Airbnb Still Isn't Threatened By Marriott And Hilton

Marriott International, Inc. MAR is the world’s largest hotelier. But, it is challenged by its close rival, Hilton Worldwide Holdings Inc HLT and both had their worlds shaken by Airbnb Inc ABNB that won its place in the travel industry. Although it reported solid fourth quarter earnings, Airbnb cautioned of moderate growth in the current quarter due to a tough comparison to 2023’s comparable quarter when bookings rose 19%. Last week, Hilton also guided for a lower-than-expected 2024 profit forecast as travel demand is expected to normalize and this week, Marriott also followed suit with a 2024 guidance below Wall Street’s estimates.

Airbnb Is Focused On Its International Expansion And AI-Enhancements

On Wednesday, Airbnb delivered better-than-expected sales but also warned of moderating growth in bookings.With revenue that grew 17% to $2.22 billion, Airbnb topped FactSet’s estimate of $2.17 billion but an adjusted loss of 55 cents per share came short of 66 cents per share that FactSet estimated. Net loss totaled $349 million or $489 million when adjusted for charges. Gross bookings rose 13% YoY to $15.5 billion with total listings increasing 18% to 7.7 million with Airbnb observing a "double-digit supply growth across all regions, with the strongest being in Asia Pacific and Latin America. Airbnb continues to expand its focus on international markets and focus on adding AI-powered features to offer personalized experiences. For example, Booking Holdings Inc BKNG already introduced AI-powered features to enhance its booking and trip planning offerings, its key growth catalyst. In simple words, Booking and Airbnb seem to plan on using AI to create the ultimate digital concierge.

Airbnb also mentioned its progress on making pricing more transparent as cleaning feels often killed the buzz of its deals. Upon its earnings release, Airbnb stated that almost 40% of active listings no longer charge cleaning fees as almost 300,000 listings have removed or lowered them.

Airbnb guided for current quarter revenue between $2.03 billion and $2.07 billion, topping FactSet’s estimate of $2.02 billion.

Marriott And Hilton Continue To Grow But They Are Not Threatening Airbnb

Marriott gathered 196 million members in its loyalty program that grew 10.7% and compared to Hilton, its program is bigger and being used more. Hilton grew its program more quickly at 19% YoY, but from a relatively smaller base, and it got to 180 million loyalty members. Interestingly, both hotel giants are less global than they imply. US made 78% of both Hilton’s and Marriott’s revenue in 2023. Although they could argue U.S. has some of the highest room rates in the world and one of the strongest currencies, U.S. holds 70% of Hilton’s and 67% of Marriott’s room count.

Hilton’s revenue was fueled by higher licensed fees and the rebound of group and convention travel. With greater occupancy in the Asia Pacific region as well as higher room rates in the Middle East and Africa region, room revenue rose 5.7% YoY. Meanwhile, demand in the U.S. was flat with difficult YoY comparisons. But, expenses rose 13.8% during the fourth quarter to $2.2 billion. With revenue of $2.60 billion that was in line with Wall Street estimates,adjusted per-share earnings of $1.68 beat topped LSEG’s estimate of $1.57.

Marriott reported its quarterly profit rose almost 27% to $848 million but its stock tanked 4.9% on Tuesday upon its latest report as revenue that rose to $6.1 billion came short of estimates, despite having recovered to exceed pre-COVID-19 levels from 2019, before the pandemic halted travel.

However, when it comes to their vacation rental businesses, Hilton avoided the alternative accommodations segment and Marriott didn’t need to materially report the figures in its 10-K due to a negligible amount of revenue and earnings. However, Marriott did comment it is encountering strong competition in the short-term lodging market, acknowledging the threat from Airbnb.

Airbnb continues to be a threat in Marriott's and Hilton's shoes and for now, it isn't threatened by their short-term lodging offerings. But only time will show if Airbnb will succeed to realize its ambitious international and AI-empowered goals.

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