For some businesses, the worst of the COVID-19 pandemic is behind them, while other companies are still struggling to overcome supply chain disruption. Entertainment titan Walt Disney(NYSE:DIS) is still operating below pre-pandemic levels, while company Airbnb(NASDAQ:ABNB) is back to high growth.
Both companies are more than pandemic plays. Looking at future potential, which company is the better buy today?
Image source: Walt Disney.
How they’re doing now
Disney’s business is back and running, thanks not only to its streaming efforts, but also to the parks segment, which became profitable again in the fiscal fourth quarter (ended Oct. 2). All parks are open, and cruise ships are running, although there are still some capacity restrictions.
All in all, the fourth-quarter report was positive. Revenue increased 26% year over year, and it posted a profit of $160 million after a loss last year. However, investors weren’t enthused about new streaming subscriber count. Total net new Disney+ subscriptions came in at 2.1 million, a big slowdown from more than 12 million in the third quarter, and while paid subscriptions increased 60% year over year, it’s the first year since launch that it didn’t increase at least 100% over the prior year.
Airbnb, on the other hand, had a scorching hot quarter. Revenue increased 67% year over year to a record $80 million, and gross booking value rose 48% to $12 billion. Travel is still not back to normal, but Airbnb is already in tip-top shape. Even better, it posted a profit of $834 million after three quarters of losses.
Part of Airbnb’s quick rebound is its flexible travel options. It’s seen particularly high growth in stays of at least one month, which accounted for 20% of nights booked in Q3, and soaring bookings in more rural locations. It’s suited to meet these nontraditional needs much more than traditional travel.
Image source: Airbnb.
Disney’s business is highly resilient for several reasons. First, it has a number of different but connected businesses that hedge against each other at any particular time. Second, its content library includes several blockbuster franchises that are challenging to compete with. Finally, it has the cash to devote to a specific area wherever it needs to refocus.
It needed to apply solutions to the sagging parks business as it dealt with restrictions beyond its control, and it’s seeing success with some new offers that are attracting customers and increasing sales. For example, it rolled out a new annual membership program called Magic Key, and the highest tier, for $1,399, is already sold out.
And its streaming business is chugging along nicely. Despite the underwhelming new subscriber count in Q3, management says it’s not a linear process and it’s maintaining its overall targets, expecting 230 million to 260 million paid subscribers and profitability by 2024. It has 340 titles in some form of development to be released over the next three years, and with its stellar creative studios, these are the meat of streaming business.
Airbnb is seeing strong demand continuing into 2022, and as vaccination rates rise and travel increases, it’s well-positioned to benefit. It launched a new playbook last year with 100 improvements to upgrade its service for both hosts and guests, and it’s planning to release another 50 upgrades this coming winter.
CEO Brian Chesky said on the recent earnings call, “For the first time ever, millions of people can now travel anytime, anywhere for any length, and even live anywhere on Airbnb.” That’s already fueling higher sales, but the opportunity is simply explosive. No other travel company can match Airbnb’s more than 4 million rentals (and growing), and Airbnb has massive growth potential.
Comparing stock stats
Let’s take a look at how their stocks stack up against each other, and vs. the broader market.
P/E Ratio Forward 1-Year
The market is finally liking Airbnb, after its stock tanked last year, while Disney stock got slammed after its earnings report, bringing its five-year stock gains down to a paltry 63%.
I think we’re even past the stage where Airbnb looks like a risk. It’s demonstrated over the past year that it has a solid model, pointed advantages over traditional travel, and disciplined management. The only factor weighing on it right now is valuation, trading at 227 times forward one-year earnings. That’s definitely a premium price to pay for a stock.
Disney and Airbnb are both great stocks to own with plenty of future growth opportunities, but right now, Airbnb is looking good to me.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
A revolution in the way we travel is taking place in countries around the world including Mexico, Airbnb co-founder and chief strategy officer Nate Blecharczyk said Friday during an appearance at a tourism industry event in Mérida, Yucatán.
