Airbnb (NASDAQ:ABNB) plans to report first-quarter earnings on Thursday, May 13. The online marketplace for vacation rentals is coming off of an atrocious year in 2020 when the coronavirus pandemic effectively shut down the travel industry. Now well into 2021, Airbnb is preparing for the inevitable rebound in travel. It's counting on the vaccines currently being rolled out worldwide to help people feel safer about leaving their homes.

That story is still developing, and it remains to be seen if people return to traveling the way they did before the pandemic. That's why when the company reports first-quarter earnings, gross booking value will be an important metric to pay attention to.

Two children and two adults unpacking a suitcase in a bedroom.

Image source: Getty Images.

Increasing supply is the key

Airbnb defines gross booking value (GBV) as the dollar value of bookings on its platform during a period, and it includes host earnings, service fees, cleaning fees, and taxes, net of cancellations. This figure, more than any other, will tell you how customer behavior is evolving.

Rather than sitting around and waiting for folks to start traveling as enthusiastically as they did before the COVID-19 pandemic, Airbnb is working on a campaign to increase the supply of listings on its platform.

Here's what CEO Brian Chesky had to say in the company's fourth-quarter conference call in December 2020:

[In December], we launched our first large-scale marketing campaign in five years, Made possible by Host. Even though the brand of Airbnb [is] mainstream, the idea of hosting is not yet. ... It will create more awareness around the idea of becoming a host by making it more mainstream and aspirational.

In addition to the marketing campaign, Airbnb is also making it easier for hosts to sign up by simplifying the onboarding process and providing tools and support to new hosts to get them through the difficulty of getting started.

That makes good sense. More options on places to stay will increase the likelihood that prospective travelers find what they are looking for and make a reservation. Moreover, since 23% of hosts were previously guests, adding more hosts to its platform will feed that virtuous cycle. Yet another benefit of increasing supply is that it can eventually decrease the prices customers pay. With lower prices, users on its platform may choose to travel more often and maybe even list their place on Airbnb while they are away from home.

If Airbnb successfully increased the supply of listings in the first quarter, it should result in a rebound in GBV. All the customer demand in the world won't help unless there is supply to meet that demand. For that reason, GBV is the most important metric you'll want to know when Airbnb announces earnings results. 

What this could mean for investors

Analysts on Wall Street expect Airbnb to report revenue of $711.44 million and earnings per share of $1.17. The stock price is down about 3% year to date. Interestingly, Airbnb is trading at a forward price-to-sales ratio of 18.37, which is down 33% from its peak of around 27 it was trading for in late February.

If its stock price dips even more following the earnings report, it could be a buying opportunity for long-term investors looking for a high-risk, high-return stock. That is, of course, if it does not report any adverse reasons that justify a price drop.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.