Why is Airbnb not profitable? Is Expedia Group losing market share? What about Booking.com losing short-term rentals? In separate published interviews recently, the CEOs of each company dismissed the criticism.
Airbnb cash flows in
In an interview with CNN, reporter Richard Quest last month cited Airbnb co-founder and CEO Brian Chesky as several unprofitable companies from years ago — and we should mention today — that spoke of a “path to profitability” in the face of losses and told Chesky “should we There will be a better feasibility study.”
In the first quarter, Airbnb cut its net loss to $19 million, and its June 2 midday market capitalization was $78.8 billion compared to rival Booking Holdings’ $94 billion.
Chesky replied that Airbnb’s free cash flow in the first quarter, which is usually a slow quarter, was $1.2 billion.
“We’re skinny, and we have 6,000 employees,” Chesky said. “We made a pretty big profit from a free cash flow standpoint in the first quarter. We feel really good.”
In fact in 2021, which saw Airbnb lose a net loss of $352 million, the red ink was mainly due to interest expense and “other income” expenses, mostly re-measurement of financial instruments.
He added, “We don’t take breaks. We tread on gas.”
Chesky recalled https://skift.com/2020/03/30/airbnb-ceo-apologizes-to-hosts-with-a-260-million-relief-package/Airbnb lost 80% of its business in two months during the start of the pandemic year 2020, and restructured. “We have laid off workers, we have restructured our company,” he said. “We rebuilt the company from the ground up.”
Chesky said he can’t control stock prices and the bad mood on Wall Street about risk-taking as it relates to high-growth companies.
“But ultimately, as a CEO, I try to focus on the things I can control,” Chesky said. I definitely can’t control the stock market. I can control the performance of the company and that’s what we focus on.”
“If you have a stock long enough, the big companies will go up,” Chesky said.
“And we don’t stop for breaks. We tread on gas.”
Expedia pulls out of southern Europe, says booking feature isn’t structural
Peter Kern, CEO of Expedia Group, who appeared Wednesday at the 50th Cowen Technology, Media and Communications conference, responded to concerns that his company is losing market share.
Kern said a lot of these concerns stem from a lack of appreciation for “hybrid transformation,” and that competitors often don’t report that they “bought” — meaning they spent a lot of marketing money — to improve their numbers.
For example, Expedia did well when the US travel revival occurred while Europe was still closed, and likewise sees the effect when Europe opens up, where Expedia is not the strongest.
“We got away from the business in Europe in the bad places, especially in southern Europe, where we weren’t making money and we were burning money,” Kern said. We didn’t have a successful strategy there. And from my point of view, you don’t keep hitting your face against the wall in the same place and do the same things. You are regrouping. You know how to win. Then back to the market. And did we give up some business there, some transactions? We certainly have. But we did it with our eyes open, and we’re comfortable with that.”
Although Booking.com is Europe’s leading online travel agency, Kern, who became a member of Expedia’s board of directors prior to the rise of Booking.com, said it wasn’t always this way.
None of this is structural,” Kern said. “We’ve traded with clients for years. In fact, we used to be dominant in Europe a long time ago. Other guys came up with a more subtle way to win at Google, and we gave up on the business slowly. But there’s nothing structural about it. Nothing sticky about it. Their product. Honestly, there isn’t enough interest in our product even though we have all these loyalty possibilities.”
Kern clearly doesn’t think much of Booking.com’s Genius loyalty program, while Expedia Group is in the midst of trying to roll out its five loyalty programs into one.
So how will Expedia and its unit Vrbo compete with Airbnb in short-term rentals?
Kern said Expedia/Vrbo won’t be as big in cities as Airbnb, and will continue to focus on renting homes, not apartments.
He said Expedia has an advantage over Airbnb in its business-to-business partnerships, an area in which Airbnb is largely absent.
“And we have that tremendous opportunity,” Kern said. “I mean, think of all the rewards programs we help save energy like Amex, Chase and others that we can run — so that we can even pay in places like big hotel chains that are starting to rent homes to their rewarding members.”
Booking.com is making improvements to short-term rental to win customers from the United States
Why would US hosts or property managers register and list on Booking.com in addition to – or instead of – Airbnb and Expedia/Vrbo?
Speaking at Cowen’s Thursday conference, Glenn Fogel, who heads both Booking.com and parent company Booking Holdings, said the company knows it needs to offer a better short-term rental — which he calls alternative accommodations — and add liability insurance, for example.
“If you own a home and want to rent it out to strangers, one of the things you might be concerned about is what will happen, [if] Vogel said. “Who’s going to pay you for that? Which is — if you had to think that some distributor would give you free insurance, oh, that’s fine, but we didn’t, and others did, and we didn’t. Now we do.”
Fogel said that https://skift.com/2021/07/09/booking-holdings-new-fintech-unit-aims-to-help-travelers-beat-banks-at-their-own-game/bettering the system The payment he uses with the big real estate managers.
“And now we have a much better payment system that works with very big property managers so that the flows and settlements work, everything works better, and that’s another way to get more inventory,” Fogel said.
Vogel said Booking has a large foothold in Europe in short-term rentals, but the company is underrepresented in the United States
“We have a great product in Europe,” Vogel said. “It is doing very well. We are very big players there, and we are building slowly here. We will continue to work on that.”