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- Airbnb predicted nights booked and prices would drop compared to last year at this time.
- CEO Brian Chesky said "low-priced listings" are most popular and the average room rate is $67/night.
- US travelers are "price-sensitive" and favor the cheapest accommodations possible, Chesky said.
For once, your summer vacation may not break the bank.
Airbnb said this week that it expects travelers to book fewer nights in the second quarter than last year. CEO Brian Chesky told analysts that he expects hosts could be motivated to reduce their nightly rates to stay booked.
In a letter to shareholders on Tuesday, the company cautioned that people who followed their wanderlust during spring and summer 2022 did so because of pent-up demand from the Omicron COVID-19 variant that scuttled travel plans earlier that year.
As a result, the short-term-rental giant is predicting a decrease in the number of nights booked from April to June. Airbnb shares dropped more than 12% in the two days after the forecast.
Airbnb is still anticipating a wave of summer travel that it said will lead to a 14% increase in revenue during the second quarter, from $2.1 billion in 2022 to around $2.4 billion in 2023. (Airbnb expects earnings for the full year 2023 to be on par with 2022.)
Still, the forecast reinforces a split-screen view of the short-term rental industry, which has fueled whispers of a so-called Airbnbust. On the one hand, traveler demand remains high, but individuals have more options than ever to choose from, making the environment extremely competitive for hosts and owners of investment properties. When there is increased supply, hosts often drop their nightly rate to attract more bookings.
Chesky said during Airbnb's first-quarter earnings call Tuesday that US travelers are currently "price-sensitive" and favor the cheapest accommodations possible, pointing to affordability as one of the biggest concerns in today's economy.
"Just like Amazon, the more affordable we are, with the wider selection, the more people will come to Airbnb," Chesky said in the earnings call. "We're going to continue to add supply. And hopefully, this is going to continue to address the number one request of travelers, which is affordable options."
In some areas with a lot of places to stay, this summer could be a repeat of what happened in Phoenix, Arizona, ahead of the Super Bowl in February. Faced with empty booking calendars, one host in the Arizona capital told Insider he had resorted to slashing prices by over 60%, from $1,200 to $500, just to lure last-minute guests.
"The lowest-priced listings have the highest occupancy," Chesky said Tuesday. "People do want low-priced listings."
Hosts have fretted over a slowdown in bookings since at least May 2022, and many have already toyed with adjusting pricing to woo travelers. Some have removed their cleaning fees or invested in eye-catching interior design.
Meanwhile, Chesky has made it easier than ever for hosts to cut prices. This month, Airbnb introduced a map where owners or property managers can view similar listings in their area and peek at what others are charging and who's booked the most. Hosts can then use this information to reduce prices and stand out from their competition.
Chesky is optimistic that more hosts with more agile pricing will result in the best deal for a majority of guests.
"I can't make products just for 41-year-old tech founders. That's not a really big market. So I've gotta make sure I remember the 26-year-old me that didn't have a lot of money when I started the company," Chesky told Nilay Patel, editor-in-chief of technology news site The Verge, this week. "And the 26-year-old me is not going to be booking one of these really large homes. The 26-year-old me is going to be probably staying in a room in someone's house as cheaply as possible."