Airbnb (ABNB +0.24%) has long been a lightning rod for controversy.
Local communities have pushed back against the vacation rental platform. Hotel operators have protested it, and critics have accused the company of driving up real estate prices by using housing stock for tourists rather than local residents.
The animosity has gotten bad enough that some openly root for Airbnb's demise, and that seemed to be the case again after Twitter user Nick Gerli, CEO of Reventure Consulting, claimed demand for Airbnbs in some popular destinations had plunged in May.
The Airbnb collapse is real.
-- Nick Gerli (@nickgerli1) June 27, 2023
Revenues are down nearly 50% in cities like Phoenix and Austin.
Watch out for a wave of forced selling from Airbnb owners later this year in the areas hit hardest by the revenue collapse. pic.twitter.com/xjGkj7bFC5
Citing data from AllTheRooms, a short-term rental analytics site, Gerli went on to theorize that the supposed decline in Airbnb revenue for these listings would lead to a flood of homes coming on the market, or "massive forced selling."
Gerli's tweet had earned 46,000 likes roughly 24 hours after it was posted, but not long after it went viral, a post citing another short-term rental data platform, AirDNA, contradicted the findings.
A viral tweet about STR data! Lets get some facts straight... There is not a collapse in RevPAL happening. Is it down in 2023? YES. Is it down 40%? NO.
-- Jamie Lane (@Jamie_Lane) June 28, 2023
I've pulled the numbers from @airdna's dataset mirroring the analysis done by @nickgerli1. What do we find? The average... pic.twitter.com/HRjIXZk9p9
Jamie Lane is the chief economist and SVP of analytics at AirDNA, which found a much more modest decline in revenue per available listing at 3.6% compared to 40.3% from AllTheRooms.
Image source: Airbnb.
What's going on here?
I can't comment on the accuracy or methodology of the reports from AllTheRooms or AirDNA to compare year-over-year trends, as the data isn't public. Comments from respondents on Twitter were mixed, as some Airbnb hosts said they had seen significant declines in bookings, while others said the opposite.
A 40% year-over-year decline in demand for most products or services would be highly unusual without a disruptive event. The travel market is still volatile on a local level, however, and the second quarter of 2022 did represent the beginning of the post-pandemic travel recovery in earnest as the omicron coronavirus variant faded.
Airbnb has also said that it's seen strong growth in high-density urban areas and international travel as travel patterns normalize, which could mean that areas that were particularly popular during the pandemic may now be cooling off.
Other signs indicate that travel demand remains robust heading into the peak summer months. Carnival, the world's biggest cruise line operator, raised its full-year guidance earlier this week when it reported second-quarter earnings, and AAA said even more Americans are expected to travel this summer than last.
NASDAQ: ABNB
Key Data Points
Why Airbnb investors shouldn't be worried
Investors already have a good sense of how Airbnb will perform in the second quarter and in the summer months. The company reported solid growth in the first quarter, with revenue up 20%, and guided for 12% to 16% revenue growth in the second quarter.
Airbnb also reports its bookings each quarter, which are forward-looking, as many of the bookings that come in the first quarter are for the summer. The company's bookings actually peak in the first quarter, even though it's the seasonally slowest month in terms of revenue.
Gross booking value rose 19% in the first quarter to $20.4 billion, a sign that growth should remain steady through the second and third quarters.
Gerli's argument above doesn't necessarily mean that Airbnb is in trouble even if the data is reasonably accurate. His point is more that certain markets have become saturated, which has led to prices coming down. Growth in listings is a good thing for Airbnb, even if it means more competition for individual hosts, but the data from Airbnb clearly shows overall demand is still increasing.
Additionally, this isn't the first time that rumors of an Airbnb collapse have swept social media. Last year, the hashtag #Airbnbust was trending, with some hosts saying their bookings were down substantially. While that could have been true for some locales, it didn't affect the company's overall performance.
The same seems to be true this time around. While the ongoing backlash against the company is concerning, Airbnb continues to grow, and there's no good reason to suspect that the company didn't hit its forecast for the second quarter.
Investors will learn more when the earnings report comes out in August, but for now, the rumors of Airbnb's demise seem greatly exaggerated.
