Airbnb's IPO registration shows it's ready to join the big leagues

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Airbnb [Credit: Daniel Krason/Shutterstock.com]
The company is expected to go public by the end of this year. Photo Credit: Daniel Krason/Shutterstock.com

Airbnb has known for a long time that it's able to compete -- at least in terms of profile -- against the giants of the online travel sector.

Most of the industry has understood this, too, with countless copycats and expansion from the established players to cater for a consumer base eager to embrace the private accommodation movement.

Now, on the eve of its debut on the public markets (expected in December after its somewhat surprise announcement in August), documents filed this week indicate that it is ready move in comfortably alongside the likes of Expedia Group and Booking Holdings.

Let's start with revenues and the other core operating metrics.

In 2019, Airbnb took in $4.8 billion in revenues across the year, up from $3.7 billion in 2018 and $2.6 billion in 2017.

For comparison, Booking Holdings (owner of Booking.com et al) captured $15.1 billion in 2019 and Expedia Group (Vrbo, Expedia et al) attracted some $12 billion over the same 12-month period.

Based on 2019 revenues, Airbnb would be somewhere in the region of a third of the size of Booking Holdings and just under half of Expedia Group.

In the first nine months of a pandemic-hit 2020, Airbnb has still managed to bring in $2.5 billion in revenue (it was $3.7 billion in the corresponding first three quarters of 2019).

The coronavirus crisis has increased losses at Airbnb during 2020.

The company recorded a $674 million loss in 2019 -- a figure that was up massively on the $17 million deficit in 2018.

Airbnb's red figure stands at $697 million for the first nine months of 2020.

Deeper dive

The number of room nights and experiences booked on the platform has clearly been hit by the pandemic, with 146.9 million in the first nine months of 2020 (down from 251.1 million in the corresponding period in 2019).

But it has been showing considerable growth in the proceeding years as it increased from 185.8 million in 2017 to 250.3 million in 2018 and 326.9 million in 2019.

Gross booking values since 2017 have also been on an upward trajectory from $21 billion in that year through $29 billion in 2018 and $38 billion in 2019.

They currently stand at $18 billion for the January to September period of 2020, indicating that the business has stood up fairly well since the pandemic effectively shut down travel and tourism in the first quarter.

Much of this can be attributed to the private accommodation sector spearheading much of the early recovery efforts in the industry.

To mitigate the impact of the pandemic on the business, Airbnb put in place a number of initiatives to keep operations ticking over. 

In April, Silver Lake and Sixth Street Partners invested $1 billion to help mitigate the fallout from the Covid-19 onslaught.

The funds -- a combination of debt and equity securities -- would be used to invest in Airbnb's community of hosts and enable the company to "be in the strongest possible position as travel rebounds from the Covid-19 pandemic," the company said at the time.

It also secured a $1 billion syndicated term loan, in a bid to shore up its financial defenses amid the outbreak.

Still, a month later, 25% of the company's staff were laid off (1,900 out of 7,500) as co-founder and CEO Brian Chesky forecast that revenues for the business would be less than half of those in 2019.

In June, Airbnb talked about how the initial phase of the outbreak had nearly broken the company ("travel as we knew it, is over--and it's never coming back," Chesky said).

In this week's filing, Airbnb says: "It is not yet clear what financial impact the severe travel reduction occurring during the COVID-19 pandemic will have on these individuals or whether they will be able to keep their homes or operate their businesses as travel resumes.

"Our business, results of operations, and financial condition could be materially adversely affected if our hosts are unable to return to normal operations in the near to immediate term."

Source: PhocusWire

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