Name: Airbnb has navigated the pandemic better than its rivals — but the company's uncertain future depends heavily on forces beyond its control
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Airbnb has navigated the pandemic better than its rivals — but the company's uncertain future depends heavily on forces beyond its control

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Airbnb made its initial-public-offering documents available to the public Monday, revealing during the first three quarters of what has been a tumultuous year for the company.At one point, Airbnb's bookings in Beijing — an early COVID-19 hot spot as well as a key growth market for the company — had from pre-pandemic levels. Airbnb was forced to drastically cut costs worldwide, including , cutting all marketing spending, and raising .But Airbnb and its CEO, Brian Chesky, have also garnered praise for strategic decisions over the past few months that have helped the company actually turn a $219.3 million profit in the third quarter.Chesky made some key bets on travel trends during and after the pandemic, even to support the hypothesis. He predicted people would flock to over international tourist traps and big cities, opt for private spaces over crowded ones like chain hotels, gravitate toward longer-term stays, and travel more for pleasure rather than for work."We used to do a lot of travel for work, and then we entertained ourselves on screens. That's going to inverse," in August. "I think we'll work more on screens and entertain ourselves in the real world."Chesky also returned Airbnb's focus to its core business of vacation rentals after a push the past few years to expand into everything from to producing travel content. The company's losses had ballooned to $674 million in 2019, more than the previous four years combined.So far, Airbnb's positioning — both by choice and by circumstance — seems to be paying off.Airbnb's third-quarter revenue was down roughly 18% from the same quarter in 2019, a significant recovery compared with the 72% year-over-year decline in the second quarter.Crucially, Airbnb's third-quarter performance was substantially better than Airbnb's competitors — Booking.com was still in year-over-year revenue, and Expedia was — as well as the traditional hotel industry. Hilton was , and Marriott was .Even considering Airbnb's current relative strength, however, its road ahead is filled with uncertainty, and much of that comes from risk factors that Chesky and his team won't be able to influence.Airbnb cited the pandemic among a in its IPO filing on Monday.That list mentioned several risks like Airbnb, such as slowing rates of revenue growth, rising costs, increasing competitiveness from incumbents, and complex challenges around keeping its platform safe and fraud-free.But some of its biggest and most notable challenges — the coronavirus pandemic, an unpredictable regulatory landscape, , and a potential billion-dollar tax bill — cannot be navigated through smart management decisions.The company acknowledged in the filing that with heading into winter, it's projecting higher year-over-year declines in bookings and cancellations during the fourth quarter than in the third quarter. Since Airbnb already made huge cuts, its profitability will be even more reliant on driving revenue growth.But with several US states already reversing reopening plans and , and public-health experts warning that than the spring, Airbnb could see tough times beyond December.Another possibly huge obstacle for Airbnb will be local and state regulations.In recent years, the company has faced significant pushback, both from residents — who sometimes complain that Airbnb guests aren't the best neighbors and that the platform — as well as from hotel owners and local governments, which argue that Airbnb should be taxed and regulated like traditional hotels (this is similar to the dynamic between the taxi industry and companies like Uber and Lyft).As a result, some cities initially . Others have enacted steep taxes or imposed restrictions on who can operate Airbnb listings, where, and for how long. While Airbnb has fought cities that try to regulate it — — many of them have still cracked down, and if they continue to do so, it could eat into the profitability of both Airbnb and its hosts.As with other "platform" companies like Uber, Amazon, and Google, Airbnb's competitors span a variety of industries. Thus far, it has stood out among those competitors in part because of its strong brand — the company said 91% of its traffic came through unpaid or organic channels. But now that brand is up against an even better-known one: Google.Airbnb said in its IPO filing that Google's push into the travel sector, through the launch of price-comparison tools that are displayed prominently in its search engine, had . That could require Airbnb to increase its marketing spend significantly to keep reaching customers.When it comes to Airbnb's competitors, "it might be Booking.com right now, but the biggest competitor will be Google — that's the one Airbnb's afraid of," Dennis Schaal, the executive editor at Skift, a travel-industry news and research site, told .Airbnb's best hope to avoid bleeding money and customers to Google, however, may rest with regulators in the or the , who have expressed a growing interest in reining in Google's dominance over internet searches.Finally, Airbnb is also awaiting the results of an IRS investigation into whether it owes an over how it valued the sale of its international intellectual property to a subsidiary.Considering the $2 billion in emergency funding it raised earlier this year, that's a bill Airbnb wouldn't be excited to see.{{}}Email addressEnter captchaBy clicking ‘Sign up’, you agree to receive marketing emails from Insider as well as other partner offers and accept our and Copyright © 2022. Times Internet Limited. All rights reserved.For reprint rights. Times Syndication Service.

Airbnb made its initial-public-offering documents available to the public Monday, revealing during the first three quarters of what has been a tumultuous year for the company.At one point, Airbnb's bookings in Beijing — an early COVID-19 hot spot as well as a key growth market for the company — had from pre-pandemic levels. Airbnb was forced to drastically cut costs worldwide, including , cutting all marketing spending, and raising .But Airbnb and its CEO, Brian Chesky, have also garnered praise for strategic decisions over the past few months that have helped the company actually turn a...

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Airbnb has navigated the pandemic better than its rivals — but the company's uncertain future depends heavily on forces beyond its control

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