Airbnb rakes in the dough. The company reported a record fourth quarter today, beating its previous benchmark both in revenue and net profit.
In the fourth quarter, Airbnb’s revenue grew 24% year-over-year to $1.9 billion, according to the company, driven by an increase in stays and experiences, Airbnb’s curated selection of tours and events. Stays and experiences booked are up 20% in the fourth quarter of 2022 compared to a year ago, the company said, as guests stayed longer in venues. The gross number of nights booked in the fourth quarter of 2022 for more than a week – a profitable customer segment – was 40% higher than in the fourth quarter of 2019.
Cross-border travel was up 49% year-on-year in the fourth quarter of 2022, the company said, with outbound travel from the Asia-Pacific region showing the strongest growth globally as China lifted its COVID-19 travel restrictions. Coinciding with the increase, the total number of listings on Airbnb grew to 6.6 million — the highest number ever — while the platform added 900,000 active listings year-over-year.
Arguably another boost for Airbnb was the company’s decision to stop offering COVID-19-related refunds. Host perks also likely helped, plus growth-focused features like a toggle that shows the price of stays including fees. (While Airbnb said the impact of more transparent pricing was neutral last year, it expects an increase in the future as customer prices are similar to hotels.)
Somewhat surprisingly, the decision to remove ads in mainland China in July was not a factor when it came to revenue, as Airbnb puts it. On this afternoon’s earnings call, Chesky said Airbnb remains focused on outbound business from China, which it sees as a big (albeit slowly growing) opportunity.
“We think there will be hundreds of millions of people who want to leave China to travel the world,” Chesky said. “We think this will be the best way for essentially Gen Z people [based in China] to travel – I think they really want an authentic experience as they travel the world.
On the net income side, Airbnb recorded $319 million in Q4 2022 compared to $264 million in Q4 2021, which it attributes to revenue growth and “cost discipline.” It’s unclear to what extent Airbnb’s embrace of a completely remote workplace has played a role; Airbnb’s workforce is down 5% from 2019.
For the full year 2022, Airbnb generated $1.9 billion in net revenue – its first profitable full year. That’s quite a turnaround from 2021, when the company lost $352 million.
Airbnb says it sees “strong demand” in 2023 and plans to focus on raising awareness around hosting, improving community support and developing new products and services. As an investment area, Airbnb recently launched a tool that helps renters find an apartment so they can Airbnb it.
During the earnings call, Chesky mused that AI would play an increasing role in strengthening Airbnb’s business.
“I am very excited about the possibility of AI. I think Airbnb will benefit from this in a unique way,” Chesky said. “The reason for this is that Airbnb is a very difficult product challenge, which means that unlike hotels, we don’t have a SKU — there’s no representative inventory… Guests left over 100 million reviews last year. And just sifting through all these reviews is very cumbersome. I think AI will really benefit our long tail of data and the fact that our search problem isn’t really a search problem it’s a [customer-inventory] coordination problem.”
Airbnb shares were up about 5% as of publication time according to Q1 2023 revenue projections of between $1.75 billion and $1.82 billion, above Wall Street expectations.