Airbnb (ABNB) is a technology platform that individuals can rent primary residence as accommodation for travellers. Renters are usually looking for accommodation with a homey feel that hotels cannot provide, while most hosts want to rent out their homes to supplement their income.

As an intermediary between hosts and travelers, Airbnb provides an established marketplace platform where hosts and travelers can securely exchange goods and services. In a peer-to-peer model like Airbnb, the due diligence system adds value to potential hosts and guests looking to meet their lodging needs. In online marketplaces, participants trust reviews, allowing individuals to safely choose quality products instead of buying lemons.

Airbnb has 6.6 million active listings in more than 200 countries. The platform has more than 4 million hosts and has welcomed more than 1.4 billion guests.

Key things

  • Airbnb connects travelers looking for affordable accommodation with hosts who offer their properties as short-term rentals.
  • The company operates in more than 200 countries and has 6.6 million records.
  • The company charges its host and guests a certain percentage of fees to generate revenue.
  • In Q1 2023, the North America segment was the largest contributor to revenue, but the Asia Pacific segment posted the highest year-over-year (YOY) revenue growth.
  • In May 2023, the company launched its “summer version”, which includes new features as well as “Airbnb Rooms”; a new and affordable booking option.

Airbnb’s finances

Airbnb’s primary source of revenue comes from booking service fees charged to both guests and hosts. Depending on the size of the reservation, guests are required to pay a non-refundable service fee based on the type of offer – usually less than 14.2%.

More expensive bookings result in lower guest service fees as families or groups with larger bookings can save money for others travel expenses.

Hosts are also charged a fee of 3% of each completed booking to cover the processing of guest payments. This fee may be higher for Airbnb Plus offers. When a reservation is made, guests pay a service fee—unless the host cancels or withdraws the offer. If the reservation is changed, Airbnb will adjust the service fees to suit the users.

Q1 2023 revenue rose 20.5% to $1.8 billion. The revenue growth was attributed to “a 19% increase in booked nights and experiences of 19 million, which led to a 19% increase in gross booking value of $3.2 billion. Revenue growth demonstrated continued strong demand for travel.”

The company had net income of $117 million for Q1 2023. A significant improvement compared to a net loss of $19 million in Q1 2022. This is primarily due to interest income received from the higher rate environment.

Airbnb Business Segments

Airbnb breaks down its revenue by geography with four reported regions. They are (1) North America, (2) Europe, the Middle East and Africa, (3) Latin America, (4) and Asia Pacific. The company does not provide revenue figures for each region.

The company also uses two key metrics to “measure performance, identify trends, formulate financial projections and make strategic decisions.” These two metrics are Nights and Booked Experiences and Gross Booking Value and are directly related.

In Q1 2023, Nights and Experiences grew to $121.1 million from $102.1 million; an increase of 18.6%. Thus, gross booking value also increased by 18.6% from $17.2 billion to $20.4 billion.

North America

For Q1 2023, the North America segment reported revenue of $925 million; an increase of 12.5%. This segment accounts for 50.9% of Airbnb’s total revenue.

Europe, Middle East and Africa

The Europe, Middle East and Africa segment generated revenue of $458 million in Q1 2023; an increase of 22.8%. year after year (YOY). This segment accounted for 25.2% of the company’s total revenues.

Latin America

The Latin America segment brought Airbnb revenue of $235 million, a year-over-year increase of 32%. The segment accounted for 12.9% of total revenues.

Asia and the Pacific

The Asia Pacific segment saw a 47% increase in revenue to $200 million. While this segment saw the largest year-over-year revenue growth, it is still the smallest contributor to Airbnb’s total revenue, accounting for 11% of total revenue.

Airbnb’s latest developments

On May 3, 2023, Airbnb launched its “summer version”. The release includes the launch of Airbnb Rooms, a “brand new take” on the original Airbnb that aims to bring the company back to its roots. Airbnb rooms are an affordable way to travel with an average price of $67 per night. Eighty percent of Airbnb rooms are under $100 per night.

Other features of the new launch include Host Passport, total price view, new pricing tools for hosts, transparent checkout instructions, more payment flexibility and more affordable monthly stays.

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