Airbnb reports Q3 results: travel remains resilient, flexible work is here to stay, cross-border travel drives longer stays, and executives push to increase supply on the platform

On November 1st, Airbnb (ABNB) announced their Q3 Earnings for 2022. Despite the deteriorating macroeconomic environment, Airbnb reported its most profitable quarter ever, with over $1.2bn in net income, a 46% increase from Q3 2021. The company also highlighted a 25% increase in nights/experiences booked and a 31% increase in gross booking value from Q3 2021. Brian Chesky, Co-Founder and CEO of Airbnb, reinforced what we’ve been reading and reporting on the state of the travel industry, “The one area I haven’t seen consumers pull back as much is travel. Because the mall is now Amazon, the movie theater is now Netflix, people still want to get out of the house. They still want to have meaningful experiences.”

Beyond the macro environment, Chesky addressed concerns for the short-term rental industry as a whole, specifically the impact that the return to offices will have on the demand. Chesky shared that the company believes “flexibility is here to stay” and expects more people to shift to remote or hybrid work environments in the future. While Airbnb’s long-term stays category remained at 20% of all Q3 bookings, the company believes that a foundational shift in the way we work, live, and travel is underway. Chesky envisions a future where fewer people rely on one-year leases, instead choosing to live in unique places for months at a time. This is very similar to sentiments that Richard has been sharing on Twitter for years and touches on megatrends we shared in late August: work-from-anywhere > offices and flexibility > certainty.

Further, Chesky expects this proliferation to occur both in the United States and abroad, where Airbnb is betting on increases in cross-border stays in their long-term stays category. We agree and are closely watching countries like Costa Rica (where we own property ) that have rolled out visa programs specifically designed to attract digital nomads. We’ll continue to monitor the success of these initiatives and are actively looking at international destinations to take advantage of the strong dollar as we build out a diversified, institutional-grade portfolio of 1:1 short-term rental destinations.

On the topic of the supply of short-term rentals on the platform, executives shared they are taking steps to make it easier to onboard supply, which they believe will improve the competitiveness of pricing for lodging. This is consistent with what we’ve seen in certain markets where supply is outstripping demand for short-term rentals for the first time. We believe increased supply will lead to a bifurcation in performance between commoditized lodging (STR 2.0) and purpose-built, differentiated stays offering experiences (STR 3.0). While the former is forced to compete on price (lower ADRs, lower returns), the latter should be insulated from the competition for available lodging. This is one of the reasons that we are vertically integrated and manage all of our properties in-house. By delighting guests and delivering exceptional hospitality that defies traditional orthodoxies, we create raving fans that seek out our properties instead of finding the lowest price on a stay in a market.