Here’s what you can expect from the home-sharing giant in the coming years.
In a little more than a decade, Airbnb (NASDAQ:ABNB) has transformed the travel industry.
When it once would have been unthinkable for most travelers to stay in the home of a stranger, it’s now the norm for many. Thanks to its network of more than 5 million hosts, Airbnb has more rooms available than the five biggest hotel chains combined and it offers a much wider range of locations, styles, and price points than a hotel chain can.
It’s difficult to predict where a disruptive company like Airbnb will be in five years and it’s a folly to try to forecast its numbers, especially as the company still faces uncertainty coming out of the pandemic. However, two significant trends should shape Airbnb’s business over the next five years.
The rise of remote work
In its recent shareholder letter, management said, “Guests aren’t just traveling on Airbnb, they are living on Airbnb.” In the first quarter, 24% of nights booked were for stays of 28 nights or longer. While that’s a function of the pandemic, it’s also a sign of what’s likely to be a lasting trend. Remote work has become popular during the pandemic, and a hybrid model seems likely to persist even when offices reopen. Management added, “An increasing number of guests are discovering that they do not need to be tethered to one location to live and work.”
The remote work trend is a significant tailwind for Airbnb as it once again demonstrates an advantage it has over hotels. By offering complete homes with kitchens and workspaces, it can accommodate remote workers in a way that hotels can’t. Similarly, it demonstrates one of the best use cases for the platform for both hosts and guests.
Over the last four quarters, even with the challenges from the pandemic, Airbnb has posted a profit in both adjusted EBITDA and free cash flow. During that time, Airbnb reported $24 million in adjusted EBITDA and free cash flow of $405 million.
The company’s marketplace model also tends to be highly profitable at scale as Airbnb makes money taking commissions on bookings. It only needs to keep its platform up and running and make sure its users are satisfied. It doesn’t have to deal with real estate or cleaning the way most hotels do. .
The company’s competitive advantages are abundant and thanks to its strong brand, it will continue to be the leader in the fast-growing home-sharing industry.
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