Airbnb reported record bookings in the first quarter of 2023. In the third quarter, it’s reporting record profits.
Airbnb’s recent quarter was its most profitable ever and also the best in terms of revenue, according to a shareholder letter the company released Wednesday.
Airbnb reported net income of $1.6 billion, excluding a one-time income tax benefit, and revenue growth of 18%, to $3.4 billion. Airbnb expects to generate between $2.13 billion and $2.17 billion in revenue in the fourth quarter, which would be an increase of between 12% and 14%.
The company said in the letter to shareholders that it’s seeing greater volatility this quarter, and that current macroeconomic trends and geopolitical conflicts could hurt demand.
“It’s hard to completely pin down the root cause of any kind of softness or volatility,” said David Stephenson, chief financial officer of Airbnb, during an earnings call Wednesday.
“We call out the macroeconomic and geopolitical just because that is what’s, I think, driving any volatility that’s out there…It’s just a little too early to tell how much volatility we see going into the rest of the quarter.”
The record numbers were driven by 113 million bookings, an increase of 14% from the same period last year.
A significant area of growth has been in the Asia Pacific region, which Airbnb said has fully recovered to pre-pandemic levels, with gross booking growing 23% last quarter compared to the same time period in 2019. Notably, China outbound travel increased 100% compared to the year prior.
Brian Chesky, CEO of Airbnb, said during the call that the company is continuing to invest in international markets.
Following increased activity in Germany and Brazil that the company reported earlier this year, he said Korea has now become one of its fastest-growing countries, with gross nights booked 54% higher than in 2019.
“What we’ve seen is that our penetration in the United States is significantly higher than our penetration in many other countries. And we think there’s a huge amount of growth if we could just get Airbnb to even a fraction of the percentage of penetration that we have in the United States,” Chesky said.
Airbnb is also looking at growing in Japan, India, China, the Asia Pacific region, Southeast Asian, Mexico, and certain areas of Europe.
“I think in the next 24 months, we’re going to see a major acceleration in our penetration in a lot of these markets. There’s about a dozen, dozen-and-a-half markets around the world that have large tourism opportunities, and we’re really focused on that. And that’s going to be one of our biggest near-term expansion opportunities.”
One Million New Listings
Airbnb said it has added nearly 1 million active listings this year. The number of active listings grew by 19% last quarter, with the highest growth in Asia Pacific and Latin America.
“We’ve been focused on making hosting as popular as traveling and our Q3 results show that our approach is working,” Chesky said during the call. “We ended the quarter with the highest number of active listings, and we saw strong active listings growth across all regions and market types.”
The company last quarter said that it had surpassed 7 million active listings. In the third quarter alone, Airbnb hosts made more than $19 billion, the letter said.
“We’ll continue growing supply by raising awareness around hosting, making it easier to get started and improving the overall experience for a host,” Chesky said.
Airbnb said it plans to release dozens of new features on November 8. The company previewed a couple of them in the shareholder letter.
One is a toggle that users can turn on to search for listings that are pet-friendly. Another is an amenities filter for king beds.
The upgrade also includes listings available on dates slightly outside of a user’s search, recommended if there are not enough listings available during the preferred time.
Chesky said the new features next week will be focused on improving “reliability.”
“When you ask people, why do you book a hotel and not Airbnb, the number one reason they come up with is usually reliability, that they know what they’re going to get before they booked…Next week, we’re going to have some new offerings that I think will make a pretty big dent in this,” Chesky said.
He said Airbnb has collected millions of pieces of feedback from hosts and users, and has released more than 350 new features and upgrades over the last two years based on that feedback. There were 50 upgrades last May.
Newer features include total price display, which Chesky said previously has led to reduced cleaning fees from hosts.
This article was updated to include information from the Airbnb third-quarter earnings call.