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Yahoo Finance's Melody Hahm sits down with Airbnb Co-Founder & CEO Brian Chesky to discuss the companies first quarter earnings as well as the state of the tourism industry amid the ongoing COVID-19 pandemic.
MELODY HAHM: Welcome to "Yahoo Finance Presents." I'm Melody Hahm, and I have the pleasure of speaking with Brian Chesky, co-founder and CEO of Airbnb. He joins us on the heels of the company's second report as a public company. Brian, thanks for joining us.
BRIAN CHESKY: Well, thank you for having me on today, Melody.
MELODY HAHM: So revenue did increase 5% to $887 million in Q1, gross booking value up 52% to $10.3 billion, net losses did add up to $1.2 billion. Can we expect a profitable quarter this year, looking ahead to even 2022
BRIAN CHESKY: Yeah, well let me just clarify that, yeah, gross booking value was up 50%. Most of our net losses are one-time expenses, including paying off debt. Actually, we only lost $59 million in the quarter and adjusted EBITDA basis, and we lost around a quarter of a billion dollars this time last year. In fact, we were more profitable this year than we were this time two years ago before the pandemic.
So I think that what we're demonstrating is we're making metronomic improvements in our operating cost. For example, we have about the same traffic that we did two years ago, 50% less marketing. So we'll continue to make progress each quarter.
MELODY HAHM: And when we think about this structural, seismic shift in travel, right, some of the stats are pretty interesting. 24% of Airbnb stays are 28 days are over, which essentially means people are staying for a month at least at a home. Nights booked for domestic travel were about 80% of all stays. And half of stays booked for at least a week long. Tell me what that means, and as we head into the second half of this year, if those kinds of metrics will continue to be in play.
BRIAN CHESKY: I guess in one sense what it means is Airbnb is no longer just a travel company. I mean, 24% of our business does not travel. Most people define travel as 28 days or less. That's almost every city defines. That's the threshold for them to collect a lot of tourist occupancy taxes.
So I think that what it really means is that people are more flexible. And I think as people are more flexible about where they travel, where they travel, I think that what it really means is that they're less tethered to any one location. And they can work, live, and travel anywhere. And if they can do that, then they can go for longer.
So I think this trend-- it was actually, Melody, 14% of our nights booked two years ago was longer than 28 days. It's now 24%. That's a pretty big shift in two years considering it took us about 11 or 12 years to get to the first 14%.
MELODY HAHM: Yeah, that's fascinating. You know, talking about longer stays, driveable destinations, bigger groups, and traveling with families and perhaps extended families, Airbnb had to crack down on parties last year. I remember that vividly.
But as the vaccine rollout continues and restrictions do lighten up a bit, will you decide to extend that max occupancy beyond 16 people? How are you envisioning that?
BRIAN CHESKY: Not for the foreseeable future. I mean, health and safety is the most important thing. We know that we're not out of the clear. We are optimistic, though. The head of the CDC said today that if you're vaccinated, you can resume activities you were doing before the pandemic-- activities like freely traveling.
So we're very optimistic, but we also know that parties aren't just a health risk, they also are a neighborhood nuisance. So we want to be really good community players all over the world.
MELODY HAHM: Yeah, let's go one step beyond the line being blurred, right, between work and home. I understand Airbnb has 100 partnerships with local organizations around the world, really buoying tourism during a time when that, obviously, has been faltering. How is Airbnb reinventing the tourism industry? Like you said, you're beyond a travel company now, right? Do you think you'll have the power to really direct demand to a certain location? Is that something from an editorial perspective you're going to be able to do?
BRIAN CHESKY: Yeah, and I would say, in a sense, we're probably already doing it. I'll give you one example, Melody-- we launched a feature in February. The feature was called flexible dates. So let me back up-- it used to be that people came to Airbnb, and they knew where they were going, and they knew when they were going.
It's why on the home page, it said, where are you going? You type a location, and we have a date picker. Well, it actually turns out a huge of guests don't know necessarily where they're going. They're flexible, and they don't know when they're going-- or they're flexible.
So in February, we launched a feature called flexible dates. It allowed you to say, instead of saying, I'm going June 10 to June 20, they say I'm looking for a place for a weekend, a week, or a month any time this summer. We've had nearly 100 million searches just using that feature since February-- nearly 100 million. What that really means is that people are flexible.
