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When Airbnb (NASDAQ:ABNB) releases its latest quarterly report later today, investors will be eager to find out whether the gradual reopening of the U.S. economy is helping boost sales of this alternative lodging company after a year of slumping sales.
The platform's first-quarter earnings report is also significant as bookings in the spring season could provide some insight into the level of pent-up travel demand for the summer period that’s so crucial to revive the ravaged tourism economy, which was decimated by the COVID-19 pandemic.
Early indications suggest that the San-Francisco-based Airbnb is in a good position to exceed analysts’ expectations. The company’s CEO, Brian Chesky, told CNBC in a recent interview that the company will have to add millions of new hosts to accommodate guests as travel picks up.
According to the Chesky interview with CNBC’s “TechCheck,” segment:
“I think that we probably will have a high class problem, where there will probably be more guests coming to Airbnb than we’ll have hosts for, because ... we think there’s going to be a travel rebound coming that’s unlike anything we’ve ever seen.”
The latest earnings reports from other travel-related companies also show that after a year of pandemic-related lockdowns and border closures, the travel sector is starting to see the green shoots of recovery.
Expedia Group (NASDAQ:EXPE) last week said its gross bookings were down 14% compared with a year earlier—a sharp rebound from the nearly 70% decline in the previous two quarters. Booking Holdings (NASDAQ:BKNG), the biggest online travel agency, also reported a significant jump in the number of room-night reservations made in the beginning of the year.
Behind this rebound are relaxed COVID restrictions in the U.S., where vaccine rollouts accelerated this spring. U.S. President Joseph Biden last week announced a goal of having 70% of the nation's adult population receive at least one dose of a COVID-19 vaccine by July 4.
Analysts and industry experts expect that the vaccinated U.S. population will be more willing to travel this summer, helping Airbnb rentals to rebound.
After remaining afloat when liquidity dried up last spring, Airbnb had quickly shifted its tactics to remain relevant when consumers’ preferences began changing. The company started promoting its local stays to cater to surging demand from travellers who were, and are, hesitant to take long flights during the pandemic.
Airbnb’s relative resilience in an historically bad year for the travel industry is a result of a flexible business model that allowed the company to meet customers in the places they wanted to go. That meant city dwellers fleeing to less crowded locations or families and groups looking to vacation close to home.
These steps and the company's cost cuts, according to some analysts, make ABNB the best asset in the travel sector. In a recent report, Mizuho wrote that it expects room-night trends for Airbnb to return to the company’s 2019 levels in the second half of 2021.
According to analysts at Canaccord Genuity:
“Pent-up travel desires and the work-from-anywhere trend has already led to lower supply availability in North America, and management is planning for a material travel rebound this year by prioritizing expanding supply, including a marketing plan targeted at hosts and a simplification of host onboarding.”
Bottom Line
Airbnb stock has weakened substantially since reaching a record high of almost $217 in February, following its early December 2020 IPO. The stock closed at $140.25 on Wednesday, down 35% from the February peak.
That tumble, in our view, has made this stock attractive, especially when travel demand is expected to surge this year. Today’s earnings could provide further evidence to support that bullish view.
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