Airbnb Says Travelers Want Real Experiences but New Hosts Need Extra Income

The world’s largest homesharing platform says economic concerns and conditions are fueling growth in both travelers and hosts, albeit for different reasons.

Speaking to investors in the wake of reporting record Q3 revenues, bookings, and profits, Airbnb Co-founder and CEO Brian Chesky explained the drivers behind the dual demand in its core constituencies despite the fact that consumers are pulling back in the face of macroeconomic headwinds.

“New use cases such as long-term stays (30+ days) and non-urban travel are here to stay because millions of people now have the flexibility that they didn’t have before the pandemic,” Chesky said of a quarter that saw nearly 100 million nights booked, marking a 25% advance from a year ago.

At the same time, Chesky said Airbnb is also seeing an increase in the number of people signing-up to rent out their properties due to high inflation, jobs cuts, rising rates and economic concerns.

“Just like during the Great Recession in 2008 when [Airbnb launched], people today are especially interested in earning extra income through hosting,” he said, hinting at an upcoming mid-November event that will be aimed at aggressively growing its current stable of 4 million hosts.

“As the economy slows down, I think people are looking for more ways to make either supplemental income or a greater yield on the assets they have,” he added, “so whether it’s second homes or primary homes, I think there is going to be a pretty big opportunity for us.”

Get Me Out of Here

Given the strength of the U.S. dollar and the 7-percentage point impact it had on third quarter revenue and the projected hit it will likely have going forward, jittery investors were not happy to see the company lower its growth rate outlook for the final three months of the year.

“In our guidance for Q4, we are anticipating revenue growth between 17% and 23%,” CFO David Stephenson said on the call. “That’s 23% to 29%, excluding the impact of foreign exchange,” he added, noting that the strong dollar is encouraging more Americans to book more trips to Europe but also discouraging Europeans from visiting the U.S., creating an offsetting and largely immaterial effect.

That said, the economically defiant demand for travel was particularly noticeable on two fronts, Chesky said: Urban bookings and cross-border travel both recovered, moving back to their pre-pandemic leadership status at Airbnb.

“Despite a lot of consumers pulling back on spending, the one area that I haven’t seen them pulling back on as much is travel,” Chesky said, particularly what he calls “meaningful travel” to be with family and friends or other inspirational reasons.

“The mall is now Amazon. The movie theater is now Netflix. But people still want to get out of their house. They still want to have memories. They still want to have meaningful experiences, and I think that’s why they continue to turn to Airbnb,” he said, again noting the impact that the remote work shift has had on his business.

To that point, Airbnb said a fifth of its nights booked are now for longer than a month while half are for longer than a week, marking a sticky use case shift that he does not see reverting.

Always Vacancy Somewhere

As much as the global travel marketplace is actively growing its roster of hosts — and also adding analytical tools to make pricing, budgeting and listing a property easier — like any lodging business, Airbnb deals with demand spikes and droughts and adjusts prices accordingly.

But Chesky said the true art of the business is being able to guide travelers to look at destinations where there are plenty of vacancies.

“The ‘Holy Grail’ is pointing demand to where we have supply,” Chesky said, “because globally on Airbnb, we are never close to 100% occupied. It’s just a matter of pointing demand to where we have supply.”

At the same time, Airbnb said it is undertaking an effort to more clearly disclose the total pricing and fees charged per night or stay on a property.

“One of the things that we’ve been hearing from guests — and we heard it loud and clear — is that people would like a little more transparency about what they are actually paying when they first get to Airbnb,” Chesky said of an unspecified and upcoming pricing redesign. “I think the north star for us on this matter is transparency,” he added.