With a market cap of about $90 billion, Airbnb (NASDAQ:ABNB) is trading for a higher valuation than Marriott International and Hilton Worldwide Holdings combined. However, in this Fool Live video clip, recorded on June 10, Fool.com contributors Matt Frankel, CFP, and Brian Withers explain why that doesn't necessarily mean the stock is expensive. 

Brian Withers: There's really two sides to it. The travelers can find places to stay and hosts, they call them hosts, can earn money by renting out their home or part of their home to host travelers. This has actually turned out to be a pretty massive business. Airbnb has recently gone through a massive upgrade to make it easier. Obviously, the more hosts and the more properties on the platform, the more travelers they're going to attract. Recently, Airbnb went through a massive upgrade and upgraded 100 different features across their platform, making it easier for hosts, making it easier for guests to really connect up. This is just some of the new screens that show you how easy you can do this stuff from your mobile phone. How easy it is to become a host and start renting out your property. Airbnb provides a service to hosts and a platform for them to essentially run a business by being a bed and breakfast or just renting out rooms or whatever. You can see all of these different features. They provide the hosts from community support payments, scheduling, reviews, and certainly some host protections as far as protecting from poor renters. Looking at the key metrics, they were really great up through last year. Nights and experienced booked, you can see 74% growth, 48%, 35%. Then last year, a minus 41%. Same thing with gross booking value up to $38 billion in gross bookings through 2019 and a massive minus 37% revenue. Similar trend minus 30% last year. Then I always like to look at revenue as a percentage of gross booking value. Basically, what that says is what hosts are paying to use the platform. It's around 12% and it's bumped up a little bit, a little shorter, 13% here and 14% for 2020. Don't know if that's an anomaly, but that's a pretty decent cut for Airbnb, as well as it's not a huge outlay for a host to pay to get global exposure.

Let me tell you about what I love about Airbnb, the metric, it aligns with its customers. It gets revenue when places are rented. Thirty percent of their revenue goes to technology and research and development. I think they have a potential to expand the market, so not just hotel. They're not just taking share from hotel rooms, but I think they're providing people an easier and more welcoming place to stay potentially. If you have small kids and pets, potentially, traveling is just a nightmare. Getting your own home with your own kitchen and separate bedrooms is really a much better experience than potentially being in a hotel room. Things I don't, it's got massive marketing expense that it's a $90 billion market cap company already, it just IPO'd this year and it was up above $100 billion even. Then the growth post-coronavirus is uncertain. Matt, you and I chatted a little before for the show. The thing that's held me back from pulling the trigger on the stock is this $90 billion market cap. What do you think about that?

Matt Frankel: Yeah. Hopefully you guys can hear me better now, I made a switch. But the more I look into it the more that valuation stops bothering me. The reason being is that, that 22 price-to-sales ratio you just mentioned, that's based on COVID numbers. It's trading at 22 times what it did during the pandemic year. Take that with a big grain of salt. The travel market, Airbnb's market is not just booking rooms. It also has a lot to do with booking -- they're expanding into experiences, they're expanding into adding events you can book along with your vacation rental. The marketing expense will get better over time. Think of a company like Amazon, which Airbnb has the potential to be in the travel space. Amazon doesn't have to get the word out anymore, if you want to buy something you just go to Amazon. Airbnb is not quite at that point yet. They do have a lot of marketing cost while they're still in rapid growth mode. The travel industry is worth $3.4 trillion of annual revenue worldwide. That's their addressable market. They're not going to get that. But even if they got 2% of the global travel market, that'd be a pretty big number. Many times there are current gross bookings. The more I look into it, the less that high valuation bothers me. I'm not quite ready to pull the trigger, but it's definitely more interesting to me than now that I really dig into it.

Withers: I really like the recent upgrade it's made. It shows that it's committed to its host and really making an easy-to-use platform. I think that's going to attract more hosts, it attracts more travelers, which attracts more hosts and allows them to develop the platform more or so. Similar to Shopify, I think it's got a really great business model that it's working. I think as more people get out and travel and look to Airbnb as a different way to travel, I think it's just going to become even more popular.

Frankel: Yeah. Etsy is another good example of a site that's really got like the same network effect going. They're owning the handmade goods market, but they didn't a few years ago. Their marketing cost was really high and they are able to now spend their marketing dollars on different things, like improving the customer experience, so people shop on the platform more. I can see Airbnb is high marketing costs overtime, really transitioned from getting people to their platform to increasing their revenue opportunity on their current customers. I'm interested in Airbnb right now. Three months ago, I never would've thought of a "hotel stock" at $90 billion valuation. That's several times like Marriott's worth. I would never have thought I would be considering that, but the more I dig into it, the more I think this really is an opportunity.

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.