The COVID-19 pandemic has continuously crushed many stocks that rely on vacationing and travel. Until vaccines came out, there was little hope for them, and then the delta and omicron variants of the coronavirus continued to ravage these companies. Now, with increasing vaccination across the world, the future is looking brighter for companies that help you vacation.
Airbnb (ABNB 2.02%), however, did not see the same crushing that other hospitality stocks saw. The company was able to take advantage of many trends, including work-from-anywhere, to propel its business forward even during the worst of times. The company reported fourth-quarter earnings on February 15, 2022, and it is already back to pre-pandemic levels of revenue and profitability. The resilience that Airbnb has shown the past couple of years speaks for itself, and management's desire for innovation doesn't look like it will stop anytime soon. Because of this, I think Airbnb is one of the best places to put money right now.
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Surpassing pre-pandemic highs
Hotel chains like Hilton Worldwide and Mariott International are still more than 15% off their all-time quarterly revenue highs, but Airbnb continued its strength and posted revenue of $1.5 billion for Q4. The company's 2021 revenue was nearly 25% higher than the revenue it brought in during 2019, marking its amazing bounce-back from the depths of the pandemic. This comeback was helped by over 4 million hosts making their homes available to live in, with many guests living, rather than vacationing, there: Airbnb reported that 20% of stays were for one month or longer.
So what hasn't improved since 2019? Nothing! The company is guiding for nights and experiences booked in Q1 to surpass 2019 highs and reach record levels, and the company's profitability is also steadily improving. The company's 2021 free cash flow reached $2.1 billion compared to just $97 million in 2019. Additionally, Airbnb's net loss is recovering. In late 2020 and early 2021, the mix of lower activity because of the pandemic and IPO-related stock-based compensation expenses put their profitability in the dumps, but the company reported a net income of $889 million in the last six months of 2021.
Continued focus on the experience
CEO Brian Chesky and the rest of Airbnb aren't sitting back on their heels now that they reached pre-pandemic highs, however. The company is continuously looking to innovate and focus on becoming the best platform for hosting and vacationing. The company launched over 150 upgrades in 2021 to make the experiences for both hosts and guests easier, and the company is listening to customers to make these innovations. Chesky noted on the conference call that this was the process for creating AirCover -- Airbnb's top-to-bottom insurance coverage that gives hosts $1 million in damage protection for hosts.
These innovations are twofold. First, the company's focus on listening to customers makes both guests and hosts think more highly of the Airbnb brand, thus increasing customer loyalty. Second, these innovations convince people to use Airbnb more. For example, a host would not get AirCover if they hosted on Vrbo, so when faced with a choice of getting $1 million or nothing in damage protection, the decision on where to rent out your space is easy.
As a result of these impressive innovations, Airbnb is rapidly becoming one of the most popular places for both guests and hosts to go. The company had the largest supply of active listings it ever had in 2021 with over 6 million listings, and customers spent almost $47 billion on Airbnb -- which grew 23% compared to 2019.
Growth still to come
Airbnb does not believe it has even fully recovered from the pandemic yet, showing that its short-term growth still looks incredibly strong. Cross-border travel in 2021 made up just 33% of what it was in 2019, driven by depressed activity in the Asia Pacific region. This signals that as countries continue to open up borders and consumers get more comfortable with traveling internationally again, Airbnb could continue to benefit from short-term tailwinds.
Airbnb trades at a premium of 20 times sales -- a high valuation when compared to traditional hospitality stocks like Mariott or Hilton. However, Airbnb is not a traditional hospitality stock. The company is riding on multiple tailwinds, including work-from-anywhere culture which allows people to travel far more than before. Airbnb's offering to both guests and hosts is unique and unmatched, which is why I think the company could continue growing and benefiting shareholders both in the short term and the long term.
