Ahead of the Airbnb IPO, here are my notes on their IPO filing
1. One of the few companies that have genuinely had a huge financial impact on the lives of people around the world. 110mln guest nights have been booked with $110bln of earnings for hosts.
2. Airbnb is an Asian company (!), 44% of their estimated TAM is from APAC
3. COVID impact was huge. GBV -40% in 9M to Sept but bouncing back led by domestic travel
4. 12% of revenue in 2019 came from the top 10 cities. More regulations put this at risk even though the company takes a collaborative approach to regulations
5. Growth had slowed a lot even pre-COVID to 30% - this could be biggest issue for investors looking purely at growth rates vs other tech companies
6. Amazing organic reach. Platform very healthy
- 79% of hosts sign up directly.
- 91% of all traffic is direct or unpaid. Hence very little impact on the massive cut to advertising budget beacuse of COVID. Given history of company investors shouldn’t expect marketing to be at this low level going forward.
- 70% of revenue generated is from repeat guests.
- Host retention at >88% since 2014
7. Experiences aren’t broken out, assume this hasn’t been a great success BUT opportunity to become a hub for local events and experiences still exists and someone is going to build a big business out of this (like a Klook for events) and it could be Airbnb if they focussed on it.
8. People are shifting some trips domestically but it has not offset the overall decline. There has been some shift to local travel but its not making up for the overall drop…yet. Bookings still down 30% despite a 20-30% increase in stays within 50-100 miles of residential home. I am a little surprised domestic travel is only growing as fast as it was pre-COVID. There doesn’t seem to be catch up happening
9. Airbnb’s take is still mostly from guests 14% vs 3% from hosts (side note: As any user has experienced, the “gotcha” from cleaning charges and fees are a terrible experience and need to be fixed)
Conclusion
- Growth is healthy but not roaring back (yet), very little cohort data to really disect but Airbnb feels well poised
- Hosts and guests love the platform, hosts stay and guests come back
- Asia is biggest opportunity where footprint is strong but competition will continue to be intense, globally. Don’t discount the OTAs who will fight them however remember Airbnb is a verb now.
- 13x EV to revenue is $40bln is inline with online OTAs like Booking.com but with arguably a much bigger TAM.
Airbnb is category defining company with a scrappy never give up attitude. Valuations are deservedly rich, as travel bounces back in 2021, the “Air” should be beneath their wings.