Airbnb reveals falling revenue, travel hit by Covid-19

Airbnb, the home rental service that disrupted the travel industry and was itself disrupted by the coronavirus, took a major step toward one of the year’s largest initial public offerings when it revealed declining revenue and growing losses in a prospectus Monday.

The offering, which could value Airbnb at more than $30 billion and raise as much as $3 billion, will test investors’ appetite for hospitality-related stocks in a year when the industry has been battered and its future is uncertain. The company provides a marketplace for people to rent their homes, taking a percentage of the fees, and facilitates bookings for activities.

Airbnb’s prospectus painted an optimistic picture, advertising its brand’s association with unique travel experiences. “We have helped millions of people satisfy a fundamental human need for connection,” the company said. “And it is through this connection that people can experience a greater sense of belonging.”

In total, Airbnb brought in $2.5 billion in revenue in the first nine months of the year, down from $3.7 billion a year earlier. Its net loss more than doubled during that period to $697 million.

Airbnb’s revenue bounced back in its most recent quarter, giving it a profit. But because of the overall trajectory of shrinking revenue and the continued uncertainty of the coronavirus, the company is unlikely to be able to pitch Wall Street on the typical tech startup narrative of soaring growth. It was the first time Airbnb provided a comprehensive look at its finances.

Airbnb was valued at $31 billion before the pandemic, but some investors bought shares valuing it at $18 billion after travel ground to a halt. The company has since positioned its business around getaways that are within driving distance of people’s homes, allowing it to recover from the disruption faster than hotels.

“It’s going to be a mixed story,” said Karen Xie, a professor at the University of Denver who researches the short-term rental industry. Airbnb’s fast rebound showed it could win customers from hotels, she said, but that success could disappear with the virus surging again. In another lockdown, she said, “they’ll face a hard time again, and history will repeat just like last spring.”