Airbnb Q1
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Does anyone have a plausible model of how Airbnb can ever make over 5x more revenue than it’s making today? Is the $100B market cap building in an assumption that it’s going to invent new business lines and push them through its distribution channel, or what?
Top line needs to keep growing 30%/yr for next 5 years, then reach a stable state of 30%/yr earnings+growth yield...
Then if that optimistic scenario comes true, congratulations, you can expect a modest 10%/yr yield investing at $100B today. I believe that’s roughly the math.
Basically if you own a property you say "Hey AirBnb, use this to make money and give me some of it".
That is a huge addressable market, and one that is adjacent to their existing market and only getting bigger.
So, while it’s a market they could address, they don’t seem to be heading in that direction, rather, more optimisation of the current model, adjacent services (experiences, possibly dining from some mood music I’ve heard from them), and an increased focus on the higher end travel market, where margins and commissions to be earned are greater.
So, at the moment, it’s more “Hey Airbnb, I’ll use this to make money and I’ll give you some of it”, and I can’t see how they could pivot to providing a full service. Who gets called when the boiler breaks? Who handles the guest who broke a light-switch and is now in the dark? Who helps the guest who can’t figure out where to park in an unfamiliar place? The list goes on, but I think it’s these “last mile” deliverables and expectations that prevent them from getting deeper into hospitality management.
If I were a property owner I'd prefer to build a relationship with a local business managing hundreds of apartments than an online multinational support portal based giant.
Line goes up is the motto for the 2020s, and assets are valued on everything but actual earning potential.
Also if they reach that level of profitability you have to factor in things like buyback programs which for big tech companies tend to be very healthy. With buybacks the valuation doesn't necessarily need to expand for you to make money on your investment.
This is just my opinion, but I tend to think it's better to over pay a little for quality companies because at worse you might buy something that's a bit overvalued, but over the long-term your investment will probably still work out well. If you look for companies that are cheap you often buy trash and in those cases you can end up with far worse returns over longer periods of time.
For what it's worth I've been looking to invest in ABNB for a while and although I don't think the valuation is too unreasonable the risk/reward still isn't there for me personally.
That said fundamental analysis is pretty absurd if you process that really all most people are getting is intrinsically a meaningless vote/s as a shareholder. Analysis on fundamentals feels like being stuck on the gold standard. It sounds good till you think about how golds value is speculative in and of itself.
By doing it's own hotels/properties.
It's unreasonable to challenge everyone who has a different valuation to short the stock especially since even the market's valuation can swing wildly from day-to-day.
What's the valuation of a popular stock like Gamestop? Ask ten different analysts and they will probably give ten different valuations based on different reasonings.
If no one came-up with a different valuation then everyone would just pile on index passive investing but that isn't the case and active investors usually see a different valuation from the market.
TLDR: Normal for people to have different valuation from the market and weird to get so confrontational over someone having a different opinion.
Happened to me twice for long term stays (e.g. cancelling 2 days before start date) and it can completely ruin your plans.
If AirBnB can provide a way for that to not happen, or at least for it to stop within a few days with our strong renter-protection laws then they could basically replace every long term rental business in Denmark.
Luckily I found a hotel literally last couple rooms and very very expensive for what it was.
I couldn't get airbnb to do shit besides give a refund for the airbnb reservation and I think maybe I got 250 or 500 or something negligible.
They 'try' to find an alternative on the platform but wouldn't pay for my hotel (s now need 2 rooms). And since there are no airbnbs available... let alone in the city and similar.
I have never stayed airbnb again only hotels.
if they allow hosts to pull that crap they should pay for alternate hotel lodging.
After causing a sufficient amount of fuss because of the urgency of it all it eventually got escalated to someone more senior but the result was the same. Best they could do was a refund, no recourse for the host, with the extra salt in the wounds with the parting words of something like "I can provide you no further help today as it's a holiday weekend and I am leaving now and will not return until Tuesday". To this day I still suspect that the host simply got a higher priced offer given it was a popular weekend that had an unseasonably great weather forecast and so they cancelled on us. No effort to find us alternate accomodation. No refund sufficient to cover the costs of doing it ourselves at such late notice. Nothing that came close to addressing the fact multiple families had now wasted their money on plans they couldn't do.
