Q4 2020 Airbnb Inc Earnings Call
Okay.
[music].
Good afternoon.
Thank you for joining Airbnb earnings conference call for the fourth quarter of fiscal 2020.
As a reminder of this conference call is being recorded and will be available for replay from the Investor Relations section of Airbnb website. Following this call.
I will now hand, the call over to Ian Lee Airbnb head of Investor Relations. Please go ahead.
Thank you good afternoon, and welcome to Airbnb fourth quarter of fiscal 2020 earnings call.
On the call today, we have Airbnb cofounder and CEO, Brian <unk>, and our Chief Financial Officer, Dave Stevenson.
The early today, we issued a shareholder letter with the financial results and commentary for the fourth quarter of fiscal 2020.
These items were also posted on the Investor Relations section of the ABTS website.
During the Covid will make brief closing remarks, and then spend the remaining time on Q&A.
Before I turn it on for Brian I'd like to remind everyone that we'll be making forward looking statements on this call that involve a number of risks and uncertainties.
Actual results may differ materially from those expressed or implied in the forward looking statements due to a variety of factors.
These factors are described on the forward looking statements in our shareholder letter and our prospectus filed with the SEC on the center live in 2020.
We urge you to consider these factors and remind you that we undertake no obligation to update the information contained on this call to the subsequent events or circumstances.
You should be aware that these statements should be considered estimates only on not a guarantee of future performance.
Also during the call we will discuss the non-GAAP financial measures.
We provide the reconciliations for the most directly comparable GAAP financial measures in the shareholder letter posted to our Investor Relations website.
These non-GAAP measures are not intended to be a part of the street for our GAAP results and with that of possible for Brian.
Thank you very much Anne and thank you all for joining today.
I am excited to share our results for the.
For the first time as the public company.
I want to start by acknowledging that we are still on a pandemic and a lot of people are hurting. So we know how lucky we are to be in the position we're in.
Now before I go into the results I wanted to share of theme that will run through each of our earnings call.
When we started the Airbnb it was about more the just travel.
In 2007, my roommate, and Joe and I play the three of our beds. When we can of turned our apartment into an Airbnb breakfast. We hosted three guests that weekend, Michael the cat in the mall and in doing so became the first host.
Our guests the rise of strangers, but the left is our friends and the connections we made that weekend made us realize maybe theres a bigger idea here.
Since then we've grown from two house the agenda Cisco debt 4 million hosts all around the world.
The idea of Airbnb is only possible because of the host without host Youre now starting of the places the visit without host you have nowhere to stave of crowded tourist district of resort.
A great host does more than share of their space.
They provide a deeper connection of the place of do visit the people who live there and they set the stage for you to be able to spend meaningful time, but the people who travel it.
So this is why <unk>.
2014 years later hosting is still at the center of the Airbnb as.
As the World continues to change People's fundamental need for connection of belonging will not this is what we will remain focused on day in and day out quarter after quarter with that let me talk about our results.
2020, with the year with nearly everything changed the way we live the way, we work and the way we travel.
Airbnb changed as well.
2020 by preparing for IPO only to have to put on hold once the world went into lockdown.
But then in the face of the biggest price it in the travel industry has ever seen our business proved to be resilient and our model was able to adapt.
Through the crisis, we also sharpened our focus.
We've made many difficult decisions, while staying true to our acquired the principals and we became a stronger company as a result.
And we succeeded in going public after all.
Now despite the difficult year, we are encouraged by our resilient business performance and the depth of the pandemic. We had forecasted net revenue in 2020 could be less than half of 2019 levels, yet we delivered $3 4 billion of <unk>.
Full year revenue in 2020.
Down only 30% compared to the year earlier.
In Q4, our revenue of $859 million was down only 22% year over year. Despite the second wave of Covid cases and widespread lockdowns.
In addition to this top line resilience, we also demonstrated our focus and discipline to protect our profitability.
Our adjusted EBITDA in 2020 was slightly better than 2019, and this was despite revenue being down $1 4 billion.
Our adjusted EBITDA in Q4 of 2020 with nearly $250 million better than Q4 2019.
This was despite revenue in Q4, 2020 being $250 million lower than a year earlier.
So we are able to achieve these results because of the adaptability of our business model and because of our focus on financial discipline. We believe these two factors set us up well for the coming travel rebound.
And travel is coming back.
Nearly a year after of Lockdowns began we believe people are yearning for what's been taken away from them travel and human connection.
When travel return it will be about connection.
We'll want to spend meaningful time of the with their family and friends and because of this as restrictions lift and borders begin to open we expect there will be a significant travel rebound.
So in 2021.
Our single priority is to prepare for the coming travel rebound.
To do this we're going to do is perfect. The entire end to end experience of our core service for.
First we're going to educate the world about what makes airbnb different post spin.
Through our marketing and communication, we will educate guests debt being hosted is the better way to travel. In addition, we will inspire more people to become host next we recruit more host and set them up for success.
Once you the educated people about hosting will simplify the on boarding process. So it's easier for host to get started and we're improving our tools and support the help them succeed.
Sir.
To make it easier for guests to find the perfect day, we are simplifying every part of the guest experience as well as improving our search functionality of support more flexible travel pattern.
And finally, whenever our hosts or guests need us we need to deliver world class service. So we're actively fixing product issues that drive for Muni context, we're scaling our operations to meet the demand and can you <unk> enhancing our service.
