There is a growing consensus that the pent-up demand for travel will be unleashed in 2021. Worldwide, travel plans were put on hold in 2020 as we tried to get the COVID-19 pandemic under control. But now with vaccinations on the rise, people are gearing up to get back on the road again. According to a survey by the Travel Technology Association, 76% of people plan to travel this year after getting their coronavirus vaccine. And 75% plan to get a short-term rental like those offered on Airbnb's (ABNB 1.39%) platform.

With pent-up travel demand like this and the clear preference for short-term rentals, one might have expected Airbnb to report blowout revenue figures for the first quarter of 2021. But that wasn't the case. First-quarter revenue was only up 5% year over year. That sounds pretty ho-hum.

However, digging a little deeper, Airbnb's Q1 results confirm strong consumer demand and robust growth. You just have to know where to look.

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Image source: Getty Images.

Bookings vs. revenue

Besides revenue, Airbnb provides a metric called gross booking value (GBV). This shows how much was booked during the quarter. Did you reserve a space for $100? Congratulations, you added $100 to Airbnb's GBV. But here's the thing: GBV and revenue don't line up perfectly. The company records GBV when a night or experience is booked, but it doesn't recognize revenue from this until it actually happens. 

Therefore, when an Airbnb user books something in Q1, it counts toward GBV for that quarter. But if travel isn't scheduled until the second quarter, the company won't generate revenue from the booking until then.

With this context, Airbnb's Q1 revenue was only up 5% to $887 million. But the company's GBV was up a much more impressive 52% from the comparable period last year. 

Pulling it all together, with modest revenue growth in Q1, Airbnb isn't reaping the benefits from pent-up travel demand yet. However, with high bookings growth in Q1, investors should expect strong year-over-year revenue growth for Airbnb for the remainder of 2021.

An Airbnb host greets a visitor to their short-term rental.

Image source: Airbnb.

A little more nuance

Let's be careful not to overstate things for Airbnb. The company provides another helpful metric called average daily rates (ADR). ADR measures the cost per night or experience booked. Let's say an Airbnb user books a $100 house this quarter and books a $150 house next quarter. In this case, GBV would go up 50%. But adoption didn't increase, it stayed the same. Rather, rising ADR was the catalyst.

Airbnb's ADR was up 35% year over year in Q1. Therefore, much of the increase in GBV is the result of higher prices, not increased travel. Indeed, nights and experiences booked were only up 13% from last year. The rest of the bookings growth came from higher prices.

Furthermore, we're only looking at year-over-year comparisons. If we zoom further out, Airbnb hasn't fully rebounded to pre-pandemic levels. In Q1, nights and experiences booked were still down 21% from the same quarter in 2019. Fortunately, prices have increased since then as measured by ADR. Therefore, GBV is up a modest 3% from 2019 levels.

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Image source: Getty Images.

How to think about Q1

The complexities surrounding Airbnb's Q1 can lead to disparate takeaways. On the one hand, you might have expected a complete rebound for this travel stock by now. But it's clear people are still using Airbnb less now than they were in 2019. That could lead people to sour on the company's prospects in 2021.

On the other hand, investors could see this as an interesting opportunity. According to the Centers for Disease Control, only about 36% of the U.S. population was fully vaccinated as of May 13. And remember, our previously cited survey showed people planned to travel after getting their shots. Perhaps Airbnb users are simply waiting to get further along in their vaccination process before booking.

Furthermore, Q1 ended on March 31 and far fewer people were vaccinated back then. Therefore, it's logical to conclude the pent-up travel demand will materialize more in the second quarter, making this a compelling reopening stock. Moreover, assuming booked nights and experiences simply rebound to what they were in 2019, Airbnb's revenue could soar considering the growth it's already experienced in ADR. 

To conclude, Airbnb's revenue growth was modest in Q1. But under the surface there's promising signs of growth that could reward shareholders if they continue to play out.