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Can Airbnb Outperform a Potential Recession? | WSJ - YouTube
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[1]
- [Presenter] This is
a tiny home on Airbnb.
[3]
So far this year,
[4]
this listing has brought in
over $20,000 for its host.
[8]
The typical U.S. host in 2021
[10]
earned over $13,800
according to the company.
[14]
- The tiny home doesn't
cost a lot to build,
[16]
and yet it could charge
hundreds of dollars a night.
[18]
- [Presenter] Airbnb posted a
profit in its second quarter,
[21]
as guests booked a record
number of stays and experiences
[24]
and hosts increased prices for
rentals amid high inflation,
[27]
but people didn't book as much
as analysts had projected,
[30]
and the company's summer bookings forecast
[33]
fell short of expectations.
[34]
- Obviously it's an incredibly
dynamic period of time,
[37]
but I'm still expecting
[38]
an incredibly strong period of travel
[40]
even if people pull back spending some.
[42]
- [Presenter] So how did the largest
[43]
home sharing platform in the U.S.
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navigate its biggest crises?
[47]
And could it borrow those lessons
[48]
to weather fears of a recession?
[50]
This is The Economics of Airbnb.
[54]
- Airbnb started
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around the time of the
2008 financial crisis.
[58]
This was a time when
people were really hard hit
[61]
by the recession,
[63]
and they were looking for a
way to make an extra buck.
[66]
- [Presenter] In 2016,
[67]
the company launched Airbnb Experiences,
[69]
which let travelers book
classes, tours, and outings.
[73]
Airbnb also spent more as it grew.
[75]
- The CEO branched out
into all kinds of things
[78]
like he wanted to have a media studios,
[80]
he wanted to branch into transportation.
[82]
- [Presenter] And then the pandemic hit.
[84]
Business was down 80%
[86]
forcing Airbnb to take on
$2,000,000,000 in debt,
[89]
and pause all non-essential projects.
[91]
- I hope I never do a side
project again in my life.
[93]
I learned a lesson,
[95]
and I think the lesson is
[96]
when you try to do new
things as side things,
[98]
they don't work.
[99]
- [Presenter] Summer of 2020
was a turning point for Airbnb.
[102]
- [Rana] People started
quarantining with their families.
[105]
Friends started taking staycations
[107]
while they could work remote.
[109]
So that's something that
definitely benefited Airbnb.
[112]
- [Presenter] Local travel
became its stronghold,
[114]
and people started using the
platform for longer stays.
[117]
The company was one of the
hottest public listings of 2020,
[120]
though with stock price
has fallen since then
[122]
amid a broad market cool off.
[124]
In August, Airbnb projected
record third quarter revenue
[127]
on the back of higher rental prices,
[129]
and said it expects to post
its first full year profit
[132]
this year.
[133]
- A lot of businesses have lucky moments,
[136]
but there's something to
be said about getting lucky
[139]
and also being able to ride
that wave and capitalize on it.
[144]
- [Presenter] That's what Airbnb says
[145]
it has done from the start.
[146]
- Back then in 2008, a lot
of people turned to hosting,
[149]
because they were losing their homes,
[150]
high housing prices,
[152]
and a lot of people because
they didn't have as much money
[154]
were looking for more
affordable ways to travel
[157]
than ever before.
[158]
- [Rana] That really helped them
[159]
bring a lot of people who were looking for
[162]
ways to make up for lost
income onto the platform.
[165]
And you can really see
them capitalize on timing
[168]
during the pandemic as well.
[170]
- [Presenter] Airbnb
redesigned its app and website
[172]
to focus on local stays
during the pandemic.
[174]
Last summer, it launched
a flexible search feature,
[177]
which curates trips for people
[178]
who don't know where they want to go.
[180]
- [Rana] The pandemic and remote work
[182]
gave us that flexibility.
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You know, we could travel during the week
[185]
and still work remote.
[186]
So Airbnb starts noticing
this trend and it says,
[190]
oh my God we can,
[191]
you know, we can sort of
capitalize on this, and they do.
[195]
- [Presenter] In May,
[195]
Airbnb launched another
redesign of its search tool
[198]
that split homes into
more than 50 categories
[201]
as a way to steer people to places
[202]
they wouldn't otherwise have picked.
[204]
- [Rana] So what they're trying to do is
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they're trying to fill existing homes
[207]
instead of adding more and more homes.
[210]
- [Presenter] Some analysts say
[211]
this is key to the company's future growth
[213]
since global occupancy rates are low.
