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Ahead of IPO, Airbnb achieves profitability for second year in a row

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Re: Ahead of IPO, Airbnb achieves profitability for second year in a row

#121

Post by rootusrootus »

conanbatt wrote: post #57
gringoDan wrote: post #43

They're often considered similar businesses, but intuitively it seems to me that, long-term, Airbnb will be valued higher than Uber and other ridesharing companies. Home rentals seem to be simpler market to operate in than coordinating real-time supply and demand between drivers & riders. Additionally, Uber seems to be facing issues on the driver side of the business - they have a $650 driver acquisition cost & a 12%…

What im not sure about is Airbnb's moat. They have a great brand name and all, but their service is very limited: 15% is a very large cut to take on these transactions. What prevents another company from doing the same at 12% and costing 50% to operate?

Yeah I was thinking exactly that a couple days ago while I was booking a beach condo on a different site. Airbnb has a fair amount of competition in the vacation rentals market, and there doesn't seem to be a good defense against that. When I'm looking for a place to rent for vacation, I start with Google and end up visiting several sites. Airbnb is frequently one of them, but never the only one.

Re: Ahead of IPO, Airbnb achieves profitability for second year in a row

#122

Post by EpicEng »

gringoDan wrote: post #69
conanbatt wrote: post #57

Earlier quoted context omitted.

What im not sure about is Airbnb's moat. They have a great brand name and all, but their service is very limited: 15% is a very large cut to take on these transactions. What prevents another company from doing the same at 12% and costing 50% to operate?

Nothing prevents another company from doing that, but all of the hosts & guests are already on Airbnb. Two-sided marketplaces are very difficult to start, but once they have some momentum, it's even more difficult to unseat them. Look at Craigslist - terrible UI, hundreds of startups have tried to challenge it in the past 15+ years, and yet it's still my go-to when I need to sell some old furniture.

>Look at Craigslist - terrible UI,

I love their UI. It's fast and does exactly what it needs to do, with the bonus that I don't have to download 12 js frameworks to look at a damn listing.

Re: Ahead of IPO, Airbnb achieves profitability for second year in a row

#123

Post by smileysteve »

gandutraveler wrote: post #119
gringoDan wrote: post #43

They're often considered similar businesses, but intuitively it seems to me that, long-term, Airbnb will be valued higher than Uber and other ridesharing companies. Home rentals seem to be simpler market to operate in than coordinating real-time supply and demand between drivers & riders. Additionally, Uber seems to be facing issues on the driver side of the business - they have a $650 driver acquisition cost & a 12%…

Airbnb has long way to go to be major player in hotel/rental market space whereas Uber has effectively killed taxi companies and is the market leader. IMO demand for ridesharing will not lower in bad economy compared to Airbnb which is driven by consumers mostly using during travel.

On the other hand, in a bad economy, more people are likely to rent their extra rooms at lower costs, and whether vacationing or even living for short term, consumers are more likely to pay.

There is then the argument that such a time would quickly be bad for aurbnb bc the fees quickly cost more than the marketing or insurance are worth.

Re: Ahead of IPO, Airbnb achieves profitability for second year in a row

#124

Post by atombender »

conanbatt wrote: post #57
gringoDan wrote: post #43

They're often considered similar businesses, but intuitively it seems to me that, long-term, Airbnb will be valued higher than Uber and other ridesharing companies. Home rentals seem to be simpler market to operate in than coordinating real-time supply and demand between drivers & riders. Additionally, Uber seems to be facing issues on the driver side of the business - they have a $650 driver acquisition cost & a 12%…

What im not sure about is Airbnb's moat. They have a great brand name and all, but their service is very limited: 15% is a very large cut to take on these transactions. What prevents another company from doing the same at 12% and costing 50% to operate?

I'm not sure about the moat either. While planning a trip recently, I checked out Airbnb, Booking.com, VRBO and Homeaway.com for the same area. I found that Booking.com and Homeaway.com both had some of the same listings. So landlords are certainly trying to bypass the moat. (Homeaway.com is in fact co-hosting Airbnb listings through a partnership, but they're also apparently transitioning away from that to become a full-blown Airbnb competitor.)

I suspect the moat won't matter that much, since a consumer ultimately doesn't care about which service they end up booking with, as long as it seems trustworthy, and landlords have little reason to be loyal to one service when there's no downside to being non-exclusive.

