What Airbnb’s Summer Boost Reveals About Covid-19 Recovery

The company’s latest earnings report showed an upsurge in business, but it also hedges expectations for the fall.

Few tech companies were rocked harder by the pandemic than Airbnb. In the spring of 2020, a crush of trip cancellations caused the company’s revenue to drop by 67 percent. By May, it had laid off a quarter of its employees. “The travel we knew is over,” CEO Brian Chesky said grimly at the time, “and it’s never coming back.”

The company’s fate, like so many others, was tied to the world’s ability to manage Covid-19. Its fortune could be seen as a pandemic bellwether, a measure of progress toward “normal” activities like vacations. In that sense, there’s good news: On a Thursday earnings call, Airbnb said that its revenue had shot up 300 percent from Q2 2020, and it was about 10 percent higher than in Q2 2019. Overall bookings had also recovered to pre-pandemic levels, even with restrictions on international travel. The surge of summer travel led to other high-water marks: The company had the most nights booked of any quarter in its history, and Saturday marked the best night on Airbnb since the pandemic began, with more than 4 million guests staying in Airbnbs around the world.

“After months of being stuck at home, millions of people have been yearning to travel,” said Chesky, who was dialing in from an Airbnb in Italy. “Now, we can definitively say that the travel rebound is upon us.”

The summer may have boosted travel back to its pre-pandemic levels, but the fall remains less certain, with the rise of the contagious Delta variant. In a letter to shareholders, Airbnb shared expectations that the Delta variant would affect bookings and cancellations, making the second half of the year “more volatile and nonlinear.” Even so, the company predicted that Q3 would bring its “strongest quarterly revenue on record.”

Part of Airbnb’s bet is that while travel may not look like it did in 2019, people will still find ways to do it. International travel plummeted in 2020, but people still booked weekend trips to places within driving distance. Pre-pandemic, the majority of people came to a travel website like Airbnb with a location and fixed dates. Now, perhaps because so many people can work remotely, Airbnb says 40 percent of its guests use the flexible location and date search when they book a place to stay. People are also booking longer stays. In its Q1 earnings, Airbnb said that a quarter of its bookings had come from month-long stays. (In 2019, stays of that length accounted for only 14 percent of bookings.) That trend has continued through the summer, and it will likely remain to some degree as long as people can work remotely.

These behavior changes, and a summer of nearly normal travel, have buoyed other companies in the sector. Turo, the “Airbnb for cars,” filed to go public last week. Vacasa, a platform for managing vacation rentals, also intends to go public via SPAC. VC funding for travel and tourism startups has also picked back up, after an all-time low during the pandemic year. In 2019, investors spent $11.1 billion across 1,125 deals in the sector, according to data from Crunchbase. In 2020, that dropped to $4.8 billion and 629 deals. Things seem to be rebounding in 2021, which has already seen 346 deals and $6.1 billion in funding.

It’s not clear how long the travel rebound will last. The rosy outlook could be clouded by new variants of the coronavirus, which continue to spread and have triggered new restrictions in some regions. On the earnings call, Airbnb’s chief financial officer, Dave Stephenson, warned that there would likely be fewer bookings in Q3 than in Q2. Summer travel always tapers off at this time of year, but rising cases of the coronavirus had also changed some people’s travel plans. Already, companies like Southwest Airlines are walking back more optimistic forecasts from earlier in the summer.

In its shareholder letter, Airbnb noted that “vaccination progress, containment of new variants, and travel restrictions” could all affect the business’s bottom line in the coming months. But if the company learned one thing from the last year, it was to become more efficient: This quarter, it narrowed its losses to $68 million, compared to $576 million last year. Those lessons could prove valuable if there’s an even rockier road ahead.

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