Unfortunately it's not the first time it had happened either. The story has been the same, the only saving grace in the other situations is we'd been able to work out our own Plan B. I'd never use Airbnb again unless I was confident there was a Plan B I could execute on with only an hours notice. That limits its usefulness to out of season and in areas with a multitude of options, or where I am at least ok significantly adjusting my planned location.
Airlines overbook and will try to get out of it by refunding your ticket. Refuse the refund. They'll up the price a few times. You can get up to an upgraded ticket on a later flight + hotel stay if the stars align.
That means if they boot you from the flight or hotel room, they have to pay for your costs to find a replacement.
Yes, many companies have terms that try to limit their liability, but those terms usually aren't enforceable.
https://europa.eu/youreurope/citizens/travel/passenger-right...
Also in my experience airlines will go out of there way to help and rebook. Sometimes it is the next day though which sucks but isn't totally apples to oranges ;)
that sucks. I think a host should only be allowed to cancel if they offer another place with similar features (like room number, and location) for the same amount of time.
So, while there isn’t a huge amount of recompense in the event it happens (I’ve been on the receiving end, literally arrived for them to tell me that sorry, they can’t do this week - it sucks), they do penalise hosts who do this, and will almost always take the side of the guest in any dispute.
If they comped it, that sounds very much like they helped you a lot. Not sure how anyone could describe this as "not really" helping?
If your long term stay is cancelled a few days before it can be pretty much impossible to find an alternative. On both occasions that this has happened to me, Airbnb has offered only a $100 voucher.
The reality is long term stay on Airbnb is a risky bet. Still often worth the risk, but something to be aware of.
I would guess that the same can happen with all other alternatives. Perhaps not for a hotel but who would want to stay in a hotel for a month? (Also that would be a huge expense)
daily rates at hotels and airbnbs add up way too fast
monthly stays at airbnb's are much closer to the local rental price, usually 10-20% above a local lease, but without the issue of actually leasing
monthly stays are also furnished (whereas it can be very hard to find a furnished place to lease at all!)
monthly stays also get around most short term stay restrictions created specifically in reaction to AirBnB, which makes it much more comfortable for someone that booked to not have to worry about who we talk to in the building or nearby
I love being a situation to travel this way. Its pretty amazing to see that its currently become a crucial portion of their revenues.
The problem, at least in Europe, is that so many Airbnbs are now being operated as “rent to rent” where a company (or individual) rents property long term specifically so they can then in turn rent it out on Airbnb (often through an intermediary that manages the property for them). The margins they need for confident profitability (considering voids etc) are ~100% over the long term rental cost.
I’m astonished you’ve found that the prices are so similar: which location(s) is this in?
I just moved out of an Airbnb I stayed in for a month where my average nightly cost was, quite literally, 200% over the amount that I would pay if I leased the property myself — and that’s not in peak season, and after negotiating.
5 years ago the cost was pretty similar but not now that Airbnb has become an industry and people have worked out how to squeeze every drop of profit out of it.
(And if you’re willing to rent a room, you can pay less than the long term local price with some savvy)
- They are getting into the rental market, basically longer term rentals with short-term leases or something like that.
- They are getting into property management under their own brand, where they will manage Airbnb branded properties (small Hotels and homes). Something similar to what Oyo rooms (https://www.oyorooms.com/us/) does.
And it’s usually not cheaper than a hotel anymore. Now I only use it for large groups for places like cabins.
During the intervening time, as I thought about it and did more research on prices, we landed on we would be better off looking for Homewood Suites[2] and skip Airbnb. This isn’t a marketing pitch for Hilton, I am just most familiar with the brand. The other chains may be just as good.
1. We always know what we are getting. I can just go to the Hilton app and pick a hotel. I know I’m going to have a two room suite, kitchen, a work area, a small gym downstairs, probably a pool. It’s going to be hopefully well cleaned and if not, at least we know we have someone on staff.
2. We save 15%-20% overall between the highest end Amex cobranded card when booking stays via points and accumulating points any other time we spend by charging it.
3. I also travel for work and stay in Hilton hotels. I get reimbursed and get to earn points.
4. We never have to worry about cancellations.
[1] there is no way we are selling our house and trying to buy later on with the crazy market. We are renting it out.
