- Despite facing macroeconomic issues, Airbnb announced its most profitable quarter ever as regular travel closes in on pre-pandemic levels.
- Airbnb’s stock dropped after posting a record profit due to a weaker outlook for the year’s final quarter.
- The company announced new features that will make fees more transparent and hopefully entice more folks to become hosts on the app.
After many complaints from guests and hosts, Airbnb finally announced changes to its platform. The changes came after the company revealed that it had a record quarter for both revenue and profit. Airbnb also announced it had 99.7 million nights and experiences booked in Q3.
The platform has been around since 2007, when two hosts decided to welcome guests into their San Francisco residence. It now has over four million hosts globally, with more than one billion guest arrivals in almost every country.
Airbnb has grown to offer unique stays and experiences for guests who are looking for more than accommodations. Here’s a look at Airbnb’s Winter 2022 release to see what the platform’s new changes could mean for hosts and travelers.
What’s new with Airbnb?
Airbnb has been through some shifts in the last few years since the pandemic hit the travel and hospitality industry hard. The company is rebounding from when people weren’t traveling due to restrictions and health fears. Pent-up demand for travel has led to a record quarter for Airbnb.
As a result, Airbnb has announced new changes to attract more hosts. It’s important to note that most of the company’s revenue comes from its share of the booking costs. For the company to increase revenue, they need more stays and experiences to be booked through the platform.
Here are the most essential takeaways from Airbnb’s recent announcement.
Changes to how you view listings
CEO Brian Chesky tweeted the following message on November 7, 2022, “I’ve heard you loud and clear—you feel like prices aren’t transparent and checkout tasks are a pain.”
The platform came under fire from users who were frustrated with the confusing payment structure. Specifically, the price would fluctuate when booking a unit due to all of the hidden fees, making it hard for guests to determine the most affordable option for their travel needs.
Guests have been sharing frustrations for years about how the listing price didn’t include the Airbnb service fees, cleaning fees and other fees that would pop up when they went to the checkout page.
Now, guests will be able to see the final cost of the booking before they get to the checkout page, which will reverse the current policy. The total price instead of the nightly price will be seen when looking at potential units.
Guests also have the option of viewing the price breakdown of the booking, which would include all of the fees and taxes.
The goal is that more hosts will reduce the cleaning fee in order to become more competitive, while guests have an easier time deciding on where to stay instead of sifting through pages of listings with inaccurate prices.
Free mentoring service for new hosts through Airbnb setup
Airbnb Setup is designed to simplify the process of getting started as an Airbnb host. Under this new system, Airbnb will automatically pair a new host with experienced superhosts for free mentorship.
There are currently 1,500 superhosts in over 80 countries who are willing to help new hosts. These superhosts will help walk new hosts through the entire setup of listing a space on Airbnb, from creating a listing to handling guest messages.
The service will run until the first guest booking so that new hosts will be comfortable with the platform since there’s a slight learning curve. These new hosts may also be paired up with experienced guests to ensure that their unit meets standards.
More AirCover for hosts
AirCover for hosts has expanded to offer extra protection for vehicles and boats parked at your home in order to entice folks with fancier homes to host on the platform. The coverage is also meant to protect your art and valuables, with damage protection increased from $1 million to $3 million.
In terms of AirCover, Airbnb is also upgrading other aspects of this service. Here are some of the notable changes:
- Easier reimbursements: You can now submit your request for reimbursement in a few simple steps. This should help with potential hosts’ hesitancy when listing a space due to fears of damage.
- Guest identity verification: This feature will be rolled out globally in early 2023 as the company will expand this service into Airbnb’s top 35 countries and regions.
- Reservation screening: This is designed to spot any bookings that could likely lead to an unauthorized party of some sort that may cause property damage since there have been reports of illegal parties that have even turned violent.
In a unique publicity stunt, Airbnb CEO Brian Chesky listed a bedroom in his San Francisco home to show potential users how easy it is to list on the platform.
What else did we learn from Airbnb’s Winter Release?
There were many highlights from the winter release from Airbnb as the company aimed to improve the platform.
Here are some of the other notable changes:
- Further guest accountability: Airbnb will introduce new ground rules for guests to agree to stay at your place in order to increase guest accountability.
- New categories: The newest listing categories will be new, trending, Hanoks, top of the world, Adapted, play and private rooms.
- Category tools: By 2023, you should be able to see what category your home is in.
- Retaliatory review protections: You can respond to negative reviews posted by guests who have damaged your home or disrespected your house rules.
- Faster payments: The new payout method, Fast Pay, delivers your money within 30 minutes of Airbnb releasing it, even on weekends and holidays. This service will be available in the U.S. this year with a 1.5% fee that caps at $15 per payout.
These changes should drastically improve the platform, as the complaints pertaining to these changes have been around for years.
How is Airbnb performing financially?
Airbnb announced record profit and revenue for the third quarter of 2022. The results for the third quarter were impressive considering the state of the overall economy.
Here are the highlights from the third quarter earnings report from Airbnb:
- 99.7 million nights and experiences were booked for the quarter.
- Revenue for the quarter was $2.9 billion, up 29% year over year.
- Airbnb’s gross booking value was $15.6 billion, up 31% year over year.
- Net income was $1.2 billion.
- Free cash flow was $960 million.
What’s next for Airbnb?
We cannot write about any company that relies so heavily on consumer spending without stating the obvious about the economy: As soaring inflation is balanced with aggressive rate hikes, there are fears that the economy could fall into a recession.
Chesky believes that the recession will push more folks towards hosting their homes or space in their homes for additional income.
Airbnb announced that they expect revenue for the fourth quarter to arrive at a range from $1.8 billion to $1.88 billion, which didn’t match analyst expectations. Shares dropped about 13% on November 2, 2022, the day after the company released the third quarter earnings results.
The company’s stock closed at $97.77 on November 18, 2022, which is down about 43% for the year thus far as the entire stock market continues to suffer.
It’s worth mentioning that active listings on the Airbnb platform went up 15% year over year, which is a sign that more folks are looking to monetize their space with Airbnb.
Chesky also brought up how the upfront pricing view should correct the market when it comes to the cleaning fee. Since individual hosts get to decide the cleaning fee, the hope is that hosts may lower the fee to increase bookings.
How should you be investing?
Despite a record quarter for profit, Airbnb shares still dropped significantly. This shows that investor confidence is dropping as fears of a pending recession loom.
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