In today's world, it is normal for many people to first check Airbnb when considering a holiday or a work trip, before traditional price comparison or hotel websites. But how did this happen? As you probably know, Airbnb, Inc is an American company that connects hosts who rent out a property or a room to people who want to book a stay, collecting a commission on the transaction. Recently Airbnb has diversified its business by acquiring luxury vacation and ‘experience’ providers, which are booked in a similar way via the website or app and its searchable map. Since 2019, it has also been possible to make last-minute hotel reservations on Airbnb.
Founded in San Francisco in 2007 under the name ‘Air Bed and Breakfast’, Airbnb benefitted from early-stage funding from tech start-up accelerator Y Combinator and experienced extremely rapid growth over the following years. The company is headquartered in San Francisco but maintains international offices across 15 countries. By 2021, the company hosted 5.6 million listings in over 100,000 cities worldwide. In 2020, Airbnb produced revenues of $3.38 billion, and though the company remains unprofitable, losses have narrowed significantly.
Airbnb has been praised since its inception for providing a very simple (only three clicks are required to make a booking), and cost-effective alternative to hotels or short-term lets. The company has also faced criticism and regulatory pressure over its impact on house prices, particularly in very expensive cities such as Berlin, which has resulted in numerous legal challenges to its business model.
In December 2020, Airbnb went public on the NASDAQ exchange, trading under the ticker ‘ABNB’. The IPO, the largest of 2020, was initially priced at $68 per share but quickly traded up to over $147 in the first few hours. This put the value of Airbnb at over $100 billion and remains one of the most successful ever IPOs in the sector. Co-founders Brian Chesky, Joe Gebbia, and Nathan Blecharczyk remain the largest single shareholders in the company, and around a third of shares are owned by Airbnb insiders. Of the publicly traded shares, a significant proportion are held by mutual and pension funds, including Vanguard and Wellington Management Group.
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Currently, Airbnb does not pay dividends to investors. Like many technology companies, Airbnb reinvests its earnings back into the company for growth and expansion into new ventures.
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