[2] This is not an ad or endorsement. I just happen to always book an Embassy Suites for business trips and we prefer staying there for vacations. Homewood Suites is a cheaper brand. But still better than their lowest brand Home2Suites.
If i need a hotel, usually I first try Marriot as that’s the one I collect points on. I like their cheaper brand Aloft, each hotel has a free thing usually attached to the bar, such as billiards or in one case a retro arcade. If nothing on there works for me, or if I need an apartment/kitchen, I use booking.com as a search engine. Then I book directly, unless booking.com is more flexible.
Booking directly means you can usually call the front desk quickly and change your checkin/checkout dates and often can get early checkin and late checkout. Last month I was traveling for work and booked directly. Not only could I check in at 10am and take a nap, when plans changed I spent 5 minutes on the phone to extend one stay and shorten the next stay. My colleague used a travel agency and when he called them he got put on hold while they called booking.com! Ultimately he (well our company) paid for 2 hotel rooms that night. It’s even more important to book flights directly for the same reason.
These days, Covid can easily change your plans. I’ve not gotten Covid yet, but I’ve had flights cancelled due to it, and once had to change my flights because my pre-travel Covid test was in the wrong format to return home.
But, in our case when we are planning to live there and I’m working and we will have a car, comfortable sleeping arrangements, a separate workspace, decent WiFi [1], and a kitchen are far more important. We can drive to the city on the weekend and in the evenings.
[1] my backup plan for bad WiFi is using my phone and my iPad as hotspots. T-mobile has unlimited hot spot with 50Gb high speed hot spot for each device.
I can spin up a large Windows Workspace VM or Cloud 9 Linux environment on AWS to conserve data coming to my computer if needed.
AirBnB's strength has always been in cities, but the cities are cracking down hard on STRs. E.g. NYC passed a law making rentals for < 30 days in the city illegal.
I do wonder there is a regulatory risk that cities will push out the min time to, say, 60 days if they feel that they haven't solved their "AirBnB problem" with a 30 day min stay.
Basically noone wants daily-changing "neighbors", half of them partying half the nights in their (multi-apartment) buildings, while finding an apartment for rent is getting harder and harder (and much more expensive).
If airbnb was the thing it was marketed as in the beginning (you go on a vacation, rent the apartment out for that week or two), then sure... but people buy apartments (at currently overinflated prices) just to rent it out on airbnb full time.
The law was existing, the city simply chose to start enforcing it.
https://www.theverge.com/2016/10/21/13361536/airbnb-new-york...
I listened in on the earnings call yesterday and heard lots of good things. But as a prospective investor my main concern is how they plan to deal with increasing circumvention of the platform.
There's professional short-term property management services in every market now, and they don't want to give Airbnb a cut.
I am literally typing this comment from a cabin that I discovered on Airbnb but booked direct to save money. The listing contained text inviting you to visit their website to book direct and avoid fees.
I've also re-booked properties I've stayed at in the past by contacting hosts directly, and received offers from hosts via Airbnb message to book outside of Airbnb for a discount.
So a major problem for Airbnb is that they don't really own the relationship between hosts and guests.
On checkin day, I carried my cumbersome luggage for like a mile from the ferry terminal to his building, and no one was there to greet me. He had misunderstood the days I requested, and was now full for the night I requested. I ended up sitting in that hallway for hours trying to find another place to stay with immediate checkin. I ended up walking across town at midnight to pay twice as much money to stay at a shitty hotel above the train tracks in the shittiest part of town. It was perhaps literally the last room available in the whole city.
Airbnb's fees are expensive (and poorly presented in the UI), but there's certainly value in having a formal booking system and an external complaints/support process.
Literally all of the lodging management sites that take a cut of transaction have this potential issue, and they've all figured out how to deal with it. It's a solved problem.
I'm curious how Airbnb specifically is solving it. I can think of four bookings off the top of my head--expensive ones--where they've missed out on my money because the hosts solicited offers to circumvent the platform. It's worked out fine for me each time.
First, AirBnB will kick hosts off the platform if they find out.
Second, as another commenter mentioned, many customers appreciate the support and guarantees paying through AirBnB gives them. All it takes is one shitty experience or getting scammed for folks to think twice about going off the platform.
Given the amount of scams few years ago, awful website and fluffy (mutual censorship) reviews…?
