Airbnb executives said the short-term rental company recorded its most profitable quarter ever, boosted by the return of international travelers and demand for stays in the urban corridors that were its bread and butter before the pandemic.
During the company's third-quarter earnings call with analysts and investors, co-founder and CEO Brian Chesky said it is evident that "guest are increasingly returning to cities and crossing borders."
"Cross-border gross nights booked increased 58% compared to a year ago," he said. "High-density urban nights booked were up 27%."
He said the trend is driving optimism within the company because it doesn't seem to be eroding domestic or non-urban travel and more guests continue to book longer stays.
"We've seen many companies require their employees to return to the office, and at the same time, long-term stays remain 20% of our total gross nights booked on Airbnb," he said.
Airbnb executives acknowledged that currency fluctuations are having some impact on travel patterns internationally, but it hasn't been wide scale.
"We are seeing strong European demand from places like the U.S. while the dollar is stronger than the euro," said Chief Financial Officer Dave Stephenson. "It's not a material part of our business, and it's hard to see it have an impact materially given the size of our business and being in 220 countries and regions around the world."
Chesky said the company plans to continue growing its base of hosts, touting an update to the platform in mid-November. Continued growth of supply — particularly more one-off owners who rent their own homes rather than large-scale commercial real estate operators — will help insulate the company from recessionary risk, he added.
He said in all likelihood a recession would be a supply driver for his company.
"We started Airbnb in 2008 during the Great Recession, and at that time, many people were turning to Airbnb to earn extra income," he said. "We think this will be a great time for millions of people to consider hosting."
Since going public in late 2020, the company has made a focused effort to drive profitability and streamline its cost structure, which was accelerated by the demand drop-off during the COVID-19 pandemic, he said.
"We made the decision that we weren't going to wait for another crisis, another weak economy or recession to change how we invest or run the company, that we were going to become lean regardless of the economy," he said.
Third-Quarter Performance
For the quarter, the company reported nearly 100 million nights and experiences booked, which marked a 25% year-over-year increase, and a 29% year-over-year increase in revenue to $2.9 billion.
Airbnb took in $1.2 billion in net income — the highest figure on record for the company and a 46% increase over 2021 — with free cash flow of $960 million. Adjusted earnings before interest, taxes, depreciation and amortization also set a record at $1.5 billion, up 51% year over year.
Average daily rate increased 5% year over year to $156.
During the earnings call, Chesky said one of the company's top priorities is to continue to provide hosts with the tools to drive rate and price competitively.
Reuters reports that investors were disappointed by the company's final quarter growth expectations, however, which sent the company's stock down 7% in after-close trading.