Airbnb announced its most profitable second quarter yet on Thursday (Aug. 3), generating a net income margin of 26% — its highest Q2 ever — an 18% increase compared to Q2 2022.
Overall, the company’s generated net income of $650 million on $2.48 billion in revenue, which was up 72% and 18%, respectively, compared to Q2 2022. Gross bookings were also higher than expected, coming in at $19 billion.
The firm said bookings grew in every region, with more first-time bookers compared to a year ago. “In fact, we’ve now had more than 1.5 billion guest arrivals since starting Airbnb,” Airbnb Co-Founder and CEO Brian Chesky said on an earnings call, adding that the firm ended the quarter with more than 7 million total active listings.
Airbnb attributed its strong performance in the second quarter to a rebound in urban and international travel, with global cross-border bookings rising 16% in the quarter compared to Q2 2022. This was likely due to more guests returning to cities, with urban nights booked increasing by 13% year over year.
However, the short-term rental company missed estimates when it came to nights and experiences booked. Airbnb reported 115.1 million nights and experiences booked during the quarter, up almost 11%, but less than the 117.6 million consensus among analysts surveyed by StreetAccount.
The online marketplace for accommodations and experiences also reported increased average daily rates (ADR). Gross booking value per night, at $166.01, was up 1% year over year. However, ADR was down 2% in North America as hosts have reduced prices.
And because guests are staying longer, the firm has taken steps to make longer stays more affordable by significantly reducing fees for stays longer than three months. “We started offering U.S. guests the option to save money by paying with their bank account, and we made it easier for host to offer monthly discounts. And as a result, the percentage of our new active listings to offer monthly discount jumped from 22% to 50%,” Chesky explained.
The company also revealed that it is piloting generative AI technology to optimize its processes, particularly helping customer service agents review nearly 70 different policies in multiple languages in case of disputes.
“No human could ever quickly read all those policies [but AI can] read the case history of both guest and host, summarize the case issue, and even recommend what the ruling should be based on our policies. And it can then write a macro that the customer service agent can adopt and amend,” Chesky said.