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Airbnb, Tripadvisor Shares Surge as Results Show Resilient Travel Demand

Published 02/15/2023, 12:25 PM
Updated 07/09/2023, 06:31 AM
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Shares of travel-focused companies Airbnb Inc (NASDAQ:ABNB) and Tripadvisor Inc (NASDAQ:TRIP) are trading higher on Wednesday after their results showed that travel demand remains robust despite a difficult macroeconomic setting.

Recent reports from companies operating in this sector suggest that record-high inflation hasn’t significantly affected consumers’ appetite for traveling.

Airbnb Beats Estimates

Airbnb published Q4 2022 earnings that beat Wall Street estimates across the board. The company reported earnings per share (EPS) of 48 cents, topping the analysts’ expectations of 25 cents per share, according to Refinitiv.

Revenue rose 24% year-over-year to $1.90 billion, while analysts were looking for $1.86 billion. The company reported a net income of $319 million for the three-month period, up from $55 million last year. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) stood at $506 million in the period, smashing the consensus projection of $432 million.

Airbinb’s gross booking value, which serves to track host earnings, service and cleaning fees, and taxes, hit $13.5 billion in the fourth quarter. Nights and experiences booked rose to 88.2 million in the quarter, up 20% YoY, though below consensus estimates of 89.7 million.

Airbnb said it had to make some tough choices to reduce spending during the coronavirus pandemic, though the company has slightly increased its headcount in the past two years. The vacation rental company said it plans to “continue hiring at a judicious pace” this year. In comparison to 2019, Airbnb’s headcount is down 5% but revenue increased by 75%, it said.

Airbnb noted its guest demand and supply growth remained buoyant throughout last year. Its average daily rates declined by 1% from last year to $153 in Q4, with the company ending 2022 with 6.6 million active listings, up 16% from 2021.

Looking ahead, Airbnb said it expects revenue to beat market estimates in the current quarter thanks to strong travel demand. The company also believes it will be able to maintain last year’s margin of 35%, its highest since going public three years ago.

It forecasts Q1 2023 revenue to be in the range of $1.75 billion to $1.82 billion, compared to analysts’ estimates of $1.69 billion, according to Refinitiv. Average rates for the company’s rentals are expected to decline slightly in the first quarter and continue facing pressure throughout the year as travelers return to low-cost urban rentals.

The San Francisco, California-based company also noted that travelers are returning to big cities, which has previously been one of its strongest business areas. In addition to short-distance travel, Airbnb said it saw “even further improvement” in long-distance and cross-border travel last quarter.

Tripadvisor Also Beats Expectations

Similarly, the travel guide company Tripadvisor delivered its better-than-expected financial report for its fourth quarter. The company generated $354 million in Q4 2022 revenue, up 47% YoY and 106% higher than pre-COVID levels in 2019. On a full-year basis, Tripadvisor’s revenue jumped by 65% to $1.5 billion.

The robust financial report came on the back of a rebound in consumer demand for travel services following the lifting of COVID-related movement restrictions. While revenues increased, Tripadvisor also saw its operating expenses surge amid tougher macroeconomic conditions, rising to $367 million for the quarter and $1.39 billion for the full year. The company spent $194 million and $784 million on marketing in the respective periods.

Tripadvisor also saw a $3 million net loss in Q4, and reported a profit of $20 million for the full year, compared to $29 million and $148 million losses last year, respectively. Tripadvisor had $1.02 billion in cash at the end of 2022, significantly higher than the $298 million it had at the start of the year.

“We are pleased with our fourth quarter, which exceeded our expectations and brought to close a strong fiscal 2022 across each of our segments,” CEO Matt Goldberg said in a statement.

Appetite for Travel Remains Strong Despite Soaring Prices

Earnings reports from Tripadvisor and Airbnb came after the hospitality giant Marriott International Inc (NASDAQ:MAR) saw its shares climb on Tuesday following the company’s strong 2023 guidance. Marriott said it expects its 2023 revenue per available room (RevPAR) to increase by more than 30%. RevPAR represents a key metric for hotels.

The optimism comes after hotel operators saw an uneven recovery in China as a resurgence in COVID cases led to new lockdowns, delaying the construction timelines of some luxury hotels and properties.

According to a December survey by the NPD Group, nearly one-third of Americans plan to travel more for leisure in 2023 compared to last year, while around 52% of U.S. adults have leisure travel plans in the following six months. Additionally, around 22% of U.S. adults said leisure travel is a top budget priority this year.

A strong travel demand amid inflationary pressures shows that premium consumers are prioritizing leisure after spending several years under unprecedented lockdown measures during the coronavirus pandemic. According to NPD data, more than 40% of U.S. consumers trimmed apparel spending in Q4 in favor of travel.

Summary

Shares of travel-focused companies like Airbnb, Tripadvisor, and Marriott are trading higher this week after all three companies delivered results that topped Wall Street expectations. Despite fears that soaring prices would dampen appetite for traveling, these earnings reports suggest that the travel demand remains resilient while supply for home rentals is ramping.

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Shane Neagle is the EIC of The Tokenist. Check out The Tokenist’s free newsletter, Five Minute Finance, for weekly analysis of the biggest trends in finance and technology.

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