Airbnb’s third-quarter (3Q) earnings call took place on November 1, 2022 and, along with their Shareholder Letter, they shared a ton of insights and information about the company’s overall performance – plus a few teasers of what’s to come. We listened in to bring you the must-know takeaways that will impact hosts and property managers.
Quick Stats & Facts to Know
- Guest demand on Airbnb remains strong. Nights and Experiences booked increased 25% in Q3 2022 compared to a year ago, even with macroeconomic uncertainties
- Guests continue to stay longer on Airbnb. Nights booked from long-term stays remained stable from a year ago at 20% of total gross nights booked, and the majority of long-term stays occurred in EMEA and North America.
- The host community continues to grow.
- Guests are increasingly returning to cities and crossing borders. Airbnb saw cross-border travel to all regions increase in Q3 2022 from last year.
Algorithm Updates that Prioritize Value
Airbnb also spoke about some algorithm updates in the future to prioritize listings that show better value for guests. The algorithm updates will rank listings higher that receive better reviews from guests relating to the overall “value” of their stay. Pricing will also play a role in that ranking, prioritizing stays that provide a great deal for the fully loaded price.
“After recent fee-related backlash on social media, it’s clear that Airbnb wants to focus on demonstrating the value of individual listings on the platform, especially compared to alternative accommodations like hotels.” Ryan Saylor, Head of Partnerships
Pricing-Related Changes to Drive Demand
Airbnb leadership believes that competitive pricing will drive more bookings and conversion rates – especially during a downturn and during the next travel season – so they spoke about some changes to the way their pricing is displayed and managed to support this.
Airbnb intends to have more transparent pricing displays that show “all-in” prices. Currently, Airbnb’s pricing displays the nightly rates first, then shows all the extra fees (cleaning, taxes, etc.) later when a guest goes to book. This new change will ensure that guests are clear about the ending price earlier in their booking journey, and will help hosts understand what their all-in pricing is for guests.
They also plan to add some discounting tools - like seasonal, weekly, peak vs. non-peak, etc. - which will help hosts become more competitive in the future.
“Airbnb is now taking on the momentous task of educating all its millions of new hosts how to price in a flat market for the first time. While all-in prices will appease guests, Airbnb’s continued success in grabbing market share will depend on the ability of its large user base to learn how to actually manage revenue competitively”. Jeffrey Breece, Head of Revenue Management
New Host Growth, Plus Updates
Airbnb noted that 35% of new Airbnb hosts in Q3 started as guests. However, even with a significant percentage of new hosts who are familiar with the platform, there are still two big pain points and hesitations for these new hosts that Airbnb spoke about:
- Simplicity in getting started
- Concern about strangers staying in their homes
Airbnb has implemented a few updates to address this and even attributes these improvements to driving growth. Their product improvements (new host onboarding flow, AirCover for Hosts, and Ask a Superhost) were aimed to make the onboarding and overall process easier and provide more peace of mind. They also alluded to more host improvements that will be included in the Winter Release.
Airbnb also attributes strong host growth during the quarter to be driven by a few other factors. First, demand drives supply. In Q3 2022, total urban supply accelerated from a year ago as guests returned to cities. Second, Airbnb was founded during the Great Recession, and the current economic uncertainty might be driving more hosts to sign up. Hosts have turned to Airbnb as a form of supplemental income since their founding in 2008, and have earned more than $180 billion to date.
Airbnb 2022 Winter Release
Airbnb is planning a major product release and will announce it on November 16. It will include a multitude of updates aimed at improving the host and the guest experience.
Airbnb says that they have just scratched the surface of growing their host community and are focused on addressing the obstacles to becoming a host. They will be introducing an all-new, way for millions of people to Airbnb their homes and delivering a major upgrade to AirCover that provides more protection for every host on Airbnb.
Were you surprised by any of this information? Let us know, we’d love to chat. And keep an eye out for our takeaways from Airbnb’s Winter Release later this month!