Speaking at the Tianguis Turístico – Latin America’s largest tourism industry event – Blecharczyk said the coronavirus pandemic has eliminated the need for people to work in specific places at specific times.
Tens of millions of people can now work from anywhere, travel whenever they want and stay away from home for longer, he said.
As a result, many people are living in Airbnb properties, Blecharczyk said, adding that the trend is occurring in Mexico.
“Traveling to Mexico has become a real trend for travelers from the United States. Tulum, Cancún, Mexico City and Playa del Carmen are some of the top trending destinations for U.S. travelers,” Blecharczyk said.
He presented data that showed that villas, cabins and country houses in Mexico were among the most searched listings on the Airbnb site.
The co-founder of the booking platform presented additional global data that showed that 20% of nights booked between July and September were for stays of one month or longer. More than 100,000 guests have stayed continuously on Airbnb for three months or longer during the past year and 45% of nights currently booked on the platform are for stays of one week or longer, up from 38% two years ago.
Six in 10 respondents to an Airbnb survey in Mexico said they were interested in working while traveling so that they can take advantage of their free time to explore and get to know new places, Blecharczyk said.
He also said there are Airbnb hosts in almost all of Mexico’s 132 Pueblos Mágicos, or Magical Towns. Listings in such towns have increased 170% since 2018, Blecharczyk said, adding that as of the end of last year 11,000 families in Pueblos Mágicos had obtained extra income by listing properties on the site.
Earlier this week, President López Obrador inaugurated the 45th edition of the Tianguis Turístico, which was originally slated to be held in Mérida in March 2020 but was postponed due to the pandemic. The event began Tuesday and concludes Friday.
“What in essence this act means is to inaugurate a new stage in the public life of our country, to come out of the tunnel of darkness we were in because of the pandemic,” López Obrador said.
He lauded the Yucatán Peninsula as a tourism destination, saying it is an “extraordinary region” filled with “archaeological riches.”
“That’s why [we’re building] the Maya Train [railroad], to connect the new and old Mayan cities. In what region of the world are there as many archaeological sites as the Mayan region?” the president said.
The railroad will spur tourists to go beyond the beach and explore, López Obrador said.
For his part, Tourism Minister Miguel Torruco said international tourism declined 46% in Mexico last year compared to a 73% worldwide contraction.
He said López Obrador’s instruction not to restrict the entry of international flights during the pandemic and the implementation of bio-health protocols designed by the Tourism Ministry in close coordination with the Health Ministry allowed Mexico to welcome more international tourists than most other countries. In addition, Mexico has never required incoming travelers to quarantine, present a negative COVID test result or show proof they are vaccinated.
Torruco predicted that international tourist numbers will total 31 million in 2021 and the economic spillover will be US $18.1 billion. It’s estimated that tourism’s contribution to GDP will be 7.1% this year and 8.3% in 2022, he said. The latter figure is almost on a par with 2019 levels.
The tourism minister noted that 490 tourism projects worth a combined US $9.1 billion are currently being built, generating more than 156,000 direct and indirect jobs.
“In addition, in the first half of 2021, Mexico attracted US $711 million in direct foreign tourism investment, and in the second quarter the number of people working in the [tourism] sector was about 4 million – 249,000 more jobs than in the first quarter of the year,” he said.
“… All these statistics are without a doubt encouraging. They show that tourism activity is in the process of recovery,” Torruco said.
With regard to the Tianguis Turístico, the tourism minister said that all 32 Mexican states were represented and that more than 1,500 tourism-sector buyers from 970 companies in 42 countries would be in attendance. Some 95% of all international tourists who come to Mexico are nationals of those 42 countries, Torruco said.
Airbnb Inc. posted record revenue in the third quarter, punctuating the home-sharing company’s rebound from the collapse in bookings during the early days of the pandemic.
