When the U.S. announced massive tariff increases in April, stocks of travel-related companies like Airbnb (NASDAQ: ABNB), hit the skids.
The worry was that the global economy would tank, putting a major dent in travel activity. But as you’re undoubtedly well aware, things didn’t turn out that way. For 2025, U.S. travel spending should grow 1.1% to $1.35 trillion, and will reach $1.49 trillion by 2029, according to research firm Tourism Economics.
That dynamic has helped boost Airbnb stock 29% from its April 8 trough. The stock has annualized total returns of 1.3% over the past year, 17.1% over the past three years and negative 2.5% over the past five years. The one-year number suffered from tariff announcements, and the five-year number suffered from the Covid pandemic. Airbnb has a market capitalization of $83 billion.
In addition to the actual mild impact of tariffs, Airbnb has benefited from expansion overseas, the addition of experiences for guests and the adoption of a reserve now, pay later policy.
As for international growth, Airbnb’s revenue for Europe, the Mideast and Africa rose 14% to $1.97 billion in the third quarter from a year earlier. Latin American revenue gained 18% to $235 million, Asia Pacific revenue climbed 16% to $279, and North American revenue increased just 3% to $1.62 billion. Airbnb’s total revenue rose 10% to $4.1 billion.
Experiences; reserve now, pay later
The company began offering experiences in May. These include everything from guided tours to outdoor adventures, cooking classes, art workshops and wildlife tracking.
Airbnb doesn’t break out statistics for these activities. But, “feedback from guests has been overwhelmingly positive, with services and experiences receiving an average rating of 4.93 out of 5 stars,” the company bragged to shareholders. Also, almost half of experience bookings recorded in the third quarter weren’t attached to an accommodations booking.
Meanwhile, the trend of buy now, pay later has become quite popular in retailing. Mimicking this concept, Airbnb began offering reserve now, pay later options for the U.S. in August. That means customers pay zero upfront.
The company hasn’t offered specific data for this area. But, reserve now, pay later helped drive the growth of acommodations and experiences booked in the third quarter. Those bookings totaled 133.6 million in the quarter, up 9% from a year ago.
Other third-quarter earnings statistics included a 0.4% increase of net income from a year ago and a net-income profit margin of 34%, down from 37% last year.
Artificial intelligence
Airbnb also is devoting a lot of resources to artificial intelligence. “We are integrating AI extensively across the app,” Airbnb Brian Chesky said in the company’s November earnings conference call.
For example, Airbnb’s AI assistant can now answer customer questions tailored to their reservation and provides quicker, more personalized responses than before, he said. It also lets customers take common actions like canceling or changing reservation dates directly from the chat.
Morningstar analyst Dan Wasiolek sees good times ahead for Airbnb. Its position “will strengthen over the next decade, driven by a leading alternative accommodation network of over 5 million hosts and 2 billion guest arrivals since its start in 2008,” he wrote.
“This network advantage will be supported by artificial intelligence investment and expansion into experiences, services, and international markets over the next several years.”
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