Airbnb: "Turning The Corner"
From “Capitalizing On Adversity” (February 2023): “In mid-2022, as Airbnb CEO Brian Chesky reflected on the company’s evolution since the beginning of the pandemic, he said the following: ‘Some of the best companies are born in recessions, they're born in crisis; adversity will make great companies better if they can make it through.’ Airbnb was founded during the global financial crisis, and it was reborn twelve years later during the pandemic. They made it through extreme adversity in 2020, and they’re a much better business for having experienced it.”
As 2023 draws to a close, Airbnb continues to reach new heights. Nights & Experiences (N&E) booked on the platform will approach 450 million this year, up ~6x since 2015, with cumulative guest spending (gross booking value, or GBV) of ~$73 billion. For its efforts, Airbnb will generate ~$9.8 billion in revenues (~13.5% of GBV, ~100 basis points higher than FY18). Finally, with help from a significant improvement in its cost structure over the past five years, Airbnb will generate EBIT of ~$2.4 billion, up nearly 30% over FY22.
As you can see below, this is a new world for a company that previously struggled to stay in the black. Airbnb’s TTM operating margins are more than 3,000 basis points higher than pre-pandemic levels. This reflects OpEx leverage across all expense lines, with the most significant improvement attributable to Sales & Marketing expense (~1,700 basis point improvement from YE FY19 to YTD FY23). The near-death experience that Airbnb faced during the early days of the pandemic ultimately led to operational changes and a narrower strategic focus at the company; in hindsight, this is a much better business for having lived through those tough times. (“We made many difficult choices [during the pandemic] to reduce spending, making us a leaner and more focused company; we’ve kept this discipline ever since.”)
