The number of tourists seeking a foreign city break is rising, said Airbnb, which has recorded its first full year of profitability thanks to higher prices and a global travel rebound.
Cross-border trips in the fourth quarter of 2022 were up 49 per cent year on year, the company said on Tuesday, with stays in “high-density urban areas” up 22 per cent versus the same period in 2021.
Outbound travel from the Asia-Pacific region showed the strongest growth globally, the company said, as China lifted Covid-19 travel restrictions. Nights booked by travellers from the region were up 40 per cent during the final quarter of 2022 versus the same period in 2021.
“We see China’s recent removal of travel restrictions as an encouraging sign of continued recovery for the region,” co-founder and chief executive Brian Chesky wrote in a letter to shareholders.
Gross bookings in urban areas, described by Chesky as the company’s “bread and butter”, accounted for more than half of all bookings on the platform, for the first time since the pandemic started.
The shared accommodation company, which went public two years ago, posted revenue in the final quarter of 2022 of $1.9bn, up 24 per cent year on year, and marginally ahead of analysts’ estimates of $1.86bn, according to FactSet.
For the full year, its net income was $1.9bn, versus a full-year loss of $353mn in 2021. Net income for the fourth quarter was $319mn, compared with $55mn a year ago.
The company said it had repurchased $1.5bn in stock in the past five months.
Wall Street had been expecting slightly stronger gross booking value — the total value of all bookings — which came in at $13.5bn for the quarter, up 20 per cent on 2021. The number of total nights and experiences booked was 88.2mn, marginally lower than analysts’ estimates for 89.7mn.
Shares rose about 11 per cent in after-hours trading on Tuesday.
Airbnb forecast “continued strong demand” in the current quarter, saying Europeans were making reservations earlier in the year than in 2022. It said it expected revenue in the current quarter between $1.75bn and $1.82bn, above Wall Street’s expectations.
“Consumer confidence to travel remains high,” wrote Chesky. “We’re particularly encouraged by European guests booking their summer travel earlier this year, the market share gains we are seeing in Latin America, as well as the continued recovery within Asia-Pacific.”
Average prices continued to be considerably higher than before the pandemic. The company’s “average daily rate” decreased 1 per cent, year on year, but consumers have not felt the benefit — excluding foreign exchange impact, ADR was up 5 per cent year on year at $153. Compared to pre-pandemic prices in the fourth quarter of 2019, ADR is up 35 per cent.
Airbnb said it expected those rates to decrease in the current quarter due to a greater number of shorter, cheaper stays, plus the introduction of discounting and pricing tools.
The company said it had significantly improved its supply of available rooms, addressing a critical concern of investors, adding 900,000 active listings year on year.
That brought the total available listings on Airbnb to 6.6mn, its highest ever, up 16 per cent on 2021, the company said. The figure excludes the listings lost when Airbnb closed its China-based business in 2022.
As other big technology companies shed thousands of employees due to the market downturn, Airbnb said it had kept its headcount low, with 5 per cent fewer employees compared to 2019.
Airbnb also said it would begin reinvesting in building out products beyond its “core” accommodation business, such as its “experiences” platform where companies or individuals can offer excursions and other activities to travellers. Launched in 2016, experiences took a back seat during post-lockdown recovery.
“Airbnb Experiences is something that we’re beginning to really ramp up,” Chesky said, although he cautioned investors to not expect much near-term material impact. “I think you’re going to see a lot more traction in that product in the coming years.”