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Toto, we’re not in Kansas anymore: Rental company Airbnb announced its highest first-quarter revenue ever this week in advance of an expected summer travel boom.
Airbnb brought in $1.8 billion in revenue, a 20% increase year over year, beating analyst estimates. In particular, cross-border night bookings grew by 36% year over year, with the strongest growth happening in Asia Pacific, increasing more than 40% year over year.
“We are encouraged by China’s recent lifting of its travel restrictions even though we anticipate the outbound recovery to be gradual due to challenges with limited flight capacities,” the company said in a letter to shareholders. Airbnb reported $117 million in net income, marking its first profitable Q1.
Still, the company said it expects average daily rates to be “slightly lower” next quarter compared to the prior year, in part because of new host pricing tools it rolled out earlier this year. The company said it plans to prioritize marketing earlier in the year compared to 2022, to capitalize on the impending summer travel season.
“In 2023, we have pulled forward the timing of marketing spend to be more heavily weighted in the first half of the year as compared to 2022,” it said in the shareholder letter. “In addition, we are increasing our brand marketing investment in more countries around the world. We believe spending earlier in the year helps to support the peak summer travel season.”
Airbnb said it’s continuing to see “great results” from its brand marketing, which the company has increasingly prioritized in recent years, as well as “high ROIs” for performance marketing, but did not go into further detail. This week, the brand rolled out a campaign plugging its “Rooms” feature, which lets travelers book a room in somebody’s home. According to the company, the average price of Rooms bookings is $67 a night.
The company also noted that more travelers returned to cities, with high-density urban night bookings up 20% year over year. Supply also increased 18% year over year.
Airbnb is not the only hospitality company to report strong business lately. Hilton, as well as Delta and Alaska Airlines, reported strong earnings last quarter as well.