Skift Take

Companies like Airbnb might be diversified enough to hedge against certain challenges. Still, no company is immune from economic downturns and calamities.

Want to pick a winner in nearly any kind of economic environment? Well, Airbnb is a smart bet — according to Airbnb.

That was one of the messages from Airbnb Chief Financial Officer Dave Stephenson and co-founder and CEO Brian Chesky Tuesday as they reviewed the company’s strong financial results in the second quarter.

The company brought home $379 million in net income in the second quarter compared with a $68 million net loss a year earlier. Revenue increased 58 percent in the quarter to $2.1 billion, and the company’s profit margin was 18 percent, a jump of 43 percentage points.

Nights and experiences booked rose 25 percent year over year to 103.7 million.

“I think we’ve highlighted this a bit on the call that you don’t know what the economy is going to bring, but we do know that Airbnb is resilient to almost any kind of economic shock,” said Airbnb Chief Financial Officer Dave Stephenson in a call with analysts. “As Brian mentioned, we’re founded in recession, and we’ve obviously thrived in the era of Covid … And what we’re just finding is that people can come to Airbnb because we have any kind of property, whether it’s a small shared room or a private room to luxury stays, we have something for anyone depending on their travel needs.

Stephenson said people fine-tune travel plans according to their budget demands. “And as we saw in Covid, people are more willing to — maybe they stay domestically if their budget doesn’t allow the cross-border traveler,” he said. “Maybe they stay domestically if they don’t feel like they can afford the cost of airline travel.”

Officials said they’ve seen an uptick in urban and cross-border travel, two areas of Airbnb strength pre-pandemic.

Chesky elaborated on the theme of Airbnb’s almost bullet-proof makeup.

“We don’t just tap out if we were only say, a vacation rental destination-type company, you can tap out in either supply and even demand in those kind of areas,” Chesky said. “But that’s really — we have such a diversity of supply around the world that we’re able to continue to grow quite well.”

Despite statements about Airbnb being fairly bulletproof when it comes to economic disruptions, Wall Street apparently wasn’t buying that line of argument.

Airbnb’s “shares were down about 9 percent after hours, despite what appeared to be a strong report, suggesting Wall Street was looking for faster growth and a revenue beat,” CNBC reported. “The company also said it was impacted by flight cancellations at the end of the quarter.”

The company announced a $2 billion share repurchase program. Chesky characterized it as expressing “confidence in our long-term growth and profitability.”

Regarding the economic outlook, Stephenson said Airbnb is seeing strong demand in the third quarter.

“Q2 nights and experiences grew 25 percent year-over-year, seeing a similar growth for Q3 and our demand in Q4 reservations is really strong, as I mentioned kind of earlier,” Stephenson said. “What we’ve seen so far is North America and Europe have been our strengths.”

Chesky said experiences, or tours and activities, will become a “rising priority.”

“And I think it’s going to be a big part of our story in 2023 and beyond over really the next five years,” he said. “So I’m really excited about them.”

Airbnb scrambled to secure high-interest loans during the initial phase of the pandemic to make sure it had enough liquidity. It finished the second quarter of 2022 with $10 billion of cash on hand.

That’s quite a turnaround.

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Tags: airbnb, earnings, experiences, future of lodging, online travel newsletter, vacation rentals

Photo credit: Guests in a Mexico City Airbnb.