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Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus

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Re: Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus

#91

Post by user5994461 »

CydeWeys wrote: post #59
user5994461 wrote: post #38

Earlier quoted context omitted.

They should not be tanking. Airbnb is in a highly profitable business with very high operating margin. For reference, they take 20 to 30% commission on each booking, whereas the fixed costs to run a website are ridiculously low. Even with half the bookings, it's still a cash cow.

Why shouldn't they be tanking? Everything in the travel sector, including hotels, is tanking right now. They're not highly profitable; indeed they've never turned a profit. > whereas the fixed costs to run a website are ridiculously low This is clearly not true. They are a tech company and have a large number of well-compensated engineers. So they do have a large amount of fixed costs. It sounds like you're arguing f…

Not turning a profit is a meaningless metrics for a silicon valley company. They could burn endless amounts of (VC) cash with zero relations to how well the business is doing or how solid it is.

I've worked at their main competitors for a while. I know the industry. I guarantee you AirBnb is not at any risk of disappearing.

Re: Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus

#92

Post by user5994461 »

shartshooter wrote: post #49
user5994461 wrote: post #38

Earlier quoted context omitted.

They should not be tanking. Airbnb is in a highly profitable business with very high operating margin. For reference, they take 20 to 30% commission on each booking, whereas the fixed costs to run a website are ridiculously low. Even with half the bookings, it's still a cash cow.

A company growing as aggressively as AirBnB wasn't taking a 20-30% profit and paying out shareholders. They were taking that 20-30% and reinvesting back into growth. That means people, offices, tech, marketing, audits of homes, process, insurance, etc. When things look good you can run lean and focus on growth. If things start to turn you can ratchet back those costs. Unfortunately, things turned on them very fast an…

What I am trying to say is that AirBnb is a solid business that is not at any risk of disappearing. I am moderately sure that they could have turned profitable any minute if they wanted to.

There was a subject on HN yesterday were people were posting offers from AirBnb in excess of 400k per year and from what you are telling me they have 15k+ employees now. Fact is, they're burning money for the sake of growth and metrics.

Can they sustain this and sustain it forever? No, but there are pretty much no business in the world who could, so that's not a reasonable metrics to say they're doing poorly and in danger.

They might get a reality check and cut some fat, like most unicorns playing the VC game get sooner or later, but the company is not at risk of dying.

Re: Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus

#93

Post by [deleted] »

chadmeister wrote: post #4

It's kind of frightening to think of the broader economic impact it would have on the whole real estate market if Airbnb went belly up. Aren't there a ton of cases where people are mortgaging multiple homes and paying them off with the revenue they generate? That cash just dried up over night and there doesn't appear to be any incoming federal support. Edit: Look, I'm all for affordable housing, but when viewing this…

[deleted]

Re: Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus

#94

Post by samsonradu »

chadmeister wrote: post #4

It's kind of frightening to think of the broader economic impact it would have on the whole real estate market if Airbnb went belly up. Aren't there a ton of cases where people are mortgaging multiple homes and paying them off with the revenue they generate? That cash just dried up over night and there doesn't appear to be any incoming federal support. Edit: Look, I'm all for affordable housing, but when viewing this…

I'm not sure you're assessing the damage that Airbnb inflicts to locals and the lower/middle class in major European cities - which also happen to be touristic hotspots.

> Aren't there a ton of cases where people are mortgaging multiple homes and paying them off with the revenue they generate?

So buyer beware does not apply to housing? In case you buy the wrong thing or in the wrong place or the wrong time you just get reimbursed?

Re: Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus

#95

Post by yesplorer »

CydeWeys wrote: post #88
yesplorer wrote: post #48

Earlier quoted context omitted.

Airbnb has over 5 million listings and 150 million customers around 190 countries and they don't make enough in commissions to pay rent, salaries and server costs?

They don't. Period. That's a simple fact. No questions need asking here; they do NOT make enough money from their listings to cover all of their costs, full stop.

Then they're indeed not fit to run their business, period.

Re: Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus

#96

Post by dk8996 »

I'm not very surprised, most of the travel industry is getting hit hard. On a side note, I had a very bad experience with Airbnb. I found out, because it happened to me, that they remove negative reviews of hosts. I lot of the rating on their site are goosed.

Re: Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus

#97

Post by yesplorer »

rchaud wrote: post #82
yesplorer wrote: post #48

Earlier quoted context omitted.

Airbnb has over 5 million listings and 150 million customers around 190 countries and they don't make enough in commissions to pay rent, salaries and server costs?

you forgot marketing costs. Airbnb is a household name for a reason.

At what point does Management not realise that they need to balance their books and so at least, expenditure = revenue for them to break even?

Airbnb is 12 years old. If they haven't figured out that they shouldn't spend more than they earn by now, I don't think the current management will be able to figure it out in another 12 years.

Re: Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus

#98

Post by im3w1l »

threatofrain wrote: post #84
chadmeister wrote: post #79

Earlier quoted context omitted.

Look, I'm all for affordable housing, but when viewing this within the context of a looming recession and potential financial crisis I can assure you that the last thing you want to do is add in a potential amplifier to a housing market crash. Houses may get cheaper, but everyone is going to suffer in very difficult to imagine ways. Corporate debt markets are looking scary as hell right now. If you threw a housing ma…

A house is rarely used as an interesting business asset for generating productivity for the rest of the nation. AirBnB is like the height of how commercially productive a home can be. I would argue that the home is most interesting to a nation when it houses a family which is contributing to the economy. What we're talking about is making the housing market more healthy, where health is viewed from the perspective of…

What will happen is that airbnb hosts with liquidity problems have to fire sell them to lucky speculators and then in a year or two after the speculator has made his profit, they go right back on airbnb.

Re: Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus

#99

Post by ukabwlsbeux »

colinmhayes wrote: post #46
ukabwlsbeux wrote: post #31

Earlier quoted context omitted.

I don’t think that’s frightening at all. A bunch of rent seekers lose everything, and everyone else wins. This practice should be, and in some places is, illegal.

Airbnb isn't rent seeking. They're providing a valuable service to tourists. I find it very hard to see how short term rentals should be illegal.

AirBnB is not rent seeking though I’m dubious of its value to society. People buying property in RESIDENTIAL areas to be used exclusively as short term rental units are rent seekers.
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