If Airbnb intends to have zero control over the end user experience, I think they will eventually lose out to a player which offers consistent hotel-like convenience with home-like comfort/experience.
I don't see how this is a "major" problem.
If hosts and guests discover one another on the platform but cut Airbnb out of the transaction then Airbnb is losing money.
Losing money is a major problem for a business that seeks to make money.
Booking.com has many dark patterns but at least it allows you to actually display and sort by full price!
Airbnb for long term and for families.
Instead, they have to throw in a bunch of self-aggrandizing startup bullshit.
Interestingly, the AU price was a couple dollars more than the US price. Threw together a quick side-by-side: https://imgur.com/a/DJwG5z9
Same goes for hotels + resort fees, though. It seems like the only place I can really see the actual price is on airline websites?
EDIT: I just tried to repro and now the total is always matching. I swear I was just raging about this 4 days ago when I booked a trip... gah.
But I do agree, the fees are generally a higher percentage.
You may encounter a city tax of a couple Euro in most European cities as an add on, but nothing in the range of dozens of Euro.
I think it's nothing less than a scam and should be made illegal. Period.
Hotels are on Booking.com and to a lesser extent AirBnb.
They often charge parking fees and wifi fees too.
There are multiple occasions that I've booked an Airbnb only to find the house doesn't exist and the host's phone number is no longer connected, yet somehow Airbnb won't issue a refund without lots of hassle.
Possibly 5% of my bookings on Airbnb have turned out to be fraudulent in some way which disadvantages me financially and leaves Airbnb with more money in their pockets. If I'm not unique, that's a big contributor to the company bottom line!
Major urban centres around the world (eg. Barcelona, Berlin, Vancouver) are facing severe housing affordability challenges, and as part of the solution have enacted regulation against sub 30 day vacation rentals in apartments intended for long term rental to people who live and work in the cities.
You'd think that these regulations will keep a lid on Airbnb growth and force the company to place more emphasis on non-urban and tourism oriented towns that have less severe housing pressures.
Mostly good experiences. I was also part of the last group of stays before Japan more or less outlawed it, feels bad.
Some bad parts include scorpion infestations in jungles in colombia, bedbugs in russia, roaches in brazil, rocket attacks in israel and mold in South korea. But mostly the worst thing is knowing im paying 20-50% more than a local in some countries.
Airbnb confirmed that this happened.
I asked for refund immediately.
Airbnb waited 7 fucking days. They claimed they wanted host to correct the situation. I told Airbnb I didn't want to wait for that as I don't trust the host anymore.
Fortunate for me that the host didn't reply to Airbnb.
The whole thing is just anti-consumer. Host changing details should grant me the right to cancel with full refund immediately.
I was very disappointed at the ethical standard at Airbnb.
I hope Airbnb fails. I can't support them anymore.
I agree with OP though. If you change the available amenities after the booking has been made, you've deceived the customer and they should be eligible for an immediate refund.
After I booked, internet was removed from the booking.
Airbnb even confirmed this was true but refused to refund because they wanted to "give equal footing" to the host (e.g. waiting for host to respond).
I was like wtf?
With AirBnb, I just enter my credit card number and book it.
[0]: https://play.google.com/store/apps/details?id=org.havenapp.m...
This one is surprising, but not totally unexpected I guess. Airbnb is slowly replacing short term leases and sublets, and I imagine this will be a huge growth driver for them as remote work and the nomad lifestyle becomes more common.
And I have to say. Compared to finding a normal rent it's just insane how much more convenient it is.
Context: I used to work at Airbnb, and some point designed one version those listing cards as well. There was never a goal to have some dark pattern choice not to include the fees or somehow try to mislead users. There is just limited space for the price. Also each city, country and might have different fee structures and pricing regulation so we actually had to design the card as something supports those different cases. Like in Australia you always have to show total price where as in US it's common for hotels to show nightly price without taxes or resort fees. In some cities or countries there is now a tourist fee.
Unlike in hotels where the cleaning fee is included in the price, on Airbnb, the host sets it. Also each rental is unique like one might be 10 bedroom house with pool and jacuzzi and some might be one bedroom rooms so the cleaning needs vary. Also in some places cleaning is very cheap and some places it's very expensive to get someone to clean your house.
edit: grammar