"Airbnb, Travel Demand Surges Amid Expectations of Gyeonggi Normalization"

[Asia Economy Reporter Minji Lee] With expectations for economic normalization rising due to COVID-19 vaccinations, Airbnb is projected to see improved performance driven by the recovery in travel demand.

According to the financial investment industry on the 27th, the total booking amount in the fourth quarter of last year was $5.91 billion, down 31% compared to the same period the previous year but exceeding market expectations of $5.19 billion. Revenue also reached $860 million, surpassing the expected $740 million. However, net loss was $3.89 billion, falling short of market expectations. The market had anticipated a decline of over 50% in last year’s performance compared to 2019 revenue, but the decrease was limited to 30%.

Jung-han Kim, a researcher at Samsung Securities, said, “Although net profit fell short of expectations due to stock compensation costs ($2.8 billion) and IPO-related expenses, overall the results were favorable and exceeded expectations. In terms of growth potential, Airbnb outperformed market expectations and is expected to be the biggest beneficiary of the post-pandemic lodging market restructuring.”

Travel demand in the fourth quarter of last year showed a mixed impact from the peak-out effect of the high season in the third quarter and the spread of COVID-19 in the fourth quarter. Specifically, the quarterly growth rate gap of total booking amount (4Q growth rate minus 3Q growth rate) was -13.3 percentage points, down from 2 percentage points recorded in the same period last year. This indicates that the fourth-quarter results were affected by the resurgence of COVID-19.

This change is expected to impact profitability improvement. The company’s adjusted EBITDA margin (earnings before interest, taxes, depreciation, and amortization) for the fourth quarter was -2.4%, a significant improvement compared to -25% in the same period before COVID-19. Researcher Kim said, “With vaccinations starting early this year and a sharp decline in new confirmed cases, there is growing hope that suppressed demand will reemerge. According to the company’s survey, 54% of travelers have already made travel reservations or are planning trips.”

First-quarter bookings this year are expected to decrease compared to 2019 but show an increasing trend compared to the previous quarter. This is because the number of booking days in North America is recovering to pre-COVID-19 levels, and in the long term, sales recovery and increased travel demand are expected in emerging markets and Latin America. Bowon Choi, a researcher at Hanwha Investment & Securities, said, “Normalization is progressing rapidly in North America, where the average daily rate (ADR) is relatively high. As cash flow improves, Airbnb’s relative attractiveness among online travel agencies (OTA) is expected to increase.”

Airbnb is receiving a differentiated premium as the biggest beneficiary of economic normalization. According to Bloomberg, the company’s PSR (price-to-sales ratio) is around 28 times. Researcher Kim said, “Considering the overall volatility expansion trend among growth stocks, the valuation is somewhat burdensome and will fluctuate in the short term linked to overall investor sentiment. However, the long-term growth potential is significant.”