The three months covering much of the busy summer vacation period is typically the most lucrative for Airbnb. People resuming more normal travel patterns and other factors helped the company fill the rentals available on its platform. Airbnb said it is preparing for bumper Thanksgiving business, with bookings at the end of September up roughly 40% from the 2019 level.
The Airbnb project received funding from ASIS International (the world’s largest membership organization for security management professionals) and via a grant from John Jay College. Over the course of 2.5 years, the teams used machine learning and natural language processing techniques to analyze Twitter data resulting from guest complaints. “Our number one goal when starting out with this research was to find out what’s most likely to go wrong for Airbnb guests,” Fergusson tells Forbes Women.
And it wasn’t just a few Airbnb complaints. The teams analyzed a large dataset of 127,183 Tweets posted between January 1, 2015 and September 20, 2020 that contained guest complaints about problems they had encountered with an Airbnb stay, then broke them down using a combination of human coding, machine learning and natural language processing techniques.
The report documented many of the circumstances that countless guests have experienced, from the frustrating to the downright dangerous (read on for some examples). “We found thousands of cases of account hacking with vacation dollars being stolen via fraudulent bookings as well as many other scams,” says Fergusson. “Then there were police interventions, bodily harm, threats, bug infestations, invasions of privacy via hidden cameras,and long-term negative health impacts after the customer checked out of the Airbnb—and so much more. Even in 2021, the amount of illegal, unsafe or fake listings on the platform is staggering, more than any of us probably realize.”
The report also compiled more than 500 examples of photographic evidence of unsafe conditions, including bug infestations, rodents, pests, mold, bodily fluids, rotting food and other unsightly or unsafe problems. In total, the report found that 72.2% of Airbnb problems related to customer service problems, from limited support in emergencies to unreachable or rude service. The next most common problem: scams, which accounted for 22.3% of complaints—from fake listings to hacked accounts. Following that (10.4%) was the host canceling the stay. Next up: 6.1% of complaints documented unsafe conditions, from pest infestations to hidden cameras. And 3.7% of complaints documented discrimination, from racial discrimination to LGBTQ+ discrimination.
Fergusson says he was inspired to do the study after his family’s own bad Airbnb experience in 2017 when they experienced two back-to-back nightmares that left them stranded on the streets of Paris with their 10-month-old baby. “We had nowhere to stay and Airbnb support tried to ‘help us’ by suggesting a new place hosted by the same scammer who had just taken advantage of us,” says Fergusson. “That experience opened our eyes to the many flaws and loopholes on the Airbnb platform.”
In publishing the report, Fergusson says he felt it was important that Airbnb users know what they’re getting themselves into when using the platform. “Countless Airbnb guest complaints we reviewed on Twitter suggested that the company is very good at circumventing responsibility,” says Fergusson. “Their customer service will often go silent or cite some obscure, confusingly worded terms of service when guests rightfully request refunds for services not rendered. It’s important for users to understand renting an Airbnb is not the same as booking a hotel.”
Fergusson points out that hotels are highly regulated whereas short-term rentals have little oversight in most cities around the world. “For example, reputable hotel chains are not likely to be scamming people en masse or routinely canceling a reservation a few hours before the guest arrives,” says Fergusson. “It would be hard to find a hotel without a smoke detector or a carbon monoxide detector—but with an Airbnb, those listings with missing amenities would be fairly easy to find. Tragically, just last week, a Californian couple and their baby were found dead in an Airbnb likely because of a gas leak.”
Another big difference between an Airbnb and a hotel: When you have a disappointing hotel experience, you have somebody to assist with a rapid resolution. “You can talk to the front desk, you can talk to a manager, you could leave a scathing review online via a third-party review site,” says Fergusson. “Conversely, with Airbnb, our research has uncovered that if you have a bad experience there’s no individual to complain to in real-time since there is no ‘front desk.’”
