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Airbnb’s Stunning IPO

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Re: Airbnb’s Stunning IPO

#251

Post by titanomachy »

maybelsyrup wrote: post #135

I decided I'd had it with Airbnb a couple of years ago now and mostly haven't looked back. I prioritize more traditional hospitality options now. I'll save a long diatribe and instead say that when I added up the little details I didn't like about the platform, and the ways I'd fix them, I'd "invented" ... a hotel. It may be my age now (over 30), but I've come to value knowing that Hilton uses a certain type of bedsh…

> It may be my age now

I assume it's probably in part an increase in wealth as you've gotten older. I think a Hilton is normally upwards of $200 a night, plus $50 per night for parking ($1400-1750 depending if you have a car). The average American earns $900 per week and is probably not dropping that kind of money on a hotel.

They're also pretty geared towards business travelers, with lots of premium conveniences that aren't needed by someone traveling to visit friends or something. For example, I usually prefer a basic kitchen with a fridge rather than room service for $40 per meal. I'll happily take the room service if I have work to do and my employer is paying, though.

Re: Airbnb’s Stunning IPO

#252

Post by notahacker »

rurp wrote: post #136
boberoni wrote: post #65

Earlier quoted context omitted.

Based on Airbnb's other product of "experiences", I could see them growing into the broader vacation industry. I remember a talk by Brian Chesky where he lamented the (pre-COVID) style of travel where tourists just herd into queues at mainstream tourist attractions. Airbnb experiences are supposed to subvert this and create an industry of tourism that is more serendipitous and less standardized.

It's already so easy to do non-standard tourist activities on a vacation that I'm skeptical there is a big opportunity here. All it takes to avoid the standard tourist traps is having interests that influence your travel, talking to locals, or firing up something like Groupon to find something to do in a new area. I've always figured that so many people hit up classic tourist spots because that's what they actually w…

'Something like Groupon to find something to do' is the pitch though, because actual Groupon isn't the ideal place to find things which are interesting to experience on holiday. (And in many of places asking locals meets with either utter bemusement or a commission-paying introduction to a standard tourist activity)

AirBNB aren't the first people to try this, but they're pretty well placed brand-wise to sell the 'real local experience curated by ordinary local people' image. And yes, in practice it'll leverage that to sell standard tourist activities and some customers will be delighted, just like they use AirBNB to find ideally situated self-catering holiday apartments run as businesses rather than airbeds in suburban spare rooms

Re: Airbnb’s Stunning IPO

#253

Post by worker767424 »

titanomachy wrote: post #251
maybelsyrup wrote: post #135

I decided I'd had it with Airbnb a couple of years ago now and mostly haven't looked back. I prioritize more traditional hospitality options now. I'll save a long diatribe and instead say that when I added up the little details I didn't like about the platform, and the ways I'd fix them, I'd "invented" ... a hotel. It may be my age now (over 30), but I've come to value knowing that Hilton uses a certain type of bedsh…

> It may be my age now I assume it's probably in part an increase in wealth as you've gotten older. I think a Hilton is normally upwards of $200 a night, plus $50 per night for parking ($1400-1750 depending if you have a car). The average American earns $900 per week and is probably not dropping that kind of money on a hotel. They're also pretty geared towards business travelers, with lots of premium conveniences tha…

> The average American earns $900 per week and is probably not dropping that kind of money on a hotel.

The average American making $900 per week doesn't normally go places that charge $50 a night for parking. Apparently parking at the Omaha Hilton is $15 per night.

If I'm price-conscious, all else being equal, I'd still prefer a Super 8 to an Airbnb because it might not be nice, but it won't be bad, and the variance between room and service quality across all their properties is pretty small, so I won't be surprised by anything. That, and if you're price-conscious, a bad Airbnb experience is expensive to fix; you just finished traveling, you want your room now, 3 hours and 4 phone calls later. Don't book an Airbnb unless you have a backup hotel to go to.

Re: Airbnb’s Stunning IPO

#254

Post by gotostatement »

subsubzero wrote: post #132

Some of my experiences with airbnb, always a guest not an owner: Bads - Had a really bad house with cabinet doors torn off the cabinets, trash in the garage, place was a total dump. Stayed one day and got the rest of my money back. Another place had a bad mouse infestation, this was dealt with by the owner but it was still pretty shocking as I have never lived or stayed in a place that had a single mouse my entire li…

the most annoying thing to me about airbnb is that for some reason there is no way to search by bed size. last time I used airbnb I had to resort to using a scraper library to search keywords relating to king beds. I felt like a hacker but it was still far from easy or clean

Re: Airbnb’s Stunning IPO

#255

Post by gotostatement »

therealx wrote: post #209
pm90 wrote: post #164

Earlier quoted context omitted.

They will churn through new customers who get bitten by this until they come up with controls/features that prevent it. Instituting those will increase the price making them less competitive and opening the door to others. Its quite amusing how much the gig economy is hyped up but besides the initial surge of excitement, it just settles down and looks like the industry its trying to replace. But I'm a pessimist. Mayb…

It's often worse than what it replaced, too. Uber did well because the Taxi industry already had gone to such low low's, but the gig economy feels synonomous with an excuse to pay less than minimum wage to me.

low pay + no benefits

Re: Airbnb’s Stunning IPO

#256

Post by boublepop »

brown9-2 wrote: post #234
xiaosun wrote: post #232

Earlier quoted context omitted.

