over 1 year ago • 2 mins
Airbnb gave a disappointing quarterly update earlier this week, as the home-sharing platform’s summertime high wore off.
What does this mean?
Determined holidaymakers weren’t going to let canceled flights and extortionate airline tickets spoil their first restriction-free summer, so they did whatever they needed to reach their happy places. And because a lot of those happy places were Airbnb homes, the company managed to hoist its average daily rate up 5% from the same time last year and still record its most third-quarter bookings ever. That brought in record-breaking quarterly revenue of nearly $3 billion, $600 million more than analysts expected, and helped Airbnb bring profit up to an all-time high too.
But here’s the record scratch moment: Airbnb predicted the strong US dollar will take more than a nibble out of its rental income this quarter, which is partly why it gave a worse-than-expected revenue outlook. And since investors focus on the future, they sent the firm’s shares down 7% after the news.
Why should I care?
The bigger picture: Back to work.
End-of-summer reality might be about to hit Airbnb extra hard. See, bookings in increasingly desirable urban areas were up 27% last quarter, and those city spots tend to be much smaller – and, in turn, cheaper – than the bigger, more rural digs that were popular pandemic escapes. Mix in the potential of fresh competition from hotels that are only just recovering from lockdowns, and Airbnb might have to put in extra work this winter if it wants to stay ahead.
Zooming out: No more nice-to-haves.
Airbnb thinks these trying times could push more hard-up homeowners to rent out rooms to make some extra cash, but those shiny new locations could well end up empty. After all, the Federal Reserve’s fourth-straight 0.75-percentage-point hike on Wednesday takes interest rates to their highest since 2008, and that type of environment will pressure consumers to cut back on luxuries – not least flashy Airbnb vacations.
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