Airbnb Checks In With $3.9 Billion Loss; Predicts Travel Industry Comeback

Reflecting the travel industry’s pandemic-led decline, Airbnb held its first earnings call as a public company on Thursday (Feb. 25) reporting a respectable revenue line, outweighed by a huge loss.

“We didn’t ask for this crisis but I think it has made us a better company,” CEO Brian Chesky told the analysts on the earnings call.

Chesky made it clear on the call that he was more interested in how Airbnb would navigate what he sees as a travel industry comeback this year than he was interested in analyzing the company’s fourth-quarter results. By the numbers, those results showed a $3.9 billion loss mostly comprised of $2.8 billion in stock compensation tied to its December initial public offering (IPO). That compared with a $352 million deficit in 2019. Chesky chalked the Q4 revenue number up as a win, as it was down 22 percent compared to 2019. He predicted in June 2020 that the company’s revenue would be down by 50 percent.

The company is basing its bullish travel industry predictions on vaccine success and pent-up demand. The company’s internal research showed more than half of those surveyed (54 percent) said they either already booked, are currently planning to travel or expect to travel in 2021. Fifty-six percent of the consumers surveyed said that travel would be domestic. Chesky called cross-border travel the company’s primary challenge, even when the pandemic fades. Airbnb is also betting that new use cases discovered during the pandemic will drive growth in 2021. One of those use cases is tied to the work from here movement, which he expects will continue to grow.

“We think in the future, fewer people are going to be tethered to a permanent destination for work and even people who are going to take more three-day weekends, might be more likely to go away for the summer,” Chesky said. “And we think that, in addition to that, these medium-length stays of a couple of weeks or even a couple months, are going to be a really big part of the story. I guess the headline is this: People aren’t just traveling on Airbnb, they’re now living on Airbnb.”

The strategy for capturing the traveler and travel spend will weigh heavily on recruiting more Airbnb hosts. Its first national marketing campaign, running currently, is called “Made Possible By Hosts.” Chesky said he believes that the Airbnb brand is mainstream, but the concept of hosting is not. In October, Airbnb announced the creation of the Airbnb Host Endowment which includes a variety of initiatives and grants, seeded with 9.2 million shares from the company. Chesky said he will add $100 milli0n more in stock. Some examples of how the fund gets used for hosts: Emergency funds, investment in new products and grants for host performance.

Chesky also mentioned the recently announced Flexible Dates feature that allows consumers to book properties within a time period rather for an exact time period. Year-to-date 40 percent of the company’s searches have centered around flexible dates.

“During the recovery, people are going to want to do something interesting,” he said. “And I don’t think they’re all going to desire to go back to getting on double-decker buses and waiting in line and crowded lobbies or landmarks, they’re going to want to do really interesting activities and I think that’s what our hosts have to offer. And then for people in their own city, I think you can only sit at home and watch so many shows on Netflix, people want to get out of their home, and they want an alternative to a restaurant.”