So that is our plan for 2021 educate the world about hosting recruit more hosts and set them up for success simplify the guest experience and deliver world class service.
I want to end buys of highlighting two things that we launched this week that I'm really proud of.
On Monday, we launched our first large scale marketing campaign in five years.
Made possible by host.
Even though the brand of Airbnb is mainstream the.
The idea of hosting is not yet.
Our goal with this campaign is to make a long term investment in educating the world about our host.
This campaign will help our guests to understand the benefits of being hosted and how this is unique to airbnb.
And it will create more awareness around the idea of becoming the host by making it more mainstream and aspirational.
By using the real photos of real guests on real Airbnb trips.
This campaign shows with the real experience of being hosted is like and I think of speaks directly to the need for connection that people all over the world are feeling after nearly a year of isolation.
So that is made possible by host.
And second finally flexible day on Tuesday, we launched a new feature that we call flexible day.
Today more people are working from home and that means more flexibility about when and where they travel because of the we're seeing a shift in how people search on the Airbnb.
In 2021 to date.
Almost 40% of people searching on Airbnb.
<unk> been flexible in terms of their date for the location of their stay.
This is a huge change in the search paradigm of travel.
Flexible dates allows guests to search for homes in a whole new way instead of having to collect the exact dates for a trip.
They're able to do broader searches now you can search for a weekend getaway, a weeklong vacation or even a month on stage sometime in the next few months.
This allows our guests to browse more options, while being flexible on the exact dates of the trip and we think this will be a very popular feature coming this travel season. So that's our plan for this year to prepare for the coming travel rebound. We're excited about the year ahead.
I look forward to answering your questions today.
Okay.
At this time I would like to remind everyone in order to Husky question price star in the number of one on.
The telephone keypad.
Pause for just a moment to compile the Q&A roster.
And your first question comes from Brian Nowak with Morgan Stanley.
Thanks for taking my questions of <unk> to the the first one.
Brian I think you brought on quite a few new users to the platform throughout 2020 I'm. Just curious are you seeing anything different from a retention perspective or any differences in user behavior of those people is 2021 booking season has started.
And the second one I think in the letter you talk about <unk> 21 bookings being above <unk>.
There are any of them any more detail on sort of which regions are driving that or is that pretty broad base of people just sort of looking forward to travel on the back half of around the globe.
Yes, thank you for asking the questions and I'll start and Dave you can obviously, we'll feel free to elaborate on.
I'll just I'll start with the.
The second question.
We are seeing a lot of resiliency in certain geographies, especially North America and Europe. What we've generally found is that domestic travel globally is pretty strong and that the primary challenge is cross border travel. In addition to of course of business travel but were not as.
By the business travel reductions and so countries with really strong domestic travel are seeing more resilience in countries that are not as.
There are not as affected by the cross border travel so that's the that's.
That's the first thing that we're seeing and.
Very.
Im very encouraged by it now as far as retention of users that we got last year.
We are seeing continued strong retention. There is no. There is no major changes I think the retention of our user base has historically been strong and it was very strong last year I'll just highlight a couple of things one of the reasons I think on retention is strong is because people are finding many new use cases of <unk>. In addition to all of the old rate they use that.
So even though borders were closed international travel has reduced many people found it longer term stays on airbnb because they were working from home they were flexible.
People wanted to get in cars the travel nearby staying in the local community and so we're able to the exact demand as well.
No.
There's a number of areas that I think it provide a lot of resiliency for our model I think it's inherently adaptable and our model adapts that means retention increases because there are more uses for our debt.
Great. Thanks, Brian.
Thank you.
Okay.
And your next question comes from Heath, Terry with Goldman Sachs.
Yes.
Great. Thanks for.
Brian as we as we do look out for the recovery later this year on beyond I'd be interested in what youre seeing so far in terms of a more flexible work force using airbnb for both sides of their travel, meaning they use airbnb to monetize our home in one location the fun.
On the longer term stay somewhere else and how you see the size of that opportunity as.
More of mobility becomes possible for a work force thats not the case for it.
Yes, that's a really good question I want all of the O&M I wanted to really underscore this point the.
The way.
Let me kind of let me say the travel will come back, but when travel comes back we believe it's going to look different than before we don't think we're ever going back to the world of travel in 2019, it's going to change it's going to be different and probably the biggest difference we've seen its flexibility.
World of zoom as the world, where more people can work from home in a world where more people on the flexibility of working from home. We're seeing more people say they can work for many home on Airbnb and so we've seen a number of new use cases people are living more nomadic Lee.
Some people are taking longer term stays one or two months at a time on airbnb.
People are taking extended $3 for day weekend.
Many weekends in a row, because they don't have to be in the physical office and many people are snowbirds that are essentially living in some of our cold and they wanted to some of our warm day of the flexibility to do that the.
Other thing you mentioned is new people hosting.
One of the things we found is that many people like to start hosting at the beginning of the life change maybe somebody has kids on the kids move out of the house. They got from extra bedroom, maybe they were recently unemployed. They recently lost their job or they are now living more remotely and their home is more available. So one of the things that we're really excited about it.
