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Airbnb generated $117 million in net income in the first three months of 2023, marking the first time the short-term rental behemoth earned a profit in the first quarter during an ongoing period of growth for the company, according to earnings data released Tuesday.
The company’s revenue grew by 20 percent compared to a year earlier, reaching $1.8 billion for the quarter.
By Airbnb’s own calculations based on total bookings and additional fees, the company has doubled in value since 2020, it said in a statement upon the release of earnings data. And company officials shared details on how they plan to keep growing. Part of it comes down to adding more supply.
“Our long-term growth is going to only be as strong as our supply,” CEO Brian Chesky said in a call with investors on Tuesday.
“What happened in 2020 and 2021 is that demand grew faster than supply,” Chesky said. “Initially this was a great thing, but the problem is…prices generally go up. And as prices have risen, while that’s been good for the bottom line, affordability in this economy (is an issue).”
Notably, the company has lately been focused on offering more affordable options for travelers who book through the platform. That included the creation of a new category for people to quickly find and book rooms within larger homes or apartments, which Chesky said typically costs around $67 a night.
“The more affordable we are, with a wider selection, the more people will come to Airbnb,” Chesky said.
The changes around affordability address concerns from existing customers who were fed up with high fees on Airbnb, possible hesitancy around traveling for people wary about the state of the U.S. economy, and providing more options for younger travelers.
“Ultimately, the biggest market opportunity for any company is always the next generation,” Chesky said. “If you can continue to be the most relevant brand for a young audience you’re going to continue to be able to ride that growth.”
The company has also been focused on adding more international supply now that COVID restrictions have eased and among ongoing signs of pent up demand for overseas travel.
Airbnb said guests continued traveling overseas and were returning to cities as those segments continued rebounding from the slowdown caused by the pandemic. The number of rentable homes on Airbnb is now 18 percent higher than it was a year ago, the company said.
Chesky said he wasn’t concerned about upcoming changes by Expedia Group, owner of Airbnb competitor Vrbo, which will unveil a new loyalty program for travelers who book on that short-term rental platform. The loyalty rewards will also cross over among Expedia’s other travel brands, including Hotels.com.
“The best loyalty program is people loving your product,” Chesky said, adding that it would be a “subsidy to buy loyalty.”
In addition to affordability and supply, Chesky suggested the coming 12 months would include an expansion outside the core of Airbnb. The company had been gearing up to focus on Experiences, or activities that could be booked through the platform, before the pandemic.
When travel shut down during the onset of COVID, Airbnb shifted to remain focused on facilitating short-term rental stays and adding more housing options onto the platform.
That included making it easier to become a host and partnering with some of the biggest real estate developers and landlords in the U.S. to allow apartment renters to list their homes on Airbnb.
Moving forward, Chesky suggested the company would continue those efforts while taking a look at expansion beyond the core, again.
“One of the things I’ve told our team is we have numerous expansion opportunities,” Chesky said. “Our core service is stronger than ever, it’s more profitable than ever, and I think we’re now ready to expand beyond the core.”
“With regard to Experiences, I remain bullish about this product,” he added. “There is a massive opportunity for someone to build a huge product around Experience. Whether it’s us [or a competitor] we still have to prove that.”
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