Airbnb is ‘incredibly adaptable’ compared to the rest of the travel industry: CEO – Yahoo Finance | Gmx Pharm

Airbnb (ABNB) found its business drained when the coronavirus pandemic hit, losing 80% of its business in just eight weeks.

However, even in a prolonged economic downturn, CEO and co-founder Brian Chesky doesn’t anticipate a repeat.

Speaking to Yahoo Finance Live, Chesky said the home rental company is well-positioned to weather any recession because its platform is “incredibly adaptable.”

“We have almost every type of space in almost every type of community — around the world, whenever habits change, we can adapt,” he said. “Airbnb is a very affordable alternative to hotels for many people. So I think a lot of people will turn to Airbnb in this economic environment.”

Airbnb’s shares continued their declines on Tuesday, with the stock falling more than 1% despite posting a gain in the second quarter. Revenue rose 58% year over year as pent-up travel demand continued to fuel bookings on the platform. Booked nights and experiences remained strong at 103.7 million, up 25% year over year.

“The reason for our record earnings, record profits was our discipline,” Chesky said. “We didn’t have to adjust our hiring plans. We stayed incredibly disciplined. We will continue to do so.”

“Strong in growth mode”

The latest quarterly results indicate continued transformation for a company that has taken a dramatic turn in its trajectory since the coronavirus outbreak imposed lockdowns and halted international travel.

While the pandemic almost caused Airbnb to halt its 2020 IPO, the company quickly tightened its budget and cut 25% of its workforce. Since then, the company has benefited from the expansion of remote work, with long-term rentals being the fastest growing segment. A summer travel boom has added to the boon, with guest demand hitting an all-time high, according to the company.

Free cash flow generated in the quarter was $795 million, down from the first quarter, but the company expanded its cash balance sheet to $10 billion.

A woman makes a phone call at the Airbnb headquarters in San Francisco’s SOMA neighborhood. REUTERS/Gabrielle Lurie

However, an announced $2 billion share buyback failed to lift shares on Tuesday, indicating investor nervousness about a possible recession and its impact on the travel sector, although the company hinted at strong year-end demand.

Airbnb is now forecasting its highest-ever quarterly revenue for the third quarter of between $2.78 billion and $2.88 billion.

“We are very much in growth mode,” CFO Dave Stephenson said on the conference call. “We are not in profit maximization mode.”

Inflation as a possible tailwind

With nearly $800 million in free cash flow generated in the quarter, the company plans to move aggressively to put the $10 billion it now has on its balance sheet on the fundamentals.”

Now that Airbnb is exploring new “offers,” Chesky said the most immediate focus will be on attracting new hosts and expanding protections for guests and hosts.

Fear of an economic downturn and record-high inflation could even prove to be a tailwind for the platform.

Airbnb Co-Founder and CEO Brian Chesky speaks during an interview in Langa Township, Cape Town, South Africa.  REUTERS/Mike Hutchings

Airbnb Co-Founder and CEO Brian Chesky speaks during an interview in Langa Township, Cape Town, South Africa. REUTERS/Mike Hutchings

The company, founded in the depths of the global financial crisis, is now witnessing a return to similar behavior it experienced in its early days, with users turning to the platform for additional income to help offset the rising cost of living cover.

Active listings in the second quarter grew 23% compared to the same period in 2019.

“It’s going to be a very important thing,” Chesky said. “It’s one of the easiest ways to earn passive income from the assets you already have. I think that’s something a lot of people are looking for in the economic environment that we’re in right now.”

Watch the full interview in the video above.

Akiko Fujita is a presenter and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita

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