As we see more flexibility and more week or month on stage Theres more empty homes people are leaving behind and our largest source of host in 2019 require guests 23% of our host 2019 of our guests first and so we think there's big opportunities for us to continue the convert our guests to become host in this new world the flexibility means.
More empty homes that can be shared.
Great. Thank you very much from thank you.
Yes.
Okay.
And your next question comes from Lloyd Walmsley with Deutsche Bank.
Thanks for taking the question two if I can for.
First time, you guys talked about made possible by host can you just talk a little bit more broadly about the supply acquisition strategy and what youre doing kind of near term the buildup of supply in markets close to the cities as well as longer term to continue to sustain your growth and is there an opportunity to get more productivity.
Out of existing supplier will most of the long term growth comes from new supply.
And then the second question.
As you guys prepare for the rebound in travel how are you approaching performance marketing differently in terms of maybe scale unexpected rois in 2021 versus say 2019 and 2020, the the shareholder letter talks about materially increasing marketing efficiencies. So if you could explain that a little bit more that would be great.
Thanks.
Yes. These are two really good questions. Thank you for them I'll start with supply then I'll go to performance marketing on.
On supply, let's just start framing it we have about 4 million hosted on the Airbnb, 90% of our hosts are individual hubs. These are everyday people typically school teachers health care workers students, 55% of the number of women and the vast majority of them come direct to Airbnb. So most of our hosts we don't have to acquire first day.
They come organically, often because they've heard of airbnb. The friends have recommended it to them who are also host for.
Or because of the mentioned before 23% of our host in 2019 of our prior guests and the.
The second point I'd make is our model is pretty adaptable so.
We have closed and 100000 communities one of the things. We're seeing is the change of travel patterns right now in the pandemic people arent just looking to go to the same 20 or 30 cities, but now one of getting cars and travel the local communities nearby that means of travel in a sense is being redistributed to thousands of communities. This helps us smooth.
Any supply demand gap that we might have but we do have a number of levers to add supply.
Let me start by saying, yes.
Our existing host rents for their homes only occasionally so we see huge opportunities for productivity the average host on Airbnb.
$10000, a year and they do that by renting out.
For just occasionally so we think theres the huge opportunity to increase productivity of the host that we already have that being said, we also think <unk>.
Now is the time that people are interested in hosting more than ever before.
Can be restarted airbnb and the recession and during the recession of 2008 people work.
Losing their jobs, losing their homes and many people turn to Airbnb for income, we think now hosting as as appealing as ever before given the economic circumstances is happening in this country and around the world and so we're doing a few things made possible by host is a global campaign as I said, our first global campaign in five years, and we think of this campaign.
Vessel this can absolutely mainstream hosting and bring a lot of people to our platform. In addition, we're doing a companion campaign called made possible by hosting and Thats going to talk about all of the benefits of hosting and we're going to really target people that are going through of life transition as I said people that just renovated the home bought a new house.
Lots of job maybe the retired maybe the kids move out of the house. So we think that the really great way to be able to target in the.
Accrued more host once they come the Airbnb, we wanted to make it more we want to increase the conversion rate of people come the Airbnb and then lifting and active lifting on Airbnb conversion rates for the name of the game, but one of the things we've learned about conversion rate the easier it makes something and the more support you offered if somebody the more likely they're going to get through the conversion funnel.
We're reducing the steps we're going to allow you to become a host of less than 10 minutes and if you need help you can call customer service for we're going to match you to existing hosts to be able to support the along this journey. If we do these things I think we will be able to add a significant amount of more host because of the average person around the world that they knew that they can make some extra money by meeting.
The interesting people a lot more people would do it.
Now. The next question is about marketing performance marketing and let me just also take a step back and talk a little bit more about our marketing strategy. Because I think this is very important to the corporate story.
In 2019.
We had elevated spending of performance marketing and then 2020 occur our business dropped by 80% in eight weeks and we've pulled back all of marketing, including performance marketing, but something remarkable happened even before we started resuming our marketing spend our traffic levels came back.
To 95% of the traffic levels of 2019 without any marketing spend and what this of revealed is that our brand is inherently strong if the noun and verb in pop culture, and so we don't intend to ever again spend the amount of money as the percentage of revenue on marketing in the future as well.
In 2019, and Q4, 90% of our more than 90, 590% of the traffic was director of unpaid and we think that will continue in the future. Our marketing plan. Therefore, our strategy is the following a full funnel marketing approach the top of the funnel of actually PR.
We got more than half of million articles in last year in 2020, and we had as much share of voice as most of the other major travel companies combined and Thats, how we really built the brand of Airbnb more than anything probably of PR second is brand marketing, we think of brand marketing as education and the investment until made possible by <unk>.
<unk> is by host is an investment in hosting.
And then performance marketing, we don't treat performance marketing like other travel companies, we think of it as like a laser is not a way to the arbitrage users. It's the way the laser in on where we want to acquire guests for host in key markets, where we have of supplier demand mismatch, but make no mistake, our efficiencies, we're going to hold for a lot higher level.
The 2019 or years prior and update you on a share anything else about that.
If you could kind of really well I'll just round it off by saying that we will continue to use performance marketing, where it makes economic sense to do so it's absolutely important level. Obviously, we continue to do it but just kind of have a higher rate of return expectation on the performance marketing spend and won't return to the levels of you saw in 2019.
