What’s new: Airbnb business model: Q2 2023 investor update
The latest on Airbnb’s Business Model (Aug ‘23) with highlights from their Q2 2023 investor update from 03 August ‘23.
The key topics covered in this update are relating to:
You can also check out our article on the Airbnb Business Model Canvas once you’re finished with this one.
Sources
Our key sources for this article are:
3rd party data, e.g. Similarweb, TechCrunch, Entrepreneur and other insights portals
We are highlighting direct quotes from these sources in “blue italics”
Check out the video version of this article
Revenue & Key Financial Updates
Airbnb is participating in the travel market which is one of the hardest-hit by the pandemic. They reported figures against last year (being the first recovery year) and 4-years ago being pre-pandemic. Airbnb continued to remain gross and net profitable.
Q2 2023 key metrics grew as follows:
Bookings: 115m +11% YOY
GBV: $19b +13% YOY
GBV +94% YO4Y pre-pandemic ⇒ covid recovery
Revenue: $2.5b +18% YOY
Net income: $650 = 28% (21% operating margin)
These are strong numbers at the upper end of expectations. Some of the Revenue/GBV growth ratio indicates higher transaction values. At least some of this is due to ADR growth (Average Daily Rate - a key metric in lodging). And one of the themes of this call was certainly to look at price differentiation.
Key Economic trends (Airbnb's callouts)
Airbnb gave an update on key economic trends that they observe
Demand side trends
“Active bookers grew in every region, and we had more first-time bookers compared to a year ago.”
“Guests are traveling farther: Cross-border nights booked increased 16% … especially encouraged by the continued recovery of Asia Pacific, where inbound international travel increased 80% ”
“Guests are staying longer on Airbnb. Millions of people remain flexible about where they live and work, and we see this reflected in our bookings….”
Supply side trends
“In Q2 2023, we grew supply 19% [YOY]. double-digit supply growth across all regions, with the most growth in Asia Pacific and Latin America – the two regions that also had the most year-over-year growth in Nights and Experiences Booked. In addition, urban and non-urban supply grew at similar rates YOY. “
Check out the economic trip trends in the image below with a number of growing metrics that underscore the above statements. A number of areas (such as long-distance travel as well as major cities) still have a way to go before they get back to their pre-pandemic states.
Other areas such as longer stays seem to be new trends. It will certainly be interesting to observe whether these will be permanent shifts (it’s quite conceivable and would likely be a trend from which Airbnb can benefit more than traditional hotels).
Business Model Highlights (Aug '23)
A key theme was to be able to increase demand through lower prices for certain segments. This included in particular long-term stays and more price conscious travellers.
The two key callouts from an App perspective align with these key business model prioritities:
The updated pricing tool aims to provide more discount options for host and was used for longer stays which led to and increase in respective bookings (1 month+)
The updates to Airbnb Rooms targeted the more price-conscious segments
Check out the video for more updates on their business model: jump directly to the section:
03:45 Airbnb Business Model updates
Airbnb Business Model on a Page (B-MAP)
The Business Model Canvas may be an acceptable tool to describe traditional offline business models. But it has major limitations when it comes to Digital Biz Models.
We have developed the Business Model on a Page (B-MAP) format to explain in crystal clarity the business models of digital companies, including platform business models.
What’s more we have decided to make our B-MAPs super affordable at $3. Our contribution to get your innovation journey kick-started!
Check out the Airbnb Business Model on a Page (B-MAP) + a 15-minute walk through video with explanations at an unbelievably affordable price - learn more …
Strategic Priorities
(1) Supply side growth:
The dip in supply due to Covid is slowly recovering. They want to accelerate this by raising awareness (including through their “Only On Airbnb campaign) & improved tools (see also next points)
Q2 2023, active listings +19% YOY “strong growth across all regions, market types and price points.”
Strongest net add qtr: >7m total active listing
(2) Perfect the core service:
50 new features and upgrades in 2023 Summer Release based on feedback, incl new pricing tools for hosts
The new pricing tool has the purpose to make stays more affordable. This did align with one of the core themes throughout this update which was around affordability and better competitiveness with hotels and increasing demand through lower pricing.
(3) Expand beyond the core:
“building the foundational capabilities for new products and services that we plan to launch in the years to come” —> see the next section on what this may include …
Growth Opportunities
BRian Chesky, Co-Founder & CEO, called out following short/medium/long-term future opportunities which are potential areas of growth:
Airbnb Experiences: very popular (95% 5-stars vs 84% 5-star on Stays), ready to scale
Paid placements of homes (ads)
Services for hosts and guests: they called out that the challenge is scale but this has been reached in many markets
Artificial Intelligence (AI): “once-in-a-generation platform shift. Probably bigger than the shift to mobile, probably more akin to something like the Internet … huge opportunity for us to really being the leading engine of innovation”
Business Model Canvas Aug '23
This concludes the latest - August 2023 - updates to Airbnb’s business model, including their financial, economic and strategic updates. Please share if you have enjoyed it.
Check out also the more comprehensive article on Airbnb’s Business Model with further details.