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Airbnb’s S-1 registration statement was a tease — there was a ton of information about red ink over the years, but there seemed to be key areas unanswered.
Lumping “gross nights and experiences booked” seems like an obfuscation, giving true clarity to neither category. Airbnb stated, “From July through September 2020, gross nights and experiences booked have been stable, down approximately 20% relative to the same period in the prior year.”
We know that Airbnb hasn’t been a profitable company, but there is no clarity in the S-1 as to how much of a burn the experiences business has turned out to be since the company debuted it a couple of years ago.
Airbnb calculated its serviceable addressable market to be $1.5 trillion. The breakdown is $1.2 trillion for short-term rentals, and $239 billion for experiences.
Experiences, or tours and activities, have been a highly competitive market in recent years with many companies failing to turn them into viable businesses. But there is little transparency in the registration statement about how Airbnb is faring in that $239 billion market.
There are major competitors in that experiences market, including Tripadvisor/Viator, GetYourGuide and Klook. At a recent Skift forum, Tripadvisor CEO Steve Kaufer said he didn’t view Airbnb’s niche offerings as a particular competitive threat.
Urban Versus Non-Urban Inventory
There was also a dearth of discussion about how Airbnb will adapt to the pandemic in terms of travelers’ preferences switching to whole homes in non-urban markets.
Airbnb did state: “The gross daily rate was also impacted by a mix shift toward entire home listings in non-urban destinations, which have higher daily rates.”
But how that mix-shift impact Airbnb long term? The company is known for it strengths in urban markets, but will have to ramp up non-urban destinations if it wants to be competitive to some extent in a post-Covid era.
Number of Listings Declining
Airbnb acknowledged that its listings numbers have declined in the face of increased regulatory scrutiny. But Airbnb CEO Brian Chesky acknowledged leading up the initial public offering announcement that hosts felt betrayed because in the Spring Airbnb unilaterally refunded guests, and left hosts short-changed with cancelled Covid bookings.
Airbnb stated in the S-1 that “We believe that our host protection programs are integral to retaining and acquiring hosts.” Among those provisions, the programs provide up to $1 million for third-party claims of bodily injury and property damage. But there are a ton of angry and alienated hosts on the Airbnb platform: Will those kinds of insurance programs be enough to stem the listings decline.
Airbnb As a Super Brand?
Years ago, before the pandemic, Airbnb had aspirations to be a full-service online travel agency. It acquired HotelTonight in 2019, and wanted to build a more comprehensive lodging offering, including short-term rentals and hotels. But with the segment reporting being “gross nights and experiences booked,” there is little visibility into Airbnb’s hotel prospects?
Wouldn’t these kinds of things be important for investors to know?