Company Profile
Brief description
Airbnb (ticker: ABNB) has made a name for itself in a highly fragmented and crowded travel lodging industry with a lot of clout.
Business model
Most Airbnb hosts own the properties they list on the platform, and the company earns revenue from fees charged on each transaction without accruing costs from property management or ownership. In times of economic uncertainty, Airbnb’s recent growth numbers underscore two key points: first, people continue to spend money on a broad range of travel types; a method.
Airbnb has a wide variety of listings that cater to everyone from leisure travelers to business travelers to digital nomads, and its capital-light business model gives Airbnb multiple sources of revenue growth and profit. This bodes well for the company and its shareholders who are staying with the company for the long term.
Main competitiveness
Among Airbnb’s many competitive advantages, it’s worth pointing out that the platform not only serves both sides of the travel lodging relationship — supply and demand — its growing base of guests and hosts, but also does so in an extremely asset-light model. It can reduce the company’s capital expenditure and is the type of company that investors prefer.
Potential market and market share
Unstoppable trend
According to the 2016 U.S. statistics, 68% of the young people will search the Internet first when planning a trip; in addition, as many as 50% of the young people will use smart phones for travel planning. In other words, users not only highly prefer online search as a way of travel planning, but half of the users do not go to the computer to open the portal, but directly use their mobile phones to search and operate.
How big is the potential market?
In the prospectus S1 when Airbnb went public in December 2020, it estimated that its total potential market reached an astonishing $3.4 trillion. This includes the following subfields:
- $1.8 trillion for short-term accommodation.
- $1.4 trillion in travel experiences.
- $210 billion for extended stays.
- $1.4 trillion in travel experiences.
Market share
Airbnb has about 26 percent of the market for travel booking services and about 20 percent of the overall vacation rental market.
Performance in Q1 2023
Financial Report Highlights
Profit totaled $117 million in the first quarter, with free cash flow reaching $1.6 billion. That free cash flow figure has grown nearly 500% in four years.
Operating metrics
At the end of the first quarter, several important operating indicators of Airbnb are as follows:
About half of bookings on the platform are for stays of 7 nights or more, and 18% of bookings are for stays of 28 days or more (long stays).
The number of active listings is up 18% from a year ago.
During the three-month period alone, guests booked 121.1 million nights and experiences, up 19% from a year ago and 49% from four years ago.
Competitors
Booking Holding
In the pan-tourism industry, Airbnb’s biggest competitor is Booking Holding (ticker: BKNG) group. Its main business is accommodation booking, including services for hotels, youth hostels, apartments, vacation rentals and other properties. The group has six well-known brands: booking.com, Priceline.com, Agoda, KAYAK, rentalcars.com and OpenTable, providing travel for consumers and local manufacturers.
Expedia
According to 2015 data, Expedia (ticker: EXPE) received a total of 7 billion flight searches a year, with an average of 40 million visitors per month. As far as the travel platform is concerned, Expedia.com has been the world’s largest travel retailer since 2012. Under the influence of the popularization of mobile networks, this 20-year-old brand is constantly pursuing technology applications.
Its brands include Expedia.com, Hotels.com, Trivago, Hotwire.com, Egencia, Venere.com, HomeAway, Expedia Local Experts, and Classic Vacations. Search Engines Travelocity, Orbitz, etc.
TripAdvisor
TripAdvisor (ticker: TRIP) has 24 travel website brands. Once owned by Expedia.com, it was spun off in December 2011 and listed separately. It has branches in 45 countries around the world, including the United States, the United Kingdom, Spain, India, China and other places, covering 28 languages. With more than 600,000 members and information on more than 1,650,000 hotels, 530,000 attractions, and 2,700,000 restaurants.
Capital market performance
Current valuation
At present, the total market value of the company is US$70.19 billion, and the price-to-earnings ratio is 36.58.
Share price performance
Since its listing in December 2020, the stock price has fallen by 21.17%. Compared with most companies listed in the same period, the performance is considered very good. Shares have recovered 29.23% so far in the first five months of 2023.
Outlook
Profit when listed
Airbnb is one of the very few large companies in recent years that can break even when the company goes public. Please note that it was already a company with a high market share when it went public, not a small start-up company.
Survived the plight of the pandemic
Airbnb was indeed unlucky, and immediately encountered the new crown epidemic when it went public. To make matters worse, Airbnb’s industry is the tourism and accommodation industry that has been hit hardest by the new crown epidemic. During this period, it was forced to lay off employees to tide over the company’s losses. However, after the unblocking in the second half of last year, like many related industries, the company has survived the plight of the epidemic, and its financial and operating indicators have rebounded sharply.
Conclusion
Airbnb has passed the rigorous test of the new crown epidemic, which not only proves that it can indeed survive, but also has a high degree of competitiveness. The future of the company is worth looking forward to.
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