Our sales and marketing expenses as a percentage of revenue in 2021, we will be below that of 2019. The absolute dollars in 2021 will be below that of 2019, and I guess I'll round. This out by saying that because of the marketing campaign the made possible by house.
Launching now in advance of the summer travel season, you're going to see sales and marketing as a percentage of revenue higher than the first half of this year the deal on the second half.
Alright very helpful. Thank you.
Thank you. Our next question comes from Justin Post with Bank of America.
Great. Thank you for a couple of questions. Obviously, a lot of cost discipline this year to get to.
Close to breakeven by Q4, which is pretty pretty remarkable how are you thinking about balancing that and do you have any margin targets in mind as we think about modeling 'twenty. One and then secondly, very interesting on I'm sure you have a lot of incentives to get more hosts do you think there is a lot of latent post.
Offerings that will come on line once people get through the balance issues I guess another way of asking do you think of lot of host of pulled their listings and we'll be back as soon as they feel more comfortable thank you.
Thank you very much Justin why don't I start and then.
I'll, let Dave.
Elaborate net.
Let me just start at a high level of about cost discipline.
We would of of course like everyone else never asked for last year's crisis, but I do think the crisis made us a much better company because of the first thing that happened is we got more disciplined when our business was.
Precipitously falling we knew we couldnt focus on everything so we focused on what was the most special about Airbnb that was our individual host we'd means the it means we scaled back numerous investments, but something else just in what we found was as we focus what it really meant was there of taken of our very best people and putting them on the most important problems and that we did that and not only save.
On the actually drove more growth I think that in addition to the inherent adaptability of our model does explain why we are able to see a fairly strong recovery in the back half of last year.
I'll, let Dave talk a little bit more of a margin target, but I'll. Just also get the hope then I'll hand, it over to Dave on.
On late in the host offering and or the question of did host.
Pull back and do they intend to host again.
What we know is this.
In any given day, we of a certain number of posts active and live on the platform. We know that when host deactivate, it's often not permanent it's because they're taking a break from hosting and we know many hosts are intending to host once again and so one of the things. We're doing is either the Q&A townhall with thousands of hosts and I bet.
We said for them together, we have to be ready and we want to be prepared for this travel season, and our goal to collectively with our host to be ready before the rebound happens, we'd rather be early than late and so we do expect a lot of host to be ready in one of the dynamics. We basically found is.
One of the nice things about our business is as the host gets more booked up the often either expand by adding of lifting or more likely they'll tell their friends, who also become host so of the occupancy rise. It does have a nice benefit where word gets out that people are making money and if we can fulfill that with.
A couple of meant that with our brand campaign I think it could yield for quite a few gains Dave do you want to cover either of these.
Yeah, I'll just round it out per se the over.
Total number of active listening to experiences was relatively stable in Q4 relative to Q3 at about $5 6 million. So we actually haven't seen the substantial amount of deactivation of it's been very stable and for all of the reason for Brian said earlier, we're optimistic that we'll continue to be out of your hosts and the future of just given all of the the tailwind of the kind of macroeconomic factors that we have.
Going on on the World.
As far as margin targets, you know one of the things we're really proud of the progress we've made on our.
Profitability efficiency over 2020, right. We've made substantial reductions on our fixed costs, we will not be having to add back fixed cost to support the business the world.
Again approach 2019 levels and beyond and so our fixed cost discipline is great and we will continue and then we saw really great improvement in our variable cost efficiency across the P&L.
And when you actually remove the Q4, we moved the onetime impacts from stock based compensation relative to the IPO.
Our costs are down in every category across the P&L and it's that discipline of variable expenses things like cost of payments community support expenses.
The infrastructure expenses, all the way down, but we're proud of and what we would expect to achieve over time, because 30% EBITDA margins or greater and this has just accelerated on a path towards those long term margin targets I'd love to give you on specific targets for 2021, but it's just too hard to know what our revenue is going to be in.
So therefore, the kind of the flow through the profitability.
We're seeing that our revenue rates in Q1 will be better than the revenue growth rates in Q4.
But we just don't have a lot of visibility on the back half of the year to give you a lot of guidance on the profitability right now.
Great. Thank you.
Okay.
And your next question comes from Jed Kelly with Oppenheimer.
Great. Thanks for taking my question two if I may just one can you provide any color on how your bookings for the summer travel are trending relative to this time last year and then Brian.
What do you think the Olympics could do just to get People's confidence of traveling especially around the international travel. Thank you.
Thank you for the question, Dave maybe you can take summer travel and I'll take Olympics.
Sure.
I don't have a lot of color that I can give you on some of the travel bookings in the one thing as I can say is that people are booking and shorter windows. So on the greatest growth. We're seeing in the business right now are booking windows in less than 30 days and typically kind of pre COVID-19, you're right we'd be seeing much more of the bookings now the head for the summer travel season and that is delayed.
Relative to kind of a historic patterns.
Seeing some bright spots of seemed a little bit of the bright spot in the UK debt.
Arriving from summer travel bookings here in Q1, but we don't have any more color that I can give to you on the summer.
Expectations, we just know that we want to be ready for the travel rebound when it occurs we just don't know exactly when it will occur.
And then on the question the Olympics.
Just.
We are we are of sponsor of the Olympics and.
<unk>.
If the Olympics has been I think it would be of great boon to travel, but I don't think its clear this year in Tokyo that they'll have fans. So we'll have to see how that goes but I can just comment more broadly about what we're seeing with travel demand.
