Emprendedores.es : Why are Airbnb stocks falling despite the rise in non-hotel tourism 2023

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By Shoaib Ajaz

Emprendedores.es : Why are Airbnb stocks falling despite the rise in non-hotel tourism? The crisis suffered by the tourism sector as a result of the pandemic severely affected companies like Airbnb.

Although the company’s stocks reached their all-time high in February 2021 ($212.68), their performance has been erratic. Their value started to decline during the second quarter of 2021 but began a strong recovery in July, approaching their highest values again in November ($206.54).

However, since then, their stock price began a downward trend, closing 2022 at a valuation of $85.50. One reason that could explain this decline is the economic and inflationary crisis, as leisure and tourism are often the first expenses we cut back on when the situation becomes challenging.

Nevertheless, the start of the year marked a turning point for Airbnb as it embarked on a bullish rally, driving the stock price to $139.42 in mid-February, representing a revaluation of over 60%.

airbnb
Stock Price

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However, their upward trajectory was once again disrupted. After a period of ups and downs, the presentation of their first-quarter results and forecasts for the second quarter cooled investor enthusiasm. In fact, their shares depreciated over 15% after the release of this data, hovering between $100 and $110.

Although Airbnb‘s January to March numbers were positive, with a 20% YoY revenue growth, the company predicts a revenue increase of 12% to 16% for the period between April and June, signaling a slowdown in their growth rate, which has discouraged investors.

Furthermore, Airbnb acknowledges that “booked nights and experiences will face unfavorable year-on-year comparisons in the second quarter of 2023, as we overlap the accumulated demand from 2022 after the COVID Omicron variant.”

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These projections contrast with the data we have in Spain regarding non-hotel tourism, the sector in which Airbnb operates, encompassing apartments, campsites, rural tourism accommodations, and hostels.

According to the “Surveys of Occupancy in Non-Hotel Tourist Accommodations” conducted by the National Institute of Statistics (INE), overnight stays in non-hotel tourist accommodations grew by 15.7% YoY in March 2023, reaching pre-pandemic levels.

If we focus solely on tourist apartments, overnight stays increased by 10.2% YoY in March, and the accumulated annual rate of overnight stays grew by 18.58%.

Therefore, despite the blow dealt to Airbnb by its shareholders, the scenario seems favorable for generating income through the rental of tourist accommodations. This is evident in Spain, where there has been a significant increase in the number of these accommodations being offered in the market.

According to the April report of “Tourism Perspectives” by Exceltur-Alianza for Tourism Excellence, the number of tourist accommodations has increased by 20.5% in the last year, going from 66,825 accommodations offered on online platforms in the first quarter of 2022 to 80,509 recorded accommodations in the same period this year.

Tourism Perspectives
Tourism Perspectives

However, the supply of tourist accommodations has not fully recovered from the pandemic yet, as in the first quarter of 2020, there were 93,513 accommodations of this type, 16% more than currently.

Nevertheless, if this upward trend in the supply of tourist accommodations is extrapolated to the international market, it could have consequences for the profitability of platforms like Airbnb. This is because there could be a possibility of the market becoming saturated in certain areas, leading to increased competition among hosts and, consequently, a reduction in the revenue generated by Airbnb’s commissions.

Thus, investors may be concerned about the long-term profitability of the company in a scenario where supply exceeds demand in certain locations.

It is also important to consider the reaction to the excessive proliferation of tourist accommodations. Some cities and countries are imposing restrictions on vacation rentals, which could limit Airbnb’s operations in those areas. This, too, creates uncertainty among investors.

On the other hand, it is worth noting that the revival of tourism presents unique opportunities, as we have already shown in EMPRENDEDORES. For example, some people are buying old buses, renovating them, and adapting them to be offered as tourist accommodations. The same is being done with train carriages, airplanes, boats… and even “UFOs”!

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FAQs: Why are Airbnb stocks falling despite the rise in non-hotel tourism?

1. What factors have contributed to the decline in Airbnb stocks?

The crisis in the tourism sector caused by the pandemic has had a severe impact on companies like Airbnb. Although their stocks reached an all-time high in February 2021, their performance has been inconsistent. Economic and inflationary crises, coupled with uncertainties surrounding leisure and tourism expenses during challenging times, have contributed to the decline in Airbnb’s stock price.

2. Why did Airbnb experience a brief recovery in stock price earlier this year?

At the beginning of the year, Airbnb saw a positive turning point with a bullish rally, driving its stock price to a significant increase. This rally was driven by investor enthusiasm and resulted in a revaluation of over 60%.

3. What led to the recent decline in Airbnb’s stock price?

After a period of fluctuations, Airbnb’s stock price faced a downward trend following the release of their first-quarter results and forecasts for the second quarter. This cooled investor enthusiasm, leading to a depreciation of over 15% in their stock price.

4. How does the rise in non-hotel tourism contrast with Airbnb’s stock performance?

While the rise in non-hotel tourism, including accommodations such as apartments, campsites, rural tourism, and hostels, has been positive, Airbnb’s stock performance does not necessarily reflect this trend. The company’s stock price has faced challenges due to various factors impacting its growth and investor sentiment.

5. What are the concerns regarding the long-term profitability of Airbnb?

The increased supply of tourist accommodations, including Airbnb listings, may lead to market saturation in certain areas, resulting in heightened competition among hosts. This could potentially reduce the revenue generated by Airbnb’s commissions. Additionally, restrictions on vacation rentals imposed by cities and countries further contribute to investor uncertainty.

6. Are there any unique opportunities in the tourism industry despite Airbnb’s challenges?

Yes, the revival of tourism presents unique opportunities. For instance, people are exploring innovative ideas such as buying and renovating old buses, train carriages, airplanes, boats, and even unconventional structures like “UFOs” to offer as tourist accommodations. These alternative options showcase the potential for creativity and differentiation within the tourism sector.

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