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Airbnb is in demand

Airbnb is in demand

having beaten analyst estimates for the latest reported quarter, it expects to do so for the next as well
February 21, 2022
4 min read
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having beaten analyst estimates for the latest reported quarter, it expects to do so for the next as well

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if you can’t run, walk. if you can’t walk, crawl. that is apparently the motto travel lovers, especially in the US, are adopting at present under the shadow of Covid-19. there’s one company that’s benefiting from that slow crawl back to normalcy for travellers at the moment, and its Airbnb. the stay-booking company’s share jumped 4.3% in after-hours trading on February 15.

what’s behind the surge?

flying high

Airbnb says it saw a strong growth in bookings based on domestic travel, while overseas trips remain complicated due to pandemic-related rules. travellers are also choosing the peace and quiet of rural and semi-rural stays over urban stays.

the growth in demand is also allowing hosts to start increasing their fares again, further boosting income for themselves and commissions for Airbnb. these factors combined to push Airbnb’s Q4 2021 (October to December) revenue to $1.5 billion, a whopping 78% higher than the corresponding period in 2020. the company also clocked a net profit of $55 million in the quarter against a loss of $352 million in the year-ago period. bookings jumped 59% to over 73 million, and gross booking value crossed $11 billion, up 91% over the year-ago period.

keeping on

the vacation rental firm has also forecast better than expected Q1 revenue (January to March) at $1.41 - $1.48 billion vs analyst estimates of $1.24 billion. this would be almost as high as in the reported quarter, which usually tends to clock in higher due to festive travel. A note of caution might perhaps be that Airbnb still registered a net loss of $352 million for all of 2021, but that’s significantly lesser than the $4.58 billion it lost in 2020.

the takeaway here is perhaps that Airbnb’s strong recovery and projections suggest a similar trend for associated businesses. travel and hospitality in general have been lagging most other businesses in the post-pandemic recovery but perhaps their time has come. air travel and premium hospitality are two that come to mind. if Airbnb’s projections hold true, it might be a signal to invest in more than just its own stock.