We did a survey recently the.
American travelers and we found a couple of things. The first thing. We found is that people Miss traveling that's not surprising, but we also found that people miss traveling more than any other out of on activity people on this traveling more of an America then go into the restaurants going to sports live music or other activities.
But they don't Miss all kind of traveling generally people don't Miss the traveling for business as much and they generally don't Miss mass tourism Theyre generally not missing standing in line with southeast decks in front of the.
A landmark for example are going to a credit crowded lobby.
The kind of travel of the people missed it spending meaningful time with the people they care about their friends and their family and so we found that the majority of people. We surveyed said they do play on the travel this year. They will do it as soon as they feel safe to do so so obviously, that's going to be pegged a little bit of the health crisis, but we see a lot of enthusiasm and I think the kind of travel that we offer.
<unk> allows people to be able to connect with their friends and family because of home is a great way to be able to gather and spending meaningful quality time and that is very much. What we're focused on we think this is a huge window of opportunity. This travel rebound and I think it's going to be disproportionately of travel rebound thats not going to the cross border, it's not going to the business travel people are going to get in.
Cars, they're going to travel for smaller communities and dropping the staying at home. So we're prepared we're going to be prepared for that.
Thank you.
And your next question comes from right.
Jefferies.
Thanks, Brian just income.
Comment on the experience business and.
What youre seeing there on how important that is to the overall strategy right now and.
Also as we come back through this recovery can you just talk to.
The other element of the stay which could be the hotel on I know you've invested there how important will that be as we go back through the upswing of the travel cycle.
Yes. Thanks for the question, Brian So I'll talk about experiences and hotel so with experiences the very important product for our experiences are one of the purest manifestations of hosting.
The connection that we have I mean in the sense that as the entire product you have an experience with the host of new connects the other guests. So this is really important to us and what we found statistically is that the guests on the Airbnb actually life experiences statistically more than home.
For example, more guests leave a five star review after the experience than they do after of home as a percentage of after the reservation. So we thought last year was going to be a breakout year for experiences, but the opposite happened we had to put the product on hold but social distancing so very quickly pivoted the product.
To create online experiences because people couldn't gather in person we created one hour activities that you would do from your computer these were different in Instagram like videos on Youtube videos. These are actually interactive. So you actually can connect with the hope and you can meet other GAAP and people are using it because they are feeling more isolated and they want to meet other people and I think as the world starts.
The opening back up.
I think we're very bullish on experiences over the coming years because of people travel they're going to want to do something interesting and I don't think theyre all going the desire to go back to getting on double Decker buses and waiting in line and crowded lobbies or landmarks.
I wanted to do really interesting activities and I think thats, what our host half the offer and then for people around the city I think you can only sit at home and watch. So many shows on Netflix people will want to get out of their homes and if they want on alternative to a restaurant I think experience of a great thing to do on their own city. So the short answer is that we're very focused on it we had to take a bit of a pause last year, but theyre coming back.
And we're going to be focused on it because it's just another way of hosting and this is one of many ways that we're going to continue to allow us to be able to share of the world with others now.
Now with regards to hotels this is a little bit of a different story.
We made the acquisition of Hotel Tonight, I am very proud of the acquisition of Im very glad we made of it's a great team of great assets one of the most loved hotel booking app in the world and.
We were investing quite heavily in this product now when the crisis happened, we had the scale Baxter and the investments and one of the investments we scaled back was our investment in hotels, but we can scale back entirely we still are investing in hotels, just not as much of before.
We think of hotels is the way essentially we think about property managers diner Bnb Airbnb.
Community of 4 million host, 90% of individuals and they are who we prioritize because that's where I get to speak to our guests want something thats one of the kind of and this is typically offered by our individual health, but that being said, we never won airbnb guests to come the airbnb and not be able to find something they're looking for so we think that hotels.
In addition to property managers are really important for our strategy and filling in our network App again, we don't want anyone to come to Airbnb and b to the couldn't find the place to stay so of hotels are important and as we know most hotels around the world are below 50% occupancy. So we know they are in need of demand and Airbnb certainly can provide that demand for for them. So that.
So what we're doing with experiences and hotels, both part of our strategy in the future.
Thank you.
And your next question comes from Colin Sebastian with Bank.
Great. Thanks, and good afternoon, a couple of questions for me really follow ups.
But given some of the expense rationalization last year, how confident are you at this point of view of.
The team of the infrastructure in place to handle more rapid rebound on travel if that's what does transpire over the course of the year and then.
I know this may be a little bit difficult to answer at this point you addressed it a little bit earlier, but some of the newer use cases, such as long term stays in shorter trips do you have a view into.
Other those can be sustainable or incremental over what we normally use cases pre pandemic. Thank you.
Yes, the really good questions. So let.
Let me start with.
Being able to handle the rebound in the face of reductions and then ill go to new use cases, and Gainesville billing as needed.
With regards to the reductions a lot of the reductions.
I have just made a significantly more efficient and be able to handle the rebound of one of the big changes. We made were really there were two big changes we made the first big change. We made is that we got much of our focus so it means we scaled back a lot of new investment area from put a very best people on only a few problems, especially our core of hosting but the other thing we.
