1 Travel Stock to Play the Reopening in 2021 and Beyond

The COVID-19 pandemic has created a massive amount of pent-up demand to get out and travel, and we're starting to see it play out. In this Fool Live video clip, recorded on June 14, Fool.com contributors Brian Withers and Matt Frankel, CFP, discuss why Airbnb (ABNB 1.17%) could be one of the biggest winners of the reopening of the U.S. economy. 

Brian Withers: My stock is Airbnb, A-B-N-B. I got a couple of slides to share. You're probably familiar with Airbnb. It's a two-sided marketplace. It gives travelers a place to stay and allows hosts to earn some extra money, whether they're renting out their room or their entire house for travelers. Airbnb is set up to provide services to hosts. These are all the different things that Airbnb's platform will do to help hosts. If you post your property or room for rent out on Airbnb, they're in a couple hundred countries. You're going to get global people all over the world looking at your place as a potential place to stay and allows with scheduling and payments and a tremendous amount of very feature-rich platform. The platform is getting better. They had a huge upgrade this past May. You can see the first three things that are upgrading here. Think about what these three things do. It allows you, the traveler, to search on different destinations, different matching, or different dates. So it opens up more opportunities if travelers were getting into Airbnb and going, "There's nothing for me," well, you know what? If you are a little bit flexible, this is going to open up way more opportunities for travelers, and there's a ton of other benefits you can look at on the website. They are really focused on making it easier for hosts to get up and get running on the platform, as well as making it easier for travelers to make Airbnb a habit for them. Here are some of the key metrics. I just did annual metrics. You can see huge growth numbers. This is nights booked in millions. They peaked in 2019, not surprisingly 2020 saw a huge drop off in nights booked, down 41%. Gross booking value again peaked in 2019, down 37% to $24 billion. Their revenue, same thing, peaked at almost $5 billion in 2019 and down 30%. Now this is revenue as a percent of gross booking value. Basically, the gross booking value is what travelers pay to book on the platform, and then the percent that Airbnb takes home as revenue is down here on the bottom. It's been creeping up gradually over time I think 2020 is a little bit of an anomaly. It's a little higher than potentially. Maybe they want to keep it there, but it says that Airbnb is delivering more value for its travelers and its hosts over time and they're willing to pay more. What do I love about Airbnb? Airbnb gets paid when hosts get travelers to visit. So their metrics align very closely with customer success. That's something that Shopify does really well, that I love it when a company's metrics align with its customer success. Developers, their research and development costs are a huge portion of their revenue. This is the exciting part. I think being able to expand the market, it's allowing more people to give another alternative to traveling. They had a strong growth before the pandemic, they're cash-rich. They're in countries all over the world, and surprisingly, over 50% of its revenue is outside of the U.S. and it's still founder-led and founders are still involved with the business. Matt, I know you have a question for me. Shoot.

Matt Frankel: There are a ton of big traditional hotel operators that have deep pockets. Marriott, Hilton, things like that. Big broad reaches. Do you see them as competitors to Airbnb? Do you see this as a rising tide lifts all ships situation? Or do you see them as potentially working together?

Withers: I don't really see them as competitors. I view Airbnb as the new kid with the new model, being the rule breaker and taking share from the established hotel chains. Now, you aren't going to necessarily get your business traveler who's just spending one night in a particular city and wants to be near the airport or whatever. But to me, their offerings are very different. Now some people can just book one room in a house through Airbnb and that's comparable to hotel stay. But it seems to me that the people that travel and use Airbnb are looking for more that can be provided in a typical hotel. As my family travels, we have an adult son, we have a dog that comes with us, so we need more space. It's always nice to have our own kitchen because we have specific dietary needs in our family. So booking travel through Airbnb provides us a lot more flexibility and a lot more features that actually makes it easier for us to travel together. In a way, I think Airbnb has opened up a new market and making it easier for people and families with needs to travel in a brand new way.