In fact, customer service was a big issue that the report revealed. “According to the results of our study, in countless instances, Airbnb is dropping the ball when it comes to customer service,’” says Fergusson. “As reflected by so many customer complaints, Airbnb is relying heavily on bots and AI technology, obfuscating important information, and outsourcing to call centers. We’ve read endless complaints that their tactics wear people down so badly that guests are likely to give up before they ever receive a refund.”
Another issue: censoring of reviews. “Airbnb has very strict review guidelines that allow them to censor reviews for various reasons including ‘circumstances entirely outside of another’s control,’” says Fergusson. “This means previous critical reviews may not ever make it onto the platform. For example, we were contacted by a young woman who had been sexually assaulted in front of her Airbnb building. She claimed her review expressing that particular Airbnb was in a dangerous neighborhood was taken down because it fell under ‘circumstances entirely outside of another’s control.’ It’s hard not to find these accounts alarming.”
In the report, there were many issues that pertained to women. “Women seem to often be disproportionately targeted. We saw a multitude of examples of harassment, assault, unlawful video recording and poorly secured listings that affected women’s safety,’” says Fergusson. “Since Airbnb has historically not vetted all their hosts or even verified all their listings, there is room for unscrupulous individuals to take advantage of the platform and potentially cause harm or discomfort to women travelers. For this reason, if you’re a solo female traveler, we recommend extra caution if you plan to use Airbnb.”
While the report focused on Airbnb, Fergusson also says that the problems are not limited to that brand and could be representative of the entire short term vacation rental industry. “We only reviewed Tweets that pertained to Airbnb. However, I believe there are many unfortunate issues on all short-term rental platforms,” says Fergusson.
So what does Airbnb say about all this? In a recent article written by Bloomberg, the company stated that fewer than 0.1% of stays had resulted in a reported safety issue. But Fergusson has issues with phrasing of this statement, which he thought was too opaque. “Are these only circumstances where guests undergo bodily harm or worse? And this doesn’t even begin to capture all of the very expensive, frustrating, and upsetting issues that aren’t safety concerns, like the common complaints we [identified],” he says. Plus, if you break down the numbers, 0.1% of 200 million stays a year comes to 200,000 safety issues per year.
There are ways to protect yourself if you’re staying at an Airbnb or a vacation rental property. “Our biggest tip is to treat the reviews like a mystery novel. Read every review between the lines since most people will dance around the negative experience they may have had, and then cloak it in some flowery compliments,” says Fergusson, who points out that sociologists have written about this phenomenon in a paper titled, “If nearly all Airbnb reviews are positive, does that make them meaningless?”
Another piece of advice: “To help overcome some of these pitfalls we suggest you only stay at places with a 4.85-star review average or higher,” says Fergusson.
In the report, Fergusson lists a number of other tips, including:
• Never book a place with zero reviews.
• Only stay at places with a 4.85-star review average or higher
• Remember that the vast majority of reviews will seem positive even if the guest was unhappy.
• Don’t just look at your listings reviews, look at your host’s overall reviews.
• Only stay with hosts who have provided verified government ID
• Avoid hosts who have more than a couple of properties listed, aka professional Airbnb landlords.
• Communicate with your host before your stay
• Document anything that goes wrong with photo and video evidence for help with getting a refund
Below is a breakdown of the top three areas of complaint that the report revealed when it comes to Airbnb problems, with more detailed descriptions of each related problem. On Fergusson’s site, you can see examples embedded directly from Twitter.