[217]
When it comes to addressing
safety issues on its platform,
[219]
some cities have complained that
[221]
Airbnb has been too hands off.
[223]
- They're not actively
monitoring these properties
[225]
because frankly they
can't, they don't own them.
[228]
So that's really where a lot
of their problems stem from.
[231]
- Four people killed, another four hurt,
[234]
all of it happening in a
house rented out on Airbnb.
[237]
- [Presenter] After a
2019 Halloween shooting,
[239]
the company announced safety measures
[241]
including a 24/7 neighborhood
hotline to field complaints.
[245]
- [Brian] We've banned all
parties globally on Airbnb.
[248]
We have a risky reservation queue
[249]
where we looking at any
suspicious activity,
[252]
and we have a pretty
hands-on team that's using
[254]
some pretty advanced like
machine learning technology
[257]
to essentially identify
anything we think is suspicious.
[260]
If it is, we'll continue
to seek more information.
[262]
- [Presenter] The company says
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the number of party complaints
[265]
have dropped 44% in the last two years.
[267]
Airbnb has also been trying
to reduce that rate further
[270]
by doing things like blocking
one or two nights stays
[273]
on new year's Eve and Halloween
[274]
for guests without a
history of positive reviews,
[277]
but incidents keep happening.
[279]
- [Rana] Earlier this year,
[280]
we had a shooting in Pittsburgh,
[283]
and again, you know, people were injured.
[286]
- [Presenter] City officials
have also blamed Airbnb
[288]
for ruining the long term rental market
[290]
in some small communities
[292]
- What's happened is a lot of people
[293]
are just snapping up
properties and renting them.
[297]
And as a result,
[298]
locals don't have enough
properties to rent long term.
[301]
Airbnb doesn't think that it's actually
[304]
affected the long term rental market,
[307]
but you know if you ask city officials,
[310]
they have a different story.
[312]
- [Presenter] For example, in 2020,
[313]
the Mayor of Sedona,
Arizona, a tourist hotspot,
[316]
said that the demand for Airbnb rentals
[318]
worsened the shortage
of affordable housing
[320]
and demolished the long
term rental market.
[323]
- If we are, you know,
part of the problem,
[325]
we are gonna work with cities.
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That's why we've done numerous
agreements with cities
[329]
to create restrictions.
[331]
We actually do want Airbnb
[332]
to get more and more
into long term housing.
[334]
We want people to really feel
invested in the community.
[337]
- [Rana] One of the things
that Airbnb is doing now
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is it's trying to direct people
[344]
to areas where it has supply,
[346]
and that sort of also takes
the load off of certain places
[350]
that everyone might go to
[352]
and that might get sort of overburdened
[355]
- [Presenter] In April,
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Airbnb announced
[357]
that its employees can
work from almost anywhere
[359]
without a pay cut.
[360]
- So if more businesses
do follow Airbnb's lead,
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Airbnb stands to gain in
its home rental business
[367]
because that would mean,
more digital nomads,
[370]
more people traveling, and
likely booking more Airbnbs.
[374]
- [Presenter] But some
travelers are concerned
[376]
about rising nightly rates,
[377]
and some analysts believe that
hotel chains and competitors
[380]
like Expedia Group,
[381]
stand to gain as business
travel picks up this year.
[384]
So the question is, can
Airbnb keep up the momentum?
[387]
- We're an incredibly lean company.
[389]
We've already been preparing for a storm
[392]
that we thought was
inevitable for years to come.
[394]
- [Presenter] Airbnb
dramatically cut costs
[396]
during the pandemic,
[397]
and analysts have credited the company
[399]
for keeping those down
even as travel rebounded.
[402]
While a potential economic
downturn could decrease demand,
[405]
Airbnb says it could also bring
more hosts to the platform.
[408]
- As the economy is gonna be slowing down,
[410]
I think more and more people
[411]
are gonna be interested in saving money,
[413]
and I think they're
also gonna be interested
[414]
in new ways to make money.
[416]
- [Presenter] And unlike
hotels with fixed properties,
[418]
Airbnb can adapt quickly
[420]
by spotlighting properties
[421]
that serve travelers changing needs,
[423]
like it did during the
switch to local travel.
[425]
- I think even as we're
entering a recession,
[427]
people have been kind
of isolated for years
[429]
and they're yearning to get out.
[431]
And the one thing
[431]
I think you're gonna
see them spend money on,
[433]
is they're gonna continue to travel.
[434]
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