Is Airbnb now a top stock? 

It seems like the hospitality business is back on track and top on the list is Airbnb. Now that the covid restrictions have been abated, leisure travel has resumed, which means more guests and more bookings. There’s a “tremendous appetite for travel compared to 2020”, with 68% of Americans planning an international trip this year. With this and the work from anywhere trend being set, Airbnb hosts will be seeing a spike in profits this year and beyond. 

So, is Airbnb a good buy now? 

Let’s analyze below.

If you’re a Motley Fool Stock Advisor member, you may know that Airbnb has been recommended by Motley fool on a couple of occasions now. 

Airbnb benefits greatly from rebounding travel and remote work. More people will be exploring places not just for short-stay travels but for nomadic purposes, thereby lengthening their stays for a month plus. For hosts, this lengthened stay means more stable income, more profits and an increase in AirBnB’s value proposition. For Airbnb, this is an increase in its average daily rate i.e. more price and occupancy; and in the hospitality business, this price rarely increases this much, so this is a win for properties on Airbnb. And for guests? Guests now see Airbnb as a work-from-anywhere enabler, where they get to have vast housing options at varying price points and also experience traditional vacations all in one. 

This trend also reflected in its fourth-quarter report for 2021. In its earnings report, Airbnb reported that one-fifth of total nights booked in the fourth quarter were for stays of at least one month and half of the nights booked during that period were stays of one week or longer. This means more people are booking longer stays on the platform, and this translates to higher revenue. In this same period, AirBnB’s average daily rate (ADR) increased by 36% against the pre-pandemic quarter of 2019. With its higher occupancy, the company is also increasing its ADR with annual platform enhancements for hosts, expanding its experience categories and strengthening its brand name, which has become quite popular among people globally.

The Airbnb brand is in fact the company’s most valuable asset – it has huge mindshare among people in urban and rural areas worldwide, it has helped onboard thousands of properties each month and has also helped make it the profitable and cash-flow business it is now.

Airbnb’s Q1 report for 2022 beat Wall Street estimates and also gave strong guidance for the second quarter. The hospitality platform reported 102.1million nights and experiences booked in Q1, which is the first ever for them. Growth is expected to stay strong in this Q2, with a revenue between $2.03 billion and $2.13billion, which is higher than analysts’ estimates. We will be looking forward to them meeting this guidance.