About ~10% of AirBnbs shares were offered in the IPO. So only the shares sold in the IPO "left anything on the table". The other 90% of shareholders still have the option of selling at the higher market price. Who's the say this wasn't the intended effect - the benefit to the valuation of the 90% of shares still being held is greater than the opportunity cost of the 10% shares sold in the initial IPO?

that 90% would have had the same opportunity if the opening was higher

If they opened higher than the market was willing to pay, the compounded effect would have been brutal, the media would have effectively declared airbnb dead on the sport with article after article contemplating exactly how they would die. And realistically that would have been the case with even a lukewarm launch, so who’s to say the net effect of leaving some money on the table for the 10% investers doesn’t overall pay itself back? The story today definitely isn’t “AirBnB is dying after covid period cuts them to the bone”.

Re: Airbnb’s Stunning IPO

#257

Post by HexagonalKitten »

djtriptych wrote: post #238

I bought at $146 and feel ok at that price for a long play. I see regulation as the major risk. But getting millions of people to trust you with their homes is one hell of a moat. Everything about the post-pandemic world favors AirBNB. - Remote/Mobile workers. That alone is gonna make them an incredible amount of money. This isn't ever going to change. - Pandemic housing boom. People are buying at unprecedented rates…

Assuming their costs are about 50%, and that they need to make ~$8B profit / year, they'd need to collect $16B to make $8B, so that's about $100B in rentals at 15% take. Plausible, because the USA alone is ~$90B, but why does it seem stable? If AirBNB starts to charge enough to make $8B profit per year why wouldn't you rent your suite with VRBO?

The margins can get paper thin because nobody seems to want the profitable extras - just CC processing and a listings site. I know people who rent vacation property and they do not lack for potential customers. They're on all the services, but also Craigslist, etc. They value the services for easier money handling, slightly less customer service required, and a few smaller things. But certainly not enough to warrant more than a 5% cut, but ~15% seems more common. This seems to usually be obfuscated by charging the guest, not the host, but it's still money that's not on the table for them.

They often break the rules to deal with this by suggesting customers contact them directly and pay by money transfer, so the industry is already price conscious and willing to undercut partners. Not a friendly place to expand into. And customers tend to price conscious and shop around, so it seems likely to stay this way.

Uber, to contrast, benefits from their network effect because most customers are time, not price, conscious and thus only check one service. For AirBNB you have months to shop around and contact the host out of band.

Re: Airbnb’s Stunning IPO

#258

Post by titanomachy »

worker767424 wrote: post #253
titanomachy wrote: post #251

Earlier quoted context omitted.

> It may be my age now I assume it's probably in part an increase in wealth as you've gotten older. I think a Hilton is normally upwards of $200 a night, plus $50 per night for parking ($1400-1750 depending if you have a car). The average American earns $900 per week and is probably not dropping that kind of money on a hotel. They're also pretty geared towards business travelers, with lots of premium conveniences tha…

> The average American earns $900 per week and is probably not dropping that kind of money on a hotel. The average American making $900 per week doesn't normally go places that charge $50 a night for parking. Apparently parking at the Omaha Hilton is $15 per night. If I'm price-conscious, all else being equal, I'd still prefer a Super 8 to an Airbnb because it might not be nice, but it won't be bad, and the variance…

> parking at the Omaha Hilton is $15 per night.

In Seattle (last city I stayed at a Hilton) it's $45 after tax. It's entirely possible that not many people making $900 per week go to Seattle, and when they do I bet they don't stay at the Hilton.

Agreed though, it's hard to price in the potentially massive hassle of a bad Airbnb. I think most people treat the probability as zero until it happens to them personally.

Re: Airbnb’s Stunning IPO

#259

Post by TheCoelacanth »

tc313 wrote: post #180
kamilszybalski wrote: post #178

Earlier quoted context omitted.

Do you really think that the CFO should be accountable for pricing in market hype? I would much rather under-estimate and over-perform then over-estimate and fall short. The narrative between those two scenarios is drastically different. Related. Look at Snowflake, it's trading well beyond any logic. Most retail doesn't realize that ~10% float is trading. Watch for Monday as lock-ups expire, the price action will be…

> The narrative between those two scenarios is drastically different. Who cares about the narrative unless you need to raise capital again soon? The money you get in an IPO actually goes into the business, while the trading price of the stock has no impact on the business.

Your shareholders, the owners of the company who you are working for, care about what the trading price is.

Re: Airbnb’s Stunning IPO

#260

Post by refurb »

silverlake wrote: post #229
11thEarlOfMar wrote: post #154

I recall that Facebook's first day closed at or near the offer price: Opened at $38 and closed at $38.23. That's a masterful IPO pricing accomplishment, meaning, FB left $0.23 per share on the table. Moreover, the stock traded below the open for 5 quarters before starting it's impressive rise. Even with that pause, buying at the open and holding till now would have yielded nearly 27% annualized return. It's just my o…

Someone posted a terrific explanation for why companies are not “leaving money the table”. In short, if a fool pays $140 for 1 share of Airbnb, does that magically make the entire company worth 2X more? If I sell 1 share of my startup for $10, is my company worth $1B?

Ignore the rest of the company’s shares and just look at the ones sold in the IPO. AirBnB could have gotten twice as much money for them, so of course they left money on the table.
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