Airbnb’s fortunes ebb and flow with the pandemic
Third Bridge Forum spoke to a former divisional leader at Airbnb, who told us that the “decentralised living” phenomenon caused by the pandemic was injecting new growth into a once slowing North American market. The specialist said markets in APAC were also continuing to grow steadily in line with pre-pandemic expectations, and that they expect global CAGR of between 30-40% over the next five years.
The pandemic has also caused average daily rates (ADRs) to increase, although the specialist told us these are likely to reduce in the short term. In the medium term, the specialist said ADRs should stay above USD 150 per night and that North America and Western Europe would experience the highest ADRs as a result of reduced international travel.
The specialist also highlighted business travel as a new market segment that will “crack open” for Airbnb in 2022 as hesitation surrounding its suitability for business travel wanes. The specialist said the uptick could reduce the average length of stay at an Airbnb, dropping from the current average of “high fours” to 3.3 nights.
Airbnb is likely to pursue host growth more “aggressively” this year, with more resources spent on acquiring professional hosts. The specialist said officially the company is unlikely to offer discounts because “at this point, the cost of not being on Airbnb for a property manager is too high”. However, there may be some flexibility in the future depending on the number of listings a property management company has.
The specialist said the company’s organically acquired share of total bookings is likely to outperform peers considerably, with as much as 80% of bookings being acquired directly or via unpaid channels. As Airbnb scales in new markets and competes with Booking.com and Vrbo, the specialist told us paid channels could grow the share of total bookings.
In the future, the specialist said the company faces challenges in adapting its core message to different regions, noting the brand messaging that resonates with western countries may not perform so well in APEC. The specialist also said Airbnb is likely to introduce a loyalty programme for customers, claiming it is “just a question of when”.
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The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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