AP

Airbnb posts $1.2 billion profit in 3Q as revenue jumps 29%

Nov 1, 2022, 1:40 AM | Updated: 3:31 pm

FILE - Airbnb's website is displayed on a web browser on May 8, 2021, in Washington. Airbnb reporte...

FILE - Airbnb's website is displayed on a web browser on May 8, 2021, in Washington. Airbnb reported a record $1.21 billion profit for the third quarter as bookings and average daily rates increased, and the company said Tuesday, Nov. 1, 2022, that demand for short-term rentals remains strong despite uncertainty over the economy. (AP Photo/Patrick Semansky, File)

(AP Photo/Patrick Semansky, File)

Airbnb reported a record $1.21 billion profit for the third quarter as bookings and average daily rates increased, and the company said Tuesday that demand for short-term rentals remains strong despite uncertainty over the economy.

The profit and bookings were both less than Wall Street expected, however. The company said bookings growth will slow in the fourth quarter while average daily rates will also be pressured.

Airbnb shares fell 7% after about two hours of extended trading.

Airbnb shares have dropped nearly 35% this year despite the recovery in travel, a highly profitable first half of the year, and relentlessly upbeat commentary from CEO Brian Chesky and other company leaders.

Most of the share-price decline has occurred since early May. Investors worry that higher prices for basics including housing, food and gas — plus fear of recession — will cause consumers to cut back on discretionary spending like travel.

Airbnb faces other, more fundamental threats, perhaps none bigger than the perception among many guests that bookings on the site are no longer a bargain because of high cleaning fees and misleading listings.

Chesky tweeted last month that changing how Airbnb displays its prices is “one of my top priorities.” He said Tuesday that pricing was built around displaying the nightly rate first — fees levied by the host and the company are added as customers go through the booking process, and can boost the final bill significantly.

“One of the things we have been hearing from guests — and we heard it loud and clear — is that people would like a little more transparency about what they’re actually paying,” Chesky said on a call with analysts. He promised more details soon.

Another sore spot for renters: Some have posted photos of detailed lists of chores that hosts demand they perform. The discontent runs both ways — hosts are increasingly complaining about problem tenants.

Airbnb is fighting a long-running battle to crack down on unauthorized parties, a few of which have ended with shootings. The company also faces more efforts by local residents and governments to regulate the short-term rental market.

Many large cities in the U.S. and overseas have added expensive permit requirements to operate a short-term rental, and they fine property owners who don’t follow the rules. The trend is spreading to smaller cities. Officials in the Dallas suburb of Plano are considering tougher rules after a prostitution bust at an Airbnb in a residential neighborhood.

The third-quarter profit, which compared with $834 million in the same quarter last year, amounted to $1.22 per share. Analysts expected $1.47 per share, according to a survey by FactSet.

Revenue surged 29% from a year earlier, to $2.88 billion, slightly higher than analysts’ forecast of $2.85 billion.

The number of nights and experiences booked rose 25% over last year’s third quarter, and the value of bookings jumped 31%.

Airbnb forecast that fourth-quarter revenue would be between $1.80 billion and $1.88 billion. The midpoint of that range would fall short of Wall Street’s $1.87 billion forecast.

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