1. Scams (28,325 instances or 22.27% of all guest complaints)
Multiple listings of the same property (11,652 instances or 9.16% all guest complaints)
Property not as described (7,286 instances or 5.73% of all guest complaints)
Account hacked/ fraudulent charges (5,872 instances or 4.62% of all guest complaints)
Fake listings and/or reviews (899 or 0.71% of all guest complaints)
Other scam or fraud (2,616 or 2.06% of all guest complaints)
2. Unsafe Conditions (7,719 instances or 6.07% of all guest complaints)
Infestations/ unsanitary/ unhealthy (4,305 or 3.38% of all guest complaints)
Serious safety concerns (1,274 or 1.00% of all guest complaints)
Obnoxious host and/or environment (1,160 or 0.91% of all guest complaints)
Unsafe or broken amenities (581 or 0.46% of all guest complaints)
Hidden cameras (251 or 0.20% of all guest complaints)
Theft (149 or 0.12% of all guest complaints)
3. Discrimination (4,851 or 3.81% of all guest complaints)
Disability (2,891 or 2.27% of all guest complaints)
Race (1,051 or 0.83% of all guest complaints)
LGBTQ+ (153 or 0.12% of all guest complaints)
Other types of discrimination (756 or 0.59% of all guest complaints)
Fall has definitely arrived in the Pacific Northwest. It was a relatively quiet week in the online travel world. This week’s Update features a story on one of the most widely used Global Distribution Systems – Amadeus – as the company announces its second (unnamed) major customer for its new reservation platform. Enjoy.
Airbnb Takes Steps to Accommodate Hotel Listings (“Airbnb revives hotel strategy, moves closer to rival OTA model,” September 29, 2021 via Phocus Wire) While the pandemic may have led Airbnb to pause its hotel distribution aspirations, it appears that the pause may have only been temporary. Airbnb is reportedly testing a new API that allows suppliers to provide and display multiple rate plans (similar to many of Airbnb’s OTA competitors). According to two of Airbnb’s beta partners – RoomCloud (an Italian channel manager and booking engine) and Cloudbeds (an US cloud-based PMS provider), the changes are designed to appeal to hoteliers. Airbnb is also apparently re-starting efforts with its mobile booking platform, HotelTonight, as it seeks to fill multiple open positions within the company, including market managers. Airbnb has refused to provide comment on either effort.
The Most Downloaded Travel App in the First Half of 2021? Hopper (“Top Travel Booking Apps: Look Who’s Winning the U.S. Now,” September 28, 2021 via Skift Travel News) (subscription may be required) Those of you who have read my Update for the past year or two know all about Hopper. While Hopper may have started out as just another mobile booking application, it is now successfully leveraging its many fintech tools to appeal to post-pandemic travelers seeking maximum flexibility in their travel plans (as evidenced by the 1.3 million U.S. consumer downloads of the app that occurred in July alone). As noted in last week’s Update, Hopper CEO, Frederic Lalonde, isn’t satisfied just being the most downloaded app, he hopes to create the “West’s first travel superapp.” For those of you wondering, with the exception of Tripadvisor, Expedia and/or Booking Holdings owned applications dominated the remainder of the list of the top ten most downloaded apps.
Pandemic Twist Emerges on Bookings for Hotels in Tussle With Online Resellers September 27, 2021 via Skift (subscription may be required) Several hotel groups have tried to lower costs for roughly a decade by driving more consumers to book directly. During the pandemic recovery, hoteliers have by and large continued to avoid overusing aggregators such as Expedia and Booking.com for much of their online sales.
company Jones Lang LaSalle has launched a rival to Airbnb and Booking.com for
short-term accommodation rental.
The JLL Short Stays
booking platform offers professionally managed and fully
flexible rental accommodation for stays of three nights or more in towns and
cities across the UK and Ireland at launch and is expected to have a global roll-out in 2022.
The platform has been
developed in conjunction with proptech company Lavanda and will allow JLL’s
institutional real estate clients to offer their properties to a wider market.
Commercial property has taken a hit during the pandemic with more people
working from home and organisations going virtual, at least in part.
Sam Winnard, director at JLL, claims that the platform “offers guests a better
value alternative to a hotel or serviced apartment, whilst at the same time
providing exclusive access to premium urban accommodation professionally
managed by the world’s most trusted blue chip operators – including
Greystar, Blackstone, and CA Ventures”.
have big ambitions for our Short Stays platform, and I’m hugely excited to
develop it alongside our network of corporate travel bookers into a primary
channel of corporate rental demand,” he said.