Airbnb prepares for surge in travel — analysts choose Airbnb as top reopening play

Pack your bags and get ready for a travel rebound. One company, Airbnb, is packed for a lifetime of traveling.

On Feb. 26, one of the hottest IPOs in 2020, Airbnb released its first quarterly report that surpassed Wall Street’s expectations — sending its shares up 13%.

• $3.4b in sales for 2020 — down only 30% from 2019
• $4.6b in net loss for 2020 — compared to $674m in 2019

The only travel company resilient to COVID

The hotel killer and home rental company — Airbnb had a roller coaster of a year.

COVID shutdowns jeopardized Airbnb’s business. Forcing it to lay off 25% of its employees and to raise emergency funding at a valuation of $18b — half of what it was worth in 2017.

Nearly a year later, Airbnb had a record IPO and its stock had surged over 165% since it went public. But not all travel companies were this lucky…

Compared to other booking sites like Expedia and Bookings.com — whose sales fell 67% and 63% — Airbnb’s had only fallen 22%.

The pivot that saved Airbnb

In the summer of 2020, Edison Trends’ data showed that online bookings at Airbnb were higher than the 3 largest hotel chains. For the pandemic cautious traveler, Airbnb’s got many advantages over hotels — Lower cost, less crowded spaces and fewer human interactions.

Unlike traditional hotels, Airbnb was able to shift its business strategy towards focusing on local stays:

• Shifted its algorithms to show local stays on its homepage.
• In August, Nearly half its bookings were stays within 300miles of the guests’ location.

The strategy change had paid off and one thing is clear — Airbnb had survived the pandemic.

For investors… Fast forward to the future

Here’s what analysts are expecting for Airbnb:

• Monthly bookings to double in April as a result of pent-up travel demand — as per CFRA analyst Angela Zino.
• Airbnb will be the first booking company to return to growth ahead of companies like Expedia and Bookings.com — as per BTIG analyst Jake fuller.

Vaccines are forecasted to be widely distributed in the US and Europe by Summer 2021 — which could widely open the travel industry up.

Despite recording a loss that was nearly 10x more than in the previous year and sales that dropped 30%, Airbnb’s stock had shot up 13%. Why?

• Investors are anticipating a strong rebound in travel that could send Airbnb’s sales up in 2021.
• Sales were higher and losses were lower than expected.

For investors looking to make a recovery play, a booking on Airbnb’s stock could be the way to go.

Learn more: How Airbnb survived COVID and became one of the largest IPOs in 2020.