Will Airbnb Pop or Fizzle After Its First Earnings Announcement?

Online Travel This Week

Talk to any travel industry wag about Airbnb’s gargantuan — yes, record-setting — initial public offering and its current $110 billion valuation, and the conversation quickly turns to Airbnb’s first earnings announcement as a public company this week, and what will happen then?

Does Airbnb’s market cap finally come down to a realistic level after Thursday night’s earning’s announcement, or will it soar anew?

Ah, I won’t make a prediction. It would be a foolhardy to do so without knowing what financials Airbnb will actually be reporting. I will leave that to the options players and hedge funds managers.

FactSet reports that analysts expect a loss of $8.41 per share, and $739.4 million in revenue, according to MarketWatch. If fourth quarter revenue indeed comes in at that amount, it would mean about a 30 percent revenue decline for the year, which would be very positive in such a Covid-ravaged period.

We already have some idea of how alternative accommodations in general — and not Airbnb’s short-term rentals in particular — are doing so far in 2020.

“We did see that improvement overall, driven by Vrbo, not a big surprise,” Expedia Group CEO Peter Kern said of its vacation rental business during the company’s fourth quarter earnings call earlier this month. “That continues to be a terrific use case with the whole home market being very attractive, family travel being very attractive in that form.”

Keep in mind that Airbnb and Vrbo, with the latter exclusively offering whole homes, as compared to Airbnb’s urban apartment bent, aren’t exactly in the same business but Vrbo’s performance is somewhat of a barometer.

And Skift Research’s U.S. travel tracker found hotels gaining ground on short-term rentals as a preferred accommodation type from August through January — a development that could be somewhat negative for Airbnb.

Whether Airbnb’s stock price soars overnight after it reports fourth quarter earnings on Thursday may depend to a large degree on whatever color and outlook it provides, if any, for the quarter or year ahead.

“I do think there are conflicted opinions on where Airbnb goes from here,” said one pundit, who declined to be identified. “Some would argue regulations are going to challenge the company for years. Others say it doesn’t matter, the pivot to home is sustainable even as the economy reopens.”

Key things to look for beyond the guidance are whether Airbnb gives any further indication about its upcoming marketing spend and strategy, and whether the company gets back into expanding its revenue streams, such as from hotels or flights.

On the marketing front, Airbnb last week announced to hosts a global branding campaign, a chunk of which will run on Google’s YouTube, in addition to television in a handful of global markets. But will Airbnb lean into performance marketing on Google to spur growth now that it is a public company and under a microscope?

Oh yeah, although Airbnb has hogged the headlines, there’s another consequential online travel company reporting earnings this week. Booking Holdings reports Wednesday night, and between the two companies, the travel industry and investors should get as good a handle as any on the state of online booking companies at this moment in time.

In Brief

Hotel Distribution Skirmish in the Offing

Will the Expedia-Marriott deal empower the online travel company to take share in the distribution of hotel rooms on a wholesale basis? That deal and plenty of private equity investment into various players sets the stage for heightened competition. Skift

Instant Booking Reprised? Tripadvisor Subscription Plan Addresses Flaws

Tripadvisor didn’t fare very well when it made a big push a couple of years ago to get travelers to book hotels on Tripadvisor. But its new subscription program, Tripadvisor Plus, which likewise has consumers booking on Tripadvisor, gives consumers a new reason to book — discounts and perks. Skift

Expedia Won’t Spin Off Vrbo Despite Short-Term Temptations

Expedia Group CEO Peter Kern said he doesn’t want to screw up the company’s overall strategy by spinning off Vrbo for some short-term shareholder gains. Some shareholders may not agree. Skift

Traveloka Discovered Financial Services During the Pandemic

Like peers such as Grab and Meituan, Indonesia-based Traveloka is exanding into a bevy of services beyond its initial core product. Traveloka, which is mulling an initial public offering, is investing substantially in financial services. Skift