Airbnb (ABNB -6.90%) was increasing customers and growing revenue rapidly before the onset of the pandemic. The inherent advantages built into its business model were fueling the growth, making it an attractive choice for travelers.
As widespread COVID-19 vaccinations make a return to travel more likely, here are three use cases where travelers may choose Airbnb over hotels.
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1. Group travel
Traveling in a group makes it more likely you will choose Airbnb. The company's platform offers entire homes to book for short-term stays. Unlike a hotel, where you may need to reserve several rooms for your group, on Airbnb, you can book one home for your whole party. In many cases, the experience on Airbnb will be better as well. If you book a home with a swimming pool, for example, you won't have to share it with anyone outside of the group, unlike in a hotel.
Importantly, group and family travelers spend more on their trips than individuals. With the need for more space to accommodate more people, Airbnb has a lucrative edge over hotels in this category. Airbnb has already observed an increase in group travel as the company bounces back from the pandemic.
2. Out-of-the-way locations
Hotels usually focus their offerings on locations where tourist count is high. Think Los Angeles, Paris, London, and Miami. These are cities hundreds of thousands of people want to visit every year. Hotels need large markets to justify the costs of building expensive buildings. They typically shy away from rural locations that don't attract large swarms of visitors.
This is another area where Airbnb wins. With far fewer hotels in non-urban locations, Airbnb offers listings of rooms, and even entire homes, in non-urban areas. Indeed, from the first quarter of 2019 to Q1 2021, active listing in non-urban areas has grown by 30% on Airbnb. The company now has 4 million hosts with listings across 100,000 cities worldwide.
3. Long-term stays
Folks looking for a place to stay for an extended period of time are more likely to choose Airbnb. A hotel is not very comfortable when staying for more than a week. Few have kitchens, laundry rooms, or other accommodations that become more important during long-term stays. On Airbnb, the host will often make available such accommodations to guests renting a room. And they are certainly available to guests renting an entire home, condo, guest house, or apartment.
The coronavirus pandemic is making remote work a real possibility for many professionals worldwide. That means you don't need to be stuck to being within close proximity to your workplace. You can live someplace for two months and another for three weeks. Airbnb is watching this trend develop. In its fiscal first quarter, 24% of stays were for more than 28 days, a substantial increase from 14% in 2019.
Airbnb was already gaining favor with travelers before the pandemic. Major changes in lifestyle caused by the pandemic are likely to reignite that trend. Investors looking for a stock that will benefit from reopening economies can put Airbnb on their lists.
