachs Investment Research expects daily rates to be at ~$124 for FY20 & 2021 and decline until 2023 as pricing trends normalize post-COVID and lower rate regions (e.g., LatAm) increase within the overall mix. '''Profitability''' Adj. EBITDA losses widened to $253mn in 2019 with margins deteriorating by ~130bps to -0.7% (as % of GBV) on investments in growth initiatives and technical infrastructure. Near-term, Goldman Sachs Investment Research expected in investments in product to drive some deleverage as the company continues to invest in its platform and product. Over the longer-term, the company expects EBITDA margins of greater than 30% on scale benefits to gross margin and leverage on sales & marketing.
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