FILE – In this Feb. 22, 2018, file photo, Airbnb co-founder and CEO Brian Chesky speaks during an event in San Francisco. Thirteen years after its founders first rented air mattresses in their San Francisco apartment, Airbnb is making its long-awaited stock market debut. The home sharing company priced its shares at $68 apiece late Wednesday, Dec. 9, 2020 giving it an overall value of $47 billion. Starting Thursday, it will trade on the Nasdaq Stock Market under the symbol “ABNB.” (AP Photo/Eric Risberg, File)
Airbnb proved its resilience in a year that has upended global travel. Now it needs to prove to investors that it sees more growth ahead.
The San Francisco-based home sharing company makes its long-awaited debut on the public market Thursday. The company priced its shares at $68 apiece late Wednesday, giving it an overall value of $47 billion, according to a person with knowledge of the transaction who was not authorized to speak because the amount had not yet been made public. The shares will trade on the Nasdaq Stock Market under the symbol “ABNB.”
Airbnb raised $3.7 billion in its offering, making it the biggest U.S. IPO this year, according to Renaissance Capital, which tracks IPOs. The company had initially set a price range of $44 to $50 for it shares, but raised that to a range of $56 to $60 earlier this week indicating rising investor demand.
Airbnb’s listing comes a day after another San Francisco-based company, DoorDash, soared through it initial public offering, the second largest after Airbnb’s. DoorDash’s stock jumped 85.8% to close at $189.51. The meal delivery app raised $3.4 billion with its offering.
Airbnb wants to add more hosts and properties, expand in markets like India, China and Latin America and attract new guests.
First, it will need to recover. Airbnb — which has never posted an annual profit — said its revenue fell 32% to $2.5 billion in the first nine months of this year as the coronavirus forced travellers to cancel their plans. The company delayed its IPO — initially planned for the spring — and funded operations with $2 billion in loans. In May, Airbnb cut 1,900 employees — or 25% of its workforce — and halted programs not related to its core business, like movie production.
But in the months since, Airbnb’s business rebounded faster than hotels as travellers felt safer booking private homes away from crowded downtowns during the pandemic. In Miami, for example, short-term rental occupancy reached 83% in October, while average occupancy for hotels was 42%, according to STR, an accommodations data firm.
Airbnb said the number of nights and experiences booked, which plummeted 72% in April compared to year-ago levels, were down 20% in September. Airbnb debuted experiences — from cooking classes to surfing lessons — in 2016.
Airbnb now has 7.4 million listings, from castles to treehouses, in 220 countries. They are operated by 4 million hosts. The company controls around 39% of the global short-term rental market, according to Euromonitor. It’s the market leader in Europe but trails VRBO, a vacation rental company owned by Expedia, in North America.
Looking ahead, Airbnb thinks it could see a surge in business from people who are able to work remotely.
“We believe that the lines between travel and living are blurring, and the global pandemic has accelerated the ability to live anywhere,” Airbnb said in a recent financial filing.
It could also expand its offerings further into boutique hotels, as it signalled with its 2019 purchase of last-minute hotel room supplier Hotel Tonight.
Still, Airbnb acknowledges it will be difficult and expensive to attract new hosts and guests. Its revenue growth rate was already slowing in the years leading up to the pandemic.
“I do think the company will benefit from the pent-up travel demand once the vaccine is widely distributed, but why would someone want to buy into a travel-related, unprofitable business with slowing growth?” said Scott Rostan, the CEO of Training the Street, which advises Wall Street analysts.
Airbnb was born 13 years ago in the San Francisco apartment shared by Brian Chesky — now the company’s CEO — and Joe Gebbia, who leads its design studio and Airbnb.org, its charitable arm.
Chesky and Gebbia were looking for a way to subsidize their apartment. When they learned a design conference was coming to town and hotels were full, they set up a website — AirBedandBreakfast.com — and rented out air mattresses. They got three takers. In 2008, they formed a company with Nate Blecharczyk, a software engineer.
Home sharing wasn’t new. VRBO was launched in 1995. Booking.com, another older rival based in Amsterdam, mainly offers hotel rooms but has also branched into vacation rentals.
What Airbnb did differently was focus on affordability, letting hosts rent out spare rooms and sofa beds, said Tarik Dogru, an assistant professor in the Dedman College of Hospitality at Florida State University who studies Airbnb. Guests strayed further into neighbourhoods than they would if they stayed at a hotel.
“Airbnb offered that feel of authenticity for those who are looking for it,” Dogru said.
That has sometimes been a problem. The company has angered some cities, which accuse it of promoting overtourism and making neighbourhoods less affordable by taking housing off the market. Los Angeles, Paris and even Airbnb’s home city of San Francisco have passed laws restricting its rentals.
Airbnb’s rapid growth — the number of hosts and active listings grew more than 20% in both 2018 and 2019 — has also made it difficult for the company to ensure quality. Last November, Airbnb promised to verify all its listings to make sure they match the photos on its site. It also spent the last year removing party houses and tightening rules for guests after a deadly 2019 shooting at an illegal Airbnb house party in California.
Relationships with hosts and guests have been rocky at times. After multiple reports of racist behaviour targeting guests, Airbnb instituted a nondiscrimination statement that all guests and hosts must sign. It won’t display a guest’s profile photo until a property is booked, so a host can’t deny a room based on a guest’s race.
And earlier this year, hosts revolted after the company let guests cancel bookings and get full refunds due to the pandemic. Airbnb responded by promising $250 million to hosts to help make up the shortfall.
Cary Gillenwater, a university professor and Airbnb host in Duivendrecht, The Netherlands, said the company didn’t provide much financial assistance to him, even though he let many guests cancel without penalties.
Gillenwater usually makes more than $21,000 each year renting out a room on his property with its own entrance. This year, he’ll be lucky to make $2,500. He’s looking into renting the room to office workers to use during the day.
Despite his experience, he’s considering investing in Airbnb and thinks it will continue to grow. Home sharing is invaluable for his family of five, he said, because it’s difficult to find hotel rooms that are large enough.
“I feel like there is a future for them, but we have to get through all this first,” he said.
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