Did is because of that we shifted from a divisional business unit structure to of functional organization and this reduced lots of duplication of functions instead of having multiple marketing department most of the multiple product department multiple operations for it we now of one technology that one margin one operations.
And this made up not only more efficient being able the turn on of buying much more quickly. So we are preparing for this next rebound I think that we are much more efficient those reductions will be able to sustain the one group that does help the scale of little more linearly is customer service. We are scaling up ahead of demand, but make no mistake.
That was going to be significantly more efficient.
The women.
Running our operations in term of bench. She ran all customer service at Apple for many years and she has built a great team, including a new leaders for trust and community support and we are focused on improving efficiency by reducing contact rates. We are very very focused on reducing the need for people to call.
On Martha just because they have a problem if they do of the call up the message of we are going to focus on making our agents significantly more efficient. So that's a really big focus area on the production.
Now on the new use cases, the short answer is yes, we do believe these new use cases on a sustainable though we can't predict the future. We do know of few things to be true.
Many of the reasons why people are using on leap. When you use cases is the price technology has digitized so much of the world that we can now do things remotely be putting to you before so what this means is because more people can work from home on a laptop. It means they can work out of any home and so we think in the future of fewer people are going to be covered.
Two of permanent destination, and even people who are are going to take more of a three day weekend they might be more likely to go away for the summer and we think that in addition to the kind of short term state. These medium length of stays a couple of weeks or even a couple of months, we think the isn't going to be a really big part of the story I guess the headline is that people aren't just traveling.
On on the on Airbnb day, now living on Airbnb, and I think Thats here. This day, Dave I'll hand, it over to you.
Yes, I think the things that round out is that we're very happy with the underlying progress we've made in our operations support area in terms of improving the efficiency. There we are making some investments in 2021, that's kind of masked some of the underlying progress that we get to see internally and the other thing that's happening is as Brian said, we're making sure the we're ready for.
For the rebound when it occurs which means that we are going to be investing slightly more earlier in the year to make sure that we have all of the support ready for a return of travel being optimistic that it will return soon.
And so with the <unk>.
Relatively lower revenue in the first half than the second half of our operation support expenses as a percentage of revenue will be sort.
It will be a little bit higher in the first half of the second half.
Great. Thank you.
Yes.
And your next question comes from Michael Graham with Canaccord Genuity.
Your line is open. Please go ahead.
Oh, sorry on was on mute pardon me.
Two quick questions one on.
On pricing you mentioned that your AUM average daily rate was up in the shareholder letter.
Because of the mix shift towards North America, partially.
Is demand is really robust and some of these areas can you just talk about how sort of reacting in terms of setting price and are you seeing more opportunities.
<unk> given the.
The other one I wanted to ask was you talked a little bit about the steps you're taking the simplify host on boarding can you just talk about the steps you are also taking the simplify the guest experience.
Thank you Michael why don't I start with the simple climbed the guest experience and gave I can handle the T for pricing.
So.
Yes.
Said to prepare for the travel rebound the summer we're doing for things.
Moving to educate the relevant airbnb.
What makes it would be different that is hosting.
Simplify we're going to recruit more host bringing on to provide the guest experience of we're going to deliver world class sort of let's talk about your question simplified the guest experience one of the things. We know is that as we make something easier of the conversion rate goes up and so we of our goal to make it even easier to be able to book on Airbnb, So we're going to be reducing steps significant.
Reducing steps to be able to log in sign on get verified go through the key steps you need to be able to do and be able to find a place on airbnb. So we're looking at the entire end to end experience and we're going to be doing a bit of a redesign of it over the coming months I think this is going to be great in the next travel season.
The other thing, we're doing and I want to highlight just because of something that I highlighted the very beginning is we're also changing how everybody works because of the whole paradigm of how people stretch of travel is now changed.
Because today the.
This year, thus far 40% of people come the Airbnb and the either no longer noteworthy or Boeing or when they're going in other words, the flexible and this is a major change because every travel company has the search box because people know where theyre going into the ask where you're going and they have D and say check in on the state checkout on that date this whole new <unk>.
World that's much more flexible means of that when people are more open minded the weakened euro demand, where we have supply.
We can actually elevate not just destination for unique homes that can become the destination. So we think this is going to change our people search because it also means that people will be more likely to look for something thats unique and special and I think that really sets airbnb up nicely. So that's where we're going on day to simplify the guest experience, Dave I'll hand over to you.
Yeah with regards to ADR, we did see elevated rates of the average day rate in Q4 was up 13% year over year, we're seeing almost all of that is just a form of mix of mix towards North America, which has higher ADR entire homes in less urban areas each of which are higher.
<unk> seen the rates. So we're actually not seeing new hosts increase the rate of inflation of the same property year over year I'm sure. Some are doing it but we're not seeing it of material level of overall.
Thank you.
And your next question comes from Jason The Bar for me with the city.
Maybe my numbers of wrong, but when I look back over the last five years. It seems as though you've actually widen the gap between yourself and your competitors on the alternative segment.
And I just wonder now that its sort of dawned on everyone. As you say the travel has kind of changed permanently.
Have you seen or do you anticipate sort of heightened competitive intensity relative to what the historical financials would suggest thanks.
Thank you very much for the question Jason.
I'll, just I'll start by saying a couple of things number one.
<unk> is one of the largest industries from the world. It makes up a significant amount of global GDP I believe one in 10, new jobs created in the travel on the street before the pandemic for the first thing I wanted to say is this is such a large market, it's multiples larger than like the advertising industry just to give you of point of reference.
And so we think theres room for a lot of companies now with regards to more competition in our space on the we've really been seeing this competition for the license.
The last five years actually.
I don't think it's really that different from what I have found though is that I think that fundamentally.
Airbnb where in a.
A bit of a different space than our competitors because of Airbnb. We are focused primarily on individual hosts they comprised 90% of our 4 million homes.
And Otas are primarily focused on professional host we have professional hosts as well and we think professional host will probably lift on any site that provides a great experience and give them high quality GAAP and we of course will do that but we think individual hosts are less likely to want to lift the multiple platforms.
The only pop on the out of the custom built platform designed specifically for individual host we saw a lot of the really hard problems that individual host needs like the system of trust individual hosts want to know the quality for example of the guest 70% of post lever review of guest after the study and that means for example.
A lot of guests actually have reviewed that's just one of many examples of the kind of customer platform. We made for individual health and so I don't think competition for anything different by also think where the category of one in the sense that we are really focused on the individual hosted the primary.
<unk>.
That's super interesting. Thank you.
And your next question comes from Justin Patterson with the cable.
Thank you.
Great. Thank you very much we spoke a lot on discovery and just how travel is changing I'm curious to hear how you're thinking of helping individual hosts improve their level of service.
You can make sure of that special trips to keep happening on the Airbnb and none of the a quick follow up just kind of.
Great asset with your payments platform of love to hear about just how you see that investment evolving and where you see more and more opportunity to provide value either of the hosts or guests. Thank you.
Great Great question.
So.
Why don't I start with.
The host and then we'll get the payments and I'll, let Dave so.
Elaborate on payments.
So one of the things. We're doing is in addition to recruiting more hostess here, we want to make sure. Our hosts are set up to succeed and to be able to set up.
The success they have to provide great experiences because of the reviewed after the stay obviously and so we're working on a number of tools, we're going to be developing a bit more host education to be able to educate host.
We have a host of advisory board.
<unk> 17 host the pump from 14 countries and they're gonna be advising us on features that we built to be able to help our host the successful we have a number of tools, we're investing in pricing tool to help them price per lifting improving on a calendar tools given them more tips to provide better experiences we're gonna be updating the way.
The information, we collect and reviews to be able to get more helpful feedback to host on I will.
Just say at a more fundamental level the.
The person managing our host organization as the woman named Catherine Paul as I said, she is an executive from Disney She managed Disney cash numbers and I think maybe they created the Disney University, where they did a lot of education and we want to bring a lot of those learnings to educating our host we don't think we're just a distribution platform for our host.
We're really an enablement platform and we want to make sure rebuild all of the tools and services and education of materials that they need to be able to be successful for the last thing I'll just say with our host is we're also going to be providing elevated levels of customer service to our host and we think we think we can do this while even becoming more efficient.
On the cost of customer service. So that is what we're doing for host now on payments I'll start and I'll hand over to date.
To give of point of reference in 2019, we processed approximately $70 billion.
Of guests in the house transaction and this was an over 40 tenancies across 220 countries and regions. So we think this is a really unique capability that we have the reasonably even built the payments profit in the first place because we started with individual hosts we didn't start with hotels and individual people couldn't actually received money very easily and we were.
Because of our such a global network, where nearly every country in the world. We actually have to have a really tough the bill payment platform to be able to facilitate money between these countries. So it's very strategic to the company and I think that's one of the kind of best kept secrets, the airbnb our payments capability of day.
I wont elaborate on it.
We process of 100 per cent of the guest payments on Airbnb and the Super powerful individual hosts would not be able to host without suppressing the.
The processing those payments for us. So if you look of competitors, but substantially lower penetration of payments. It is the dumping of pinpoint for an individual's concern on like they can do it on the road. We also does other benefit that as we add more payment methods and as Brian said going from 40 currencies across the globe, we keep working on ways to localize the pain.
Methods in all of the different countries the.
The payment methods and customs and Brazil are different from those of Russia or the different from those from France in different windows in the United States and so we really want to localize the payment methods and we get a.
Double benefit of that one is we often decrease for costs by being more local and the second is lost in the increase of our conversion. So those are all of the great benefits.
Great. Thank you.
And as a reminder to ask a question press star one on your telephone keypad.
Your next question comes from Stephen Ju of Credit Suisse.
Okay. Thank you so Brian what do you think is for GAAP and awareness of Airbnb between your of more well established markets like the U S and some of your version of territories.
What do you think the corresponding difference of activity that you see between the developed versus emerging territory for you can look to close.
Pick out of secondary this is probably not the best question to ask for your whole system struggling with the plus demand, but the fees that you are charging seem to be fairly minimal.
Each of the individual host though.
Is there a greater desire to start shifting the take rate burden away from the consumer perhaps gradually over time or do you feel like you want to continue on its current path. That's publicly so much more supply out there that you might want to consolidate it.
A lock on to Airbnb.
Yeah.
Thank you for the question Stephen I'll answer the first question and I'll, let David answer the second.
With regards to your question about.
The GAAP of awareness between the mature markets and on new markets Yeah any.
Our brand is extremely strong in countries all over the world, but in particular of United States.
The U K, Australia, Canada.
English speaking countries and in France, I think in particular, non English speaking country, but it's got an extremely strong kind of culture of using airbnb over many years.
There is absolutely a GAAP between those and new emerging market, but this is an exciting opportunity because of the biggest GAAP is awareness and what we found pretty universally is in nearly every country in the world once the awareness normalizes the growth rates in the volume of business gets to be approximately similar.
So the major thing we need to do is just increase the awareness for airbnb and our emerging markets.
We're starting this year with investing more in brand marketing, we're going to be doing digital advertising all over the world and I expect in the coming years, we're gonna be targeting key countries that are emerging opportunities for us.
We've had a lot of success.
In Japan over the last few years, we've been on a really long journey to build that business. We've had great success in Mexico, Brazil noon.
Numerous countries in different countries all over the world and I do think we are the we are by far the most global network and all of travel.
Very few corners in the world, where F&B doesn't have a strong community, but I do think that we have eight.
Really big opportunity to grow in other countries and I think in particular once cross border travel re emerges and it will.
The coming years, because it can be a huge opportunity for us.
The second question.
Okay great.
It's just important that we charged with share price for stays in Airbnb and we continue to other great value. We believe that we do have a great value of where you can have on all home for the price of the typical hotel zone. When we look at our fees, we want to make sure that those fees are of great value to both guests and to host and we do have the mix of those fees in some case.
We have a mix of a low hosts.
<unk> and higher guest fee and then for some of our professional hosts will have a host only fee and all of it is on the home side and so we will see a mix the mix could change over time, we continue to test of an evolved to see what works best for our guests our hosts.
And we'll just continue to evolve and iterate to make sure that we provide the best value to the overall community overall, we kind of the.
Fluffy is as we keep more back to the community in terms of services and capability. Then we would could see opportunities for further increases of take rate.
But with all of it I just want to give more back to the community before we would increase that take rate.
Thank you.
And your next question comes from Mario Lu with Barclays.
Great. Thanks for taking the questions.
Two in terms of of the guest profile in 2020, just curious if the recent trends in travel such as domestic non urban and whole homes thought in the larger mix of new guests in 2020 versus 2019 and could that potentially drive further growth.
The chairs.
And then secondly on occupancy you mentioned that host generate less than 10000 of year on average and I believe the occupancy rates had been around 17, 17% per acre of it. So what would you say of the largest drivers in order to the move that rate higher over time. Thanks.
Dave why don't I intended to.
Sure.
On the mix of of new guests. It has been of great opportunities to introduce airbnb to new guests.
It's easier to go use the airbnb by driving 50 miles down the road or 300 miles down the road nearby stay domestic the news to help on the plane go halfway across the world and used Airbnb and so we do think that we've been able to expose it back to a number of new guests. So I would say that the rebound of our business has still been skewed moderately back toward.
Existing guests guests the know all about Airbnb and all of the benefits that we have so we think it's been of great opportunity to expose the but I wouldn't say the the.
It's disproportionately been new guests coming into the Airbnb now, but at the same time I think we are.
Just become more of the mainstream opportunity for people than it is.
We're no longer the alternative we really are the default.
On the occupancy rates occupancy is kind of Brian mentioned earlier is just scenario that can flex overtime.
We can also drive up the occupancy of the existing properties. So we don't need the necessarily increase the number of listings to drive incremental nights, but it is an opportunity that on.
As we get more nights, we can also bring in people that are more flexible on the time like if they're traveling for a week, maybe they only use the home.
For a whole week, so occupancy is probably not the best measure of performance on Airbnb because.
If youre on individual host it sounds like you want to constantly drive up the use of your existing home.
Want to make sure the at the home of available some part of the time during the year.
Right that makes sense.
Yeah.
Okay and your next question comes from Kevin Kopelman of let's call them.
No.
Great. Thanks, so much so during the pandemic, you've seen kind of the sunscreen suburban properties do really well.
As we start to starting to see some pick up here in booking activity with the Covid cases falling.
For the summer can you talk about what youre seeing in.
In some of the urban areas that had been hardest hit.
By the pandemic and also maybe the.
Just kind of big picture outlook for for those urban properties as we emerge.
Yeah on the day.
I think what can be greatly.
Sure urban assault on the important part of our business, we have over 40% of our nights are still are urban and.
It's just the non urban and low density urban is the place where we're seeing the greater growth right now so it's still a really important part.
And as travel the terms of the what we're going to find is the number of hotels that actually.
Aren't going to be coming back online anytime soon.
Brian also talked about the redistribution of the bit of travel where people are going to go to some smaller communities that may not even half of hotels.
And so it's the.
This mix, that's going to be kind of changing over time and as probably balance I think we will see contingency of nice growth in the non urban low density urban and urban comes back it will just be another tailwind for us.
And thanks, so much.
Okay.
And that is all the time, we have for question. If I will now turn the call back over to the company for closing remarks.
Thank you everyone for joining us today for our first earnings call at the club.
The company.
And today I just want to end by thanking all of you our shareholders.
Two of our early shareholders. Thank you for sticking with us and to all of our new shareholders. Thanks for joining us on this journey is just beginning and we look forward of sharing our progress this year with you. Thank you.
<unk>.
This does conclude today's conference call you may now disconnect.
[music].