Airbnb's IPO submitting exhibits how little promoting is required

Airbnb got its initial public offering to potential investors and it's more than a brand – it's a verb.

Despite a year that decimated the travel industry, a peek under the Airbnb financial hood showed one company made a profit in the third quarter, had enviable brand awareness with little advertising, and a short-term rental market valued at more than US $ 1 trillion -Dollars could serve.

In its IPO prospectus filed on Monday, Airbnb stated that in 2020, approximately 91% of online traffic was being handled through the brand's own or unpaid channels. In 2019 it was 77%. That said, it doesn't rely on performance marketing. Travelers arrive at their own discretion.

The company's marketing and sales spend declined from $ 1.18 billion in the first three quarters of 2019 to $ 545,510 this year. This has been referred to by Airbnb as "suspending essentially all discretionary marketing program spending". (By comparison, competitor spent an estimated $ 5 billion on marketing in 2019 alone.)

"We rely on marketing to drive guest traffic to our platform," the file says. “We have invested significant resources in building and maintaining our brand. As a result of the Covid-19 pandemic, we realigned our organizational priorities to further increase our focus on individual hosts and brand marketing while reducing performance marketing. "

Filing is a measure taken before the brand goes public and trades under the symbol ABNB.

Last year Airbnb had sales of $ 4.8 billion, but the company still lost more than $ 674 million. So far this year sales have fallen 32% to $ 2.5 billion. In April, bookings on the platform fell 72%, but by September they were only 23% lower. In comparison, the hotel industry is still down almost 36% overall. While Airbnb doesn't have a loyalty program, 69% of 2019 revenue came from returning guests.

The brand cut costs to stabilize itself amid the pandemic, including cutting its marketing budget and laying off 25% of its workforce. Airbnb expects to keep its marketing budget low through 2021.

“In early 2020, when Covid-19 disrupted global travel, Airbnb's business declined significantly. However, within two months, even with limited international travel, our business model recovered and demonstrated its resilience, ”the file says. “We believe that the lines between travel and life are blurring and that the global pandemic has accelerated the ability to live anywhere. Our platform has proven to be adaptable to accommodate these new travel opportunities. "

Airbnb has room for growth and is valued at $ 1.5 trillion. Most of the revenue comes from the brand's short-term rental platform and $ 239 billion from experience. There are also 14% of Airbnb guests who chose to stay 28 days or more in 2019. This segment hopes the brand will continue to grow after the pandemic. As early as 2020, that number has risen to 24% and could be worth up to $ 162 billion.

"Airbnb wants to do nothing but remove all hotels and put them all out of business," said Chekitan Dev, professor of hospitality branding at Cornell University. “With the lodging business continuing to struggle, I expect Airbnb will use its resources, which will be augmented by IPO funding, to move into a highly competitive mode. Hotels need to improve their game even further if they are to keep the Airbnb wolf off their front door. "

The hotel brand is working with Hilton to announce daily rates for workers tired of their own homes.

On the brand marketing front, Airbnb acknowledged that previous efforts and brand partnerships have proven expensive and potentially less rewarding than it once hoped. Last November, the platform signed a deal with the Olympics for the next five Olympics (although the 2020 Games have since been delayed until next summer due to the pandemic).

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