Airbnb presentation
Transcript: Airbnb: Is it a Worthy Investment? - Piroska Horvath, Greg Houston, Abbey Mullan, Miracle Obih, Ailey Porter, Humera Rafique Interactive Activity Interactive Activity Questions for the audience Your thoughts Initial thoughts when considering hotels/accommodation? Airbnb? Customers of Airbnb? My experience with Airbnb My Airbnb Experience Website / Booking = Immediate access to information on accessibility, availability of calender and price - quick and convenient. Misrepresentation? Stay = Location, apartment, privacy, value for money What is Airbnb? What is Airbnb? Facts American vacation rental online marketplace Hosts- rent out houses, lodges etc Customers- pay for accommodation Platform for connecting hosts and guests Income from commission on bookings Founded: August 2008, San Francisco, California, United States Revenue: 4.7 billion USD (2019) San Francisco in October 2007, roommates Brian Chesky and Joe Gebbia idea of putting an air mattress in their living room Turning it into a bed and breakfast Facts 150 M+ total users on AirBnB 2M+ people staying in an AirBnB every night 5M+ global AirBnB listings worldwide $101B AirBnB valuation after its initial public offering 4M hosts worldwide Operating in more than 220 countries Value Proposition Value Proposition Affordability Convenience Unique experiences Strong customer relations Privacy Investment Approaches Investment Strategy Rational Finance Rational vs Behavioral Our Investment Values Rational Finance Rational investment Profit orientated Growth orientated Risk averse High risk high return Fact and analysis based Behavioral Behavioral Finance Not always risk averse Bias Social & ethical Influence Consciousness Emotion Unpredictable behavior What kind of Investors are we? We Considered: -Financial performance AND - Ethical - Value based performance AND -Broader Market & Company Analysis Porter &Kramer (2007) : Inherent link between good CSR practices and competitive advantage Finances The company has seen annual net losses every year since its launch. Although revenue has been increasing, so too have associated costs. Slow Revenue Growth . Finances Financial Year 2020 Nights and Experiences Booked: 193.2M (-41%) Y/Y Gross Booking Value: 23.9B (-37%) Y/Y Revenue: 3.4B (-30%) Y/Y Net Income/(Loss): 4.6B Improvements in our cost structure enabled us to reduce our operating expenses on a year-over-year basis in all categories. Financial Year 2020 Financial Future Financial Future Hope for the future: Predicted travel boom after pandemic. More than half of those surveyed (54%) said they either already booked, are currently planning to travel, or expect to travel in 2021 Stock Market At $180 a share, Airbnb trades at 30 times its trailing 12-month revenue. High cost of shares. IPO price of $68 a share Airbnb Values Champion the mission Be a host Embrace the adventure Be a cereal entrepreneur "Every frame matters" Diversity Values CSR Promoting positive environmental impact Employee Volunteering (4 hours of paid time off purely for this) 48.94% of workforce are women (goodbye gender roles) Open house program --scheme has helped more than 25000 people Stand up for their employee's rights surrounding race and gender identity CSR Ethical Issues Cameras in accommodation (measures should have been taken) More recently, it was discovered that more than half of owners were willing to host guests last month - did not seek valid reasoning Prioritizing profits over well-being of customers Continued advertising throughout the pandemic Cheap prices affecting locals No rules or regulations in "private properties" Ethical Issues Why are Ethics Important? IMPORTANT Companies who maintain a strong ethical identity usually have a higher degree of stakeholder satisfaction (growth) Being ethical ties into a company's long term profitability Lack of ethics can be critical to company (Canada Goose example) Studies show that 82% of consumers believe ethically aware businesses outperform competitors with a lack thereof Market Analysis Market Analysis Competitive Analysis HomeAway, FlipKey, HouseTrip Rapid disruption - $30bn worth in first 8 years (HomeAway = $4bn) Technology - competitive edge to traditional hotels? (3 click, quick booking process) