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After releasing its Q2 earnings report last week, Airbnb would have hoped to make headlines about branching out beyond its core offering and relaunching its Experiences program in 2025, but attention will instead be given to the company's disappointing drop in profit and sinking share price in the aftermath of the call.
The home-sharing firm reported a 15 per cent drop in quarterly profit compared to Q2 2023 [down to a net income of $555 million this year], which it attributed to slowing demand from US travellers and shortened booking lead times. This came despite a steady rise in nights and experiences booked and an 11 per cent year-over-year increase in Q2 revenue, as Airbnb highlighted a “growing reliance on smartphones for travel planning and booking”.
As hinted previously, Airbnb is keen to emphasise the new products and services that will help it to diversify beyond short-term rental stays, including unveiling a co-hosting programme that is due to launch this autumn and relaunching its Experiences program next year, following on from its release of Icons [a star-studded Experiences category] in May.
However, the company's enthusiasm was tempered as shares dropped around 14 per cent in after-market trading, and with shorter booking lead times expected to continue into the next quarter, it would suggest that travellers are spending more cautiously amid global market uncertainty. As such, it is unsurprising to hear Airbnb CEO Brian Chesky say that the relaunched Experiences program will need to be "unique" and "more affordable" to guests.
A share price drop like that will be far from fatal to Airbnb, nevertheless it points to a trend that is being experienced by other publicly-trading companies, such as Vacasa and Selina.
Portland-based management company Vacasa is still undergoing major restructuring efforts, having already undergone two rounds of job cuts this year, decreased its portfolio by nine per cent, and raised $30 million in a senior convertible notes financing to help ease its balance sheet and provide greater security for investors in case of bankruptcy. Coupled with its share price slumping 98 per cent to a record low of $2.36 since publicly trading, Vacasa's widening losses and spiralling revenue remain concerning developments.
Just weeks after lifestyle hospitality brand Selina's collapse into administration, it is noticeable that the share prices of businesses that went public via mergers with special purpose acquisition companies [SPACs] have plummeted, from Vacasa to Sonder [$1.21] and Inspirato [$3.67]. Companies that chased rapid growth and large investment but failed to drive high returns for investors are now reeling in their expectations, and must continue to do so if they are to avoid being the next major hospitality casualty.
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