IPO

Five Takeaways From Airbnb’s IPO Filing

Airbnb

Airbnb filed its S-1 with the Securities and Exchange Commission (SEC), which gives a peek into the financials of the company, of course, but also the rental platform’s view of its own competitive landscape. A continued shift toward domestic travel has helped the firm rebound from the ravages of the pandemic.

Two months after the pandemic hit, as recounted in the filing, “our business model started to rebound even with limited international travel, demonstrating its resilience.”

Airbnb on Monday (Nov. 16) released its prospectus to debut on public markets. The company allows users to book short-term rentals and experiences while traveling, and notes, generally, that competition includes OTAs, internet search engines, hotels, Chinese short-term rental firms such as Meituan B&B and online platforms such as Viator.

Drilling down into the numbers: Through the nine months that ended Sept. 30 of this year, revenues were down 32 percent to $2.5 billion year over year, while operating losses grew from $173 million to $489 million over the same period.

At the same time, the company said, gross booking value was down 39 percent to $18 billion.

The Platform Model: The company had 5.6 million active listings across 4 million hosts, with 84 percent of revenues coming from hosts that had at least one check-in model  before December 2018 and 79 percent of hosts coming directly to the company’s platform to sign up.

Ripple Effects: Airbnb contended in its SEC filing that hosts are connecting guests to their communities, as 87 percent of hosts surveyed recommend local restaurants and cafes to their guests.

The Market Opportunity: Airbnb estimates that its serviceable addressable market today is worth $1.5 trillion, including $1.2 trillion for short-term stays and $239 billion for experiences.

The Lingering Impact Of The Pandemic: Gross nights and experiences booked in September, according to the filing, were down 23 percent, up markedly from the 72 percent decline seen in April.

Girding Against Payments Fraud: All businesses take on payments-related risk, and of course Airbnb is no exception. The filing notes that “When hosts do not fulfill their obligations to guests, there are fictitious listings on our platform, or there are host account takeovers, we have incurred and will continue to incur losses from claims by hosts and guests, and these losses may be substantial.” As for chargebacks, they totaled $92.2 million for the year that ended Dec. 31, 2019 and $95.1 million for the nine months that ended in September 2020.

Gross Daily Rate Improving: What is measured as the gross daily rate per night, before cancellations, has been improving, to $127.8 billion, in September, up 18 percent year over year driven in part by a faster recovery in North America, and a shift toward home listings in non-urban areas, which the company said have higher daily rates.

There’s also been a marked shift toward domestic travel, where cross-border travel once had an outsized presence — a further impact from the pandemic.

“Our business historically has been weighted toward cross-border travel, which accounted for 49 percent of nights in 2019 relative to our estimate for the travel industry that 20 percent of total overnight paid trips come from cross-border travel,” noted Airbnb. “While air and cross-border international travel has been significantly impacted by COVID-19, domestic travel around the world has been extremely resilient. In September 2020, global domestic nights and experiences booked were 77 percent of our gross nights and experiences booked compared to 52 percent  in January 2020.”

Domestic nights and experiences grew 14 percent year-over-year, indicating that for now, at least, people will stick (relatively) close to home.

 

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