Airbnb expects a cautious outlook for its revenue in the second quarter of 2020

May 10, 2023 | 11:05 a.m

Airbnb shares fell this Wednesday After the home rental company gave a cautious view of earnings, pointing to rising prices and an uncertain economic outlook beginning to weigh on consumers’ willingness to travel.

Shares are down near 10% at 10:54 am (Mexico City time) on the market in New York, but At the start of the day they were down 14%, The biggest downturn since the company went public in December 2020. Shares are up nearly 50% since going into business on Tuesday.

San Francisco-based housing sharing company It expects revenue between $2.35 billion and $2.45 billion In the second quarter of the year, an increase of 12% to 16% over the previous year and the slowest growth rate yet.

Analysts had expected $2.4 billion, according to a Bloomberg survey.

Airbnb said it expects EBITDA, excluding some costs, to be similar to the second quarter of last year.

The company also announced Tuesday that it has authorized a new share buyback program of up to $2.5 billion.

Recovery loses strength

The company has benefited in recent years from changes in work and lifestyle due to the pandemic. but The post-COVID-19 travel rush is wearing off And some consumers are slashing entertainment budgets amid persistent inflation and a shaky economy.

Airbnb notes that the number of nights and experiences booked in the current period will look unfavorable compared to demand a year ago, when there was a spike in the wake of the Omicron variant of the Covid-19 outbreak.

As a result, the company expects annual growth in nights and experiences booked at a slower rate in the second quarter than revenue.

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The forecasts came on the heels of a record-breaking quarter across several metrics. Revenue for the three months ended March 31 increased 20% to $1.82 billion., the highest in Airbnb history during that period. That compares with analyst estimates of $1.79 billion.

Adjusted EBITDA was $262 million, Better than Wall Street estimates and also a record first quarter. Earnings per share came in at 18 cents, while analysts had expected 17 cents.

inflation effect

Companies, from airlines to hotels, are raising prices as consumers have so far shown they are willing to pay. Personal consumption expenditure increased by 3.7% in the first three months of this year, The most in nearly two years.

But maybe people are starting to draw the line. Bank failures, high inflation, high mortgage payments, and a weak job market, particularly in high-income sectors like technology, may prompt tourists to start cutting back on spending.

Airbnb said average daily rates in the first quarter were $168, the same “keeping high” level they were a year ago. The price hike was offset by the impact of foreign currencies, people’s willingness to pay, and a shift in bookings towards urban and other rentals.

But Airbnb sees “slightly lower” daily rates in the second quarter, This is due in part to new host pricing tools introduced last week and a shift towards more urban rentals.

CEO Brian Chesky said in an interview last week that the strong demand he expects this summer could have been better if it weren’t for the economic uncertainty. Airline fares remain prohibitively expensive, he said, and “when the cost of flights goes up, it affects our business.”

Your competitors results

Airbnb’s results align with strong reporting and optimistic feedback from its online travel peers. Booking Holdings and Expedia Group reported double-digit increases in total bookings in the first quarter.

Booking, whose holdings include restaurant reservation platform OpenTable and discount travel website Priceline, said bookings had reached “all-time quarterly highs”.

Expedia CEO Peter Kern said there has been a “structural shift in the way consumers think about spending and travel is at the top of the list.”

Atlantic Equities analysts note that slowing growth at Airbnb will raise competition concerns with Booking.com. The Norwalk, Connecticut-based company also lists alternative accommodations on its website, from apartments to cabins to villas, and has pushed even further into the space.

The booking momentum on Alternatives is currently greater than that of Airbnb

Analysts wrote.

Expedia’s Vrbo platform also competes with Airbnb for home rental listings.

On a call with investors to discuss the results, Chesky said affordability is Airbnb’s top priority. He said the hope is that the large offering on the platform will help ease price pressures.

Airbnb is taking steps to prevent rent prices from skyrocketing. The company has implemented more than 50 new features and updates In part to increase pricing transparency and affordability.

In an effort to ensure that the platform has affordable accommodations, the company has launched Airbnb rooms that average $67 per night, among other initiatives.

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With information from Bloomberg