Airbnb (ABNB 0.14%) posted better-than-expected results for the fourth quarter, sending the stock price up more than 9% since the earnings report. The remote work trends that were lifting the business earlier last year are still intact entering 2022, driving strong growth in nights and experiences booked on the platform.
Co-founder and CEO Brian Chesky sees a sea wave change in how people are traveling that could set the new standard in the travel industry. During the earnings call, Chesky said these 23 important words, "Nearly two years into the pandemic, it's clear that we are undergoing the biggest change to travel since the advent of commercial flying."
To understand what impact this could have on Airbnb's business, let's review what the advent of commercial flight did for travel and why Airbnb is well suited to capitalize on the future of this massive industry.
Commercial flying's impact
Travel is an attractive industry for investors. In 2019, it was the second-fastest-growing sector in the world, beating the growth of healthcare, information technology, and financial services, according to a report from the World Travel and Tourism Council. Even with 62 million jobs lost during 2020 worldwide, the industry made up 9% of global employment.
Prior to the 1970s, air travel was mostly done for business, but faster aircraft, a growing middle class, and a booming postwar economy were causing regular tourists to jump aboard, which drove passenger totals to skyrocket. The number of air passengers in the U.S. more than quadrupled between 1955 and 1972.
World passenger traffic was still growing prior to COVID-19. Between 1995 and 2012, passenger traffic grew at an annualized rate of 5% per year, nearly double the rate of growth of the global economy.
Besides a growing economy, technological innovation has been a key driver of growth for the industry over the last 70 years, and it's ultimately Airbnb's innovation that is delivering strong results right now.
A record performance
Airbnb just completed a record quarter, capping off its best year in company history. Revenue reached $1.5 billion in the fourth quarter, up 38% over the same quarter in 2019.
Even with the surge in omicron cases, nights and experiences booked grew 56% year over year, reaching 300 million for the full year. Airbnb allows anyone to list their apartment or home to make extra money, and in turn, it provides endless choices for remote workers and tourists looking for a unique place to stay. The wide variety of options available largely explains why Airbnb has set the standard for room searching.
"It's also our culture of relentless innovation," Chesky said on the earnings call. Indeed, Airbnb continues to update its platform with new features. Last year, the company rolled out 150 upgrades, including curated wish lists, an arrival guide, faster checkout, and the ability to search listings based on length of stay availability.
The right stock for this opportunity
Investors should be aware of the risks for Airbnb. For example, in 2010, New York amended its state law to require certain dwelling units to have a permanent resident remain present during a guest's stay. However, these limitations shouldn't be a concern. After all, Airbnb is still finding plenty of ways to grow, including increasing demand from guests traveling to rural areas.
A larger supply of listings and new features explain the company's momentum heading into 2022 and why Airbnb might be the best stock to invest in the growth of travel.
The advent of commercial flight opened the floodgates to global tourism. Now in 2022, remote work appears to be the next big growth opportunity for the $9.2 trillion travel industry. People are traveling everywhere, to rural and urban areas, and Airbnb is capitalizing on this big time.