In its fiscal third-quarter results reported after the market closed on Nov. 4, Airbnb (ABNB 0.28%) revealed just how enthusiastic people are to take a little break from everyday life and travel somewhere. Answer: very enthusiastic! And the worldwide travel facilitator is busier than ever these days helping them.
The start of the coronavirus pandemic significantly reduced people's willingness to leave their homes. Thankfully, several effective vaccines against COVID-19 have been developed and administered. That's making folks feel better about leaving their home and traveling. Still, one of the long-term effects of the pandemic on the travel industry -- including Airbnb -- appears to be that people have more flexibility on when and where they can take an extended break.
Image source: Getty Images.
Remote work creates more travel options
Airbnb's overall revenue increased by 67% in Q3 from the same quarter last year to reach $2.2 billion. But travel was more restricted in the previous year due to COVID-19. A more informative comparison could be with the same quarter in 2019. Compared to the same quarter two years ago, Airbnb's revenue increased by 36% in Q3. Similarly, Airbnb boosted net income to $834 million in Q3, a 213% increase from the same quarter in 2019. This is an impressive feat, considering the pandemic is not over and travel restrictions are still in the process of being removed.
Interestingly, changes in the way people live since the start of the pandemic are altering the possibilities for travel. Here is what Airbnb said in its shareholder letter on the matter:
For centuries, people have been tethered to where they work. Then the pandemic hit and suddenly untethered tens of millions of people from the need to work in specific places at specific times. They can now work from anywhere, travel any time, and stay longer. For those who can work remotely, we believe that flexibility will be the most important benefit after compensation.
One way that is showing up in Airbnb's results is the increase in long-term stays. If you're not tied to one location for work, you can stay in an Airbnb in one city for 45 days, go to another town for 30 days, and so on. Indeed, long-term stays of 28 days or more are Airbnb's fastest-growing category by trip length, accounting for 20% of nights booked in Q3 2021 compared to just 14% in the same quarter two years ago. It's not hard to imagine this category continuing to take a larger share of total nights booked on Airbnb.
The market likes Airbnb's prospects
Even though the coronavirus pandemic hurt Airbnb in the short run, it can very well emerge out of the pandemic in a better position. The market likes its chances. In the day following its Q3 earnings announcement, Airbnb's stock was up over 10%. Overall, the stock is up 39% year to date in 2021.
The company is serving a massive travel industry that can continue to grow larger over time. Its third-quarter earnings report shows consumers are eager to travel as the risk of COVID-19 is diminishing, and they are increasingly more flexible with their schedules. Those are all good signs for long-term Airbnb shareholders.
