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Airbnb profits fell 17 percent in the third quarter compared to a year earlier despite strong travel demand on the platform and revenue that rose to all-time highs, the company announced on Thursday.
Travelers spent $20.1 billion total on 122.8 million nights and experiences booked on the platform in the quarter. That was an 8 percent increase in the total number of bookings compared to a year earlier, executives said.
Airbnb earned a total of $3.7 billion from those bookings, 10 percent higher than the same quarter a year ago. Total revenue for the year clocked in at $8.6 billion, nearly 12 percent higher than the first three quarters of last year.
After taking its share from travelers and hosts and accounting for its expenses, the company pulled in $1.36 billion in profit. That was down 17 percent from the $1.6 billion profit the company earned the same time last year.
That decline was from an increase in expenses, including marketing costs as the company looks to expand its footprint internationally.
In a call with investors and the media on Thursday afternoon, CEO Brian Chesky said that international expansion was the next phase of the company’s growth trajectory as it looked to grab market share from hotels.
“Our core business could certainly approach a billion nights a year,” Chesky said, noting that the company is approaching 500 million nights booked per year. “For every one person that stays in an Airbnb, nine people stay in a hotel. The question is how do we get one of those nine people to stay in an Airbnb? That’s how we get to a billion.”
The company’s free cash flow, a measure of profit after paying for other expenses, fell by the same amount in the quarter, from $1.3 billion in 2023 to $1.07 billion this year.
The average daily rate (ADR) to book an Airbnb was $164 in the quarter, up 2 percent from a year ago. Airbnb typically takes just over 18 percent of the money spent on the platform.
The company now has $11.3 billion in cash and cash equivalents plus $6.6 billion in money held on behalf of travelers. Its $22.1 billion in total assets under management has grown by about 7 percent in 2024.
Airbnb remains focused on expanding overseas. It touted an advertising campaign aimed at boosting awareness in Japan and efforts to add local payment methods in places like Vietnam, Denmark and Poland.
Its growth rate overseas is now twice that of its core markets of the U.S., Canada, UK, Australia and France.
Airbnb Chief Financial Officer Ellie Mertz said the company expected to grow its international presence every quarter.
She also said that the company was more committed to improving the quality of units on Airbnb rather than improving supply overall, noting that the company was removing listings that don’t meet quality standards.
“The focus more recently has been on incrementally raising the quality … not just adding more supply,” Mertz said.
The company is staying focused on international expansion, as well as on adding supply by making it as easy as possible for people to become hosts for the first time, executives said.
As part of that effort, Airbnb last month unveiled what it calls the Co-Host Network, a way for hosts to link up with other hosts to help manage their rentals. Those hosts can meet each other and come up with agreements on sharing revenue via the network.
Those are parts of efforts that Chesky said the company was making in the near term to improve its core service. But he hinted at future expansion of the business beyond just overnight bookings.
Chesky, who frequently evokes the expansion paths of companies like Apple and Amazon, told investors that Airbnb was capable of launching new companies that would be capable of generating billions of dollars every year.
“Over the next decade we are going to go far beyond travel,” Chesky said.
