Airbnb Inc. gave an optimistic forecast for revenue growth in the current quarter, reflecting consumers’ insatiable appetite for travel, despite higher prices.
Revenue for the third quarter will be $3.3 billion to $3.4 billion, surpassing analysts’ expectations of $3.2 billion, the company said in a letter to shareholders on Thursday. Airbnb said it expects a “modest” sequential increase in nights and experiences booked and that revenue will outpace nights and experiences due to continued resilience in prices.
Consumers continue to show that they’re willing to prioritize spending on travel, as nights and experiences booked in the second quarter were up 11% from a year earlier, with the pace of growth accelerating from April to June, Airbnb said. Guests are also traveling farther, though international travel hasn’t yet returned to pre-pandemic levels. Cross-border trips to the Asia Pacific region increased more than 80% while travel to North America increased 20%.
The San-Francisco based home-sharing company has seen its business shift and adapt to travel and lifestyle trends resulting from the Covid-19 pandemic. After travel initially ground to a halt, it quickly rebounded as people sought to escape crowded cities and hunker down in rental homes with outdoor space and home offices. People were staying longer too, taking advantage of more flexible work-from-home policies.
As pandemic restrictions have eased and the last barriers to travel came down last year, pent-up demand has led to a surge in trips. Americans are traveling abroad in huge numbers this year, taking advantage of the stronger dollar to venture internationally. Airbnb’s cross-border nights booked book increased 16% compared with a year ago, with strong growth across all regions.
Airbnb said revenue rose 18% to $2.5 billion in the three months ended June 30, beating analysts’ projections for $2.4 billion. Adjusted earnings before interest, taxes, depreciation and amortization was up 15% from a year earlier $819 million, well beyond analysts’ forecasts of $725.7 million. Average daily rates rose 1% from a year earlier to $166.
Airbnb’s results were a sharp contrast to the second quarter, when the company gave a cautious outlook for revenue, suggesting rising prices and a murky economic outlook were beginning to weigh on consumer appetite for trips, sending its shares tumbling.
Some analysts at the time said Airbnb was being too cautious and the stock has more than recovered in the past three months. Airbnb’s shares have risen 65% this year, outpacing the 17% gain of Expedia Group Inc. and the 27% increase in Booking Holdings Inc.
Earlier Thursday, Expedia gave a more muted view of the travel industry, reporting revenue that missed analysts’ estimates, sending its shares down 17%. Expedia’s Vrbo unit competes with Airbnb in the market for short-term rentals. Expedia Chief Financial Officer Julie Whalen said the shift in travelers’ preference toward shorter stays and urban markets has had an impact on Vrbo.
Airbnb’s extensive international reach has contributed to the company’s resiliency to domestic travel swings. It also benefits from the renewed interest in travel to cities, traditionally Airbnb’s strongest market. High-density urban nights booked were up 13%.