Re: Ahead of IPO, Airbnb achieves profitability for second year in a row

#125

Post by ricardobeat »

gandutraveler wrote: post #119
gringoDan wrote: post #43

They're often considered similar businesses, but intuitively it seems to me that, long-term, Airbnb will be valued higher than Uber and other ridesharing companies. Home rentals seem to be simpler market to operate in than coordinating real-time supply and demand between drivers & riders. Additionally, Uber seems to be facing issues on the driver side of the business - they have a $650 driver acquisition cost & a 12%…

Airbnb has long way to go to be major player in hotel/rental market space whereas Uber has effectively killed taxi companies and is the market leader. IMO demand for ridesharing will not lower in bad economy compared to Airbnb which is driven by consumers mostly using during travel.

Counter-intuitively, demand for travel tends to go up in rough times.

Re: Ahead of IPO, Airbnb achieves profitability for second year in a row

#126

Post by [deleted] »

gandutraveler wrote: post #119
gringoDan wrote: post #43

They're often considered similar businesses, but intuitively it seems to me that, long-term, Airbnb will be valued higher than Uber and other ridesharing companies. Home rentals seem to be simpler market to operate in than coordinating real-time supply and demand between drivers & riders. Additionally, Uber seems to be facing issues on the driver side of the business - they have a $650 driver acquisition cost & a 12%…

Airbnb has long way to go to be major player in hotel/rental market space whereas Uber has effectively killed taxi companies and is the market leader. IMO demand for ridesharing will not lower in bad economy compared to Airbnb which is driven by consumers mostly using during travel.

[deleted]

Re: Ahead of IPO, Airbnb achieves profitability for second year in a row

#127

Post by kccqzy »

conanbatt wrote: post #87
zethraeus wrote: post #63

Can anyone here speak to AirBnb's continued growth. Rumors say it's plateaued and even public articles suggest the same https://skift.com/2018/11/14/airbnbs-growth-is-slowing-amid-...

I've found the things like ""experiences" and related offerings to be a red flag over their capacity to grow or keep their advantage. Still, they are killing it, truly.

I've had an Airbnb "experience" and it's literally just a local tourism company doing a neighborhood tour. They existed way before Airbnb had experiences. It's a convenient way for them to advertise and facilitate a transaction.

Re: Ahead of IPO, Airbnb achieves profitability for second year in a row

#128

Post by epa »

StreamBright wrote: post #46
epa wrote: post #30

Earlier quoted context omitted.

What's wrong with a $1 profit? Sounds like sustainable tax planning to me..

You are at the mercy of you investors. Any unexpected cost would "wipe out" your profits and you would generate net loss.

Not if you have levers to pull back on (marketing, salesforce) etc.

Re: Ahead of IPO, Airbnb achieves profitability for second year in a row

#129

Post by [deleted] »

uniformlyrandom wrote: post #116
warp_factor wrote: post #113

I'm a regular user of Airbnbs AND hotels. I usually prefer staying in hotels and will look for Airbnb only as a second choice. Reasons are: - Price is usually higher on Airbnb. - Airbnb crazy fees for multiple people, cleaning scam, outrageous service fees etc. - Inconvenience to not have a 24H reception where I can get my keys. The real genius of Airbnb is that they convinced a lot of people that they shouldn't look…

This is purely anecdotical. Short-term rentals exist mostly because of high hotel prices (well, and poor hotel service - but that is already covered by the high price, as 'high price' is a term relative to the quality of goods). I always check prices on hotels and airbnb, and I mostly book airbnb. Because it is cheaper (even with fees and everything).

[deleted]

Re: Ahead of IPO, Airbnb achieves profitability for second year in a row

#130

Post by forkLding »

warp_factor wrote: post #113

I'm a regular user of Airbnbs AND hotels. I usually prefer staying in hotels and will look for Airbnb only as a second choice. Reasons are: - Price is usually higher on Airbnb. - Airbnb crazy fees for multiple people, cleaning scam, outrageous service fees etc. - Inconvenience to not have a 24H reception where I can get my keys. The real genius of Airbnb is that they convinced a lot of people that they shouldn't look…

The pricing depends on demand and supply, Airbnb doesn't set the prices, it can recommend prices, however the final decision is with the hosts.

So in a place with a lot of demand and little supply, the prices tend to be high and vice versa. Airbnb pricing is really a small projection of your local housing and rental market. I've managed to find cheaper places to stay on Airbnb than hotels and vice versa.

Source: https://www.airbnb.ca/help/article/125/how-is-the-price-dete...

Note that Airbnb does take a service fee, but in reality so does your hotel.

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