That means we can point demand. And if cities want to partner with us and they want more travelers, we could potentially highlight those travelers to those communities. We just want to cooperate with cities. And if they want more guests, we want to be able to give them more guests.
MELODY HAHM: After such a blistering year for urban areas-- I'm in Los Angeles, I know you spend a lot of time in San Francisco. Where do you really see-- what kinds of cities do you see benefiting during this time? I know, some of that demand has come back in Q1. But as we look to the back half of this year, do we expect New York, do we expect LA to continue to be hot spots for tourists? Or that's not going to be the case anymore?
BRIAN CHESKY: Yeah, it's hard for me to make a long list of places that I don't think can recover. I think LA is going to come back pretty strong. I think New York is going to do well. Kind of interesting thing about New York, though-- last year, more people traveled in Airbnb to Hudson, and Catskills, and upstate New York than New York City. So it was a very, very hard year for New York.
But what it's filled in its place is more than 60% of our nights booked in New York are now long-term stays-- longer than 28 days. So I think the first thing that's going to come back to these cities is long-term stays. But I do think you're going to see travel returning these cities, probably when crossborder.
For example, a huge percentage people that go to New York are from other countries. Once people feel comfortable crossing borders, I think these cities are going to come roaring back. But it's going to take a little bit of time.
MELODY HAHM: Speaking of comfort levels here, what are the kinds of conversations you're having with the four-plus million hosts on your platform in terms of vaccinations? Is there pressure to regulate that somehow? You know, you are a platform at the end of the day, and I'm curious if that's something that you've discussed-- or whether it's a card that guests are going to be expected to show. This is-- I'm speaking, perhaps, in North America, right, where there is availability.
BRIAN CHESKY: Well, I would say two things. Number one, we have a host advisory board, and we're constantly looking to work with our hosts to be able to get input on what they want. Number two, health and safety is paramount. We're always looking for local guidelines and regulations to take directions from.
What we did last year is we worked with the now-surgeon general in the United States, Dr. Vivek Murthy. He co-designed with us an enhanced screening protocol. More than one million hosts entered into cleaning protocol. And we also were able to work with them to be able to give them some best practices on how to be able to stay safe.
We'll see how it plays out. I think we're going to learn a lot more in the coming weeks and months. And I think we're going to really try to take our guidelines from the health professionals.
MELODY HAHM: Yeah, that makes a lot of sense. And then just thinking about, again, where you're seeing the most robust recovery, North America, and that's really boosted your average daily rate to $160, if I'm correct, in Q1. Do you anticipate that to be the case, at least for Q2, Q3? Or do you think there will be some seismic shifts in the months ahead?
BRIAN CHESKY: I think that the overall trend will somewhat continue. But the reason that the average daily rate on Airbnb up going up is because the United States is growing disproportionately faster than other countries, and people are traveling to non-urban areas more than urban areas. As countries lift restrictions, as people visit cities, as people cross borders, then the EDR should come down a little bit, because we're going to have a shift back to Europe, back to Latin America, back to Asia, back to cities.
And in cities, people typically booked studio apartments, one or two-bedroom apartments, rather than four or five-bedroom homes and vacation rentals. That being said, I do think this is a long-term trend-- a trend towards bigger homes, a trend toward longer stays, a trend towards going from a few cities to everywhere, a trend from business travel to leisure travel, and a trend from mass travel to meaningful travel. I think all these things, it's hard for me to fathom those reversing.
MELODY HAHM: Yeah. I, for one, have been a participant in all of those trends you just mentioned. And then finally, Monday is a big day. Airbnb's lock-up period does expire. Are you afraid of a near-term sell-off? Or how much volatility are you expecting?
BRIAN CHESKY: No, I'm not afraid at all. And I also just want to be clear that I try to only worry about things I can control. And what I can control is making sure that we have this once in the century travel rebound, we're going to be ready for it. Our hosts are going to be ready for it.
And the other thing is I think that there's a lot of anticipation for on May 24, we are unveiling the biggest update to our service in 12 years. So I think people are going to be pretty excited about that as well.
MELODY HAHM: I'll be tuning into that. Thank you so much, Brian Chesky, Co-founder and CEO of Airbnb.
BRIAN CHESKY: Thank you, Melody.