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Airbnb’s IPO filing shows it’s navigating the pandemic better than travel industry peers

Airbnb’s IPO filing shows it’s navigating the pandemic better than travel industry peers
Airbnb’s IPO filing shows it’s navigating the pandemic better than travel industry peers

OUWA.orgAirbnb’s IPO filing shows it’s navigating the pandemic better than travel industry peers. Airbnb is within the challenging position of preparing to travel public amid a slump in revenue. But relative to the remainder of the travel industry, the corporate is flourishing.

In its IPO prospectus on Monday, Airbnb said that third-quarter revenue dropped 18% to $1.3 billion. Compare that to food delivery company DoorDash, which said in its filing on Friday that sales within the latest quarter quite tripled. Among the year’s hottest IPOs so far, software maker Snowflake’s revenue quite doubled within the quarter before it went public, while gaming company Unity grew 43%.

Unlike those companies et al. that hit the general public markets in 2020, Airbnb was badly hurt by the coronavirus pandemic. Coming into the year sporting a $35 billion valuation and soaring demand from investors, Airbnb was slammed when travel ground to a halt, which not only caused the business to deteriorate but also forced the corporate to reimburse travelers for cancelations.

Along with airlines, hotels, and online travel agencies, Airbnb had a disastrous second quarter. Revenue plummeted 72%, and therefore the company laid off 25% of its workforce, slashed its valuation, and raised about $2 billion in high-interest debt.

While other parts of the industry are still in shambles, Airbnb is bouncing back. Even with the third-quarter revenue decline, the amount was Airbnb’s second-biggest ever, behind only an equivalent quarter from 2019. and since the corporate slashed its sales and marketing costs by 74%, Airbnb turned a profit within the quarter of $219 million.

Airbnb’s customers had to vary their ways.

People weren’t traveling such a lot to big cities like NY, Chicago, and LA, but starting within the summer, they were trying to find cabins by the lake or within the mountains to spend a vacation weekend or as an escape for a month or two of remote work.

“They decided to urge in their cars and travel on the brink of home, often staying in small towns and rural communities,” Airbnb’s founders wrote within their letter to prospective shareholders in the filing. “Our business rebounded faster than anyone expected, and it showed that because the world changes, our model is in a position to adapt.”

Compare that to online travel giant Booking Holdings, which earlier this month reported that third-quarter revenue dropped 48% as lockdowns and travel restrictions, “continue to impact travel within the near-term,” said CEO Glenn Fogel. Expedia fared even worse, with sales plunging 58% within the period and therefore the prospects of a “prolonged and bumpy path to recovery,” said CEO Peter Kern.

Airlines and hotels are becoming crushed. Delta reported a 79% revenue drop by its latest quarter, while United’s sales plunged 78% and Southwest’s plummeted 68%. On the hospitality side, Marriott’s revenue fell 66%, Hilton dropped by 61% and Wyndham Hotels declined by 40%.

Across the board, travel companies have emphasized the industry’s bounce off the lows from March and April, the first months of the pandemic. Christopher Nassetta, Hilton’s CEO, said within the company’s earnings statement this month that, “While a full recovery will take time, we are well-positioned to capture rising demand and execute on growth opportunities.”

The fourth quarter might be ugly for all of them, including Airbnb. The U.S. is recording on the brink of 150,000 new coronavirus cases every day, quite double the speed from a month ago, and communicable disease experts are advising people to avoid large family gatherings over the Thanksgiving and yuletide holidays. It’s increasingly looking like only a Covid 19 vaccine reaching the masses will return the economy to a more normal state.

Airbnb isn’t hiding the danger. the corporate references Covid or coronavirus 219 times in its prospectus and said that, due to the newest spike, it expects a steeper year-over-year drop by booking volume within the fourth quarter than within the third.

Here’s how Airbnb leads its risk factors section:

“The COVID-19 pandemic and therefore the impact of actions to mitigate the COVID-19 pandemic have materially adversely impacted and can still materially adversely impact our business, results of operations, and economic condition .”

Still, Airbnb has a minimum of the show that, during a world where people are traveling to more remote areas and finding creative ways to figure from anywhere, the corporate features a narrative that’s more optimistic than its industry peers.

Rather than trying to fill empty hotel rooms or keep middle seats open on planes, “Airbnb’s offerings are compatible to adapt to the present changing dynamic,” the corporate says.

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