Airbnb sales beat estimates, showing demand amid Covid-19 surge

Airbnb has fared better than its rivals as travelers have taken advantage of work-from-home opportunities. PHOTO: REUTERS

NEW YORK (BLOOMBERG) - Airbnb reported quarterly revenue that blitzed analysts' estimates, benefiting as travelers chose vacation rentals during a holiday season marred by rising Covid-19 cases.

The company didn't give a financial forecast and it was cautious about 2021, keeping a lid on share gains in extended trading.

Releasing its financial results for the first time as a public company on Thursday (Feb 26), Airbnb showed sales of US$859 million (S$1.14 billion) in the final three months of 2020, a decline of only 22 per cent from a year earlier. Analysts had been projecting US$739.7 million, according to data compiled by Bloomberg. Nights and experiences booked, a metric that represents the total number of guest stays and tourist activities booked on the platform, dropped 39 per cent from a year earlier to 46.3 million, the San Francisco-based company said in a statement. Gross booking value fell 31 per cent to US$5.9 billion.

The pandemic continues to hammer the travel industry after a surge in cases through winter led to new lockdowns and restrictions and the vaccine rollout has faced hurdles globally. Airbnb was among the hardest-hit companies of the pandemic and almost shelved its IPO plans as travel shut down nearly a year ago. By April, room bookings and experiences had plunged 72 per cent. Airbnb rolled out a blanket refund policy and doled out more than US$1 billion in cancellation fees.

But Airbnb, which helped pioneer the home-sharing vacation model, has fared better than its rivals as travelers have taken advantage of work-from-home opportunities, road-tripping to nearby mountain villages or beach towns, often booking longer stays than usual. Airbnb started to see business stabilize in the fall and the company ended 2020 with a record-setting IPO. It's stock is up 165 per cent since then, valuing the company at more than US$100 billion, greater than either Expedia Group or Booking Holdings.

The IPO and its associated stock compensation, as well as the effects of the pandemic, led to steep losses in the fourth quarter. Airbnb reported a net loss of US$3.9 billion compared with a loss of US$351.5 million a year earlier. Analysts had projected a loss of US$3.2 billion. The loss per share was US$11.24.

"We have been encouraged by our continued resilience and recovery, and are optimistic about the upcoming travel rebound," the company said in its report. But, Airbnb said it has "limited visibility for growth" in 2021 "given the difficulty in determining the pace of vaccine roll-outs and the related impact on willingness to travel."

Chief executive officer Brian Chesky has said he is hopeful vaccine distribution will lead to a post-pandemic travel boom that will continue to favor Airbnb over traditional hotels.

"We do believe the travel rebound is coming and we think it's going to be a very big rebound," Mr Chesky said Thursday during an interview on Bloomberg Television. "We need to make sure we have enough hosts to prepare."

The return in travel will likely be driven by longer stays as "now in a world of Zoom, people can work from home and they're realizing they can work from any home," he said.

In a conference call with analysts, Chesky said Airbnb will be investing in customer service. The company has plans to simplify users' experiences by making it easier to book a stay and list your home on the platform. Airbnb has a goal to help users become a host in just 10 minutes. Guests will not just be "traveling on Airbnb, but living on Airbnb," he said on the call.

Analysts are also optimistic. "Once a vaccine is widely distributed in the US and Europe (we see by summer), revenue will come roaring back, with monthly bookings to exceed previous peak levels by year-end, reflecting the enormous amount of pent-up demand in the ecosystem," CFRA analyst Angelo Zino wrote in a note before the results were released. He estimated Airbnb's bookings would more than double in April. BTIG analyst Jake Fuller wrote that Airbnb is positioned to be the first online travel agent to return to room-night growth due to "the rising relevance of alternative accommodations."

Airbnb shares rose about 3.5 per cent in extended trading on Thursday. The stock closed at US$182.06 in New York earlier.

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