Airbnb (NASDAQ: ABNB) has had an interesting year. Having been thoroughly battered during the COVID-19 pandemic — a crisis that resulted in a steep loss of revenue as well as mass layoffs — the home-sharing platform went public last week, seeing its market cap soar above $100 billion before dropping precipitously.
Much of the talk surrounding the company in recent days has naturally been focused on the IPO and all the volatility that followed. One rarely-asked question, however, involves the company’s positioning within the huge and unsurprisingly troubled world of tourism and travel accommodation. In other words, does Airbnb have any serious competition?
The answer, in short, is kind of. While the company is virtually unmatched in the house-sharing space in terms of its reach, scope, and prestige, AirBnB may also prove to be a victim of its own success. The very fame and ubiquity of the Airbnb brand has made it an easy target for regulatory pressure and popular discontent. Cities with sky-high levels of tourism, such as New York and Amsterdam, as well as those suffering from housing crises, like Reykjavik, Iceland, or indeed those suffering from all of the above, like Barcelona, have seen public figures sign laws in recent years that have heavily restricted the company’s operations.
Hostility to AirBnB on the part of governments and municipal agencies makes the company vulnerable in a way that other high-tech players in the tourism space are not. One of these companies is Expedia (NASDAQ: EXPE). Best-known for its namesake bookings site, Expedia actually manages a diverse and growing portfolio of brands aimed at almost every area affecting travel, including Trivago, CarRentals.com, and Hotels.com. Needless to say, the pandemic and the ensuing restrictions and lockdowns have taken a toll on the company, which saw a full 90% drop in revenue in the second quarter of 2020. The question mark surrounding the future of business travel also may not bode well.
On the other hand, Expedia’s broad investment across the entire travel sector gives the company a degree of robustness that Airbnb doesn’t currently enjoy. It even has its own AirBnB-style home-sharing segment, called Vrbo, which has remained one of its top-performing brands, even during the worst periods of the pandemic.
Like Airbnb and Expedia, TripAdvisor has had a challenging 2020. The early days of the pandemic, in particular, were catastrophic: overall revenue in April and May was only 10% of the equivalent period a year earlier. In response, CEO Steve Kaufer has overseen a large reduction of the workforce and taken on significantly more debt.
These measures, though harsh, at least speak of a company committed at all costs to getting to the other side of the pandemic in one piece. Besides, there is much to like about TripAdvisor’s offering. The company’s travel platform is the world’s largest, with over 400 million monthly active users (at least in normal times). It also benefits from diversification, including as part of its platform non-travel-related segments such as dining options. It enjoys a level of brand power almost equivalent to Airbnb, and has done so for more than twenty years. In an industry prone to uncertainty and volatility, the longevity of TripAdvisor is a bonus in itself.
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MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in companies mentioned above.
Contributing Writer at MyWallSt
Jamie is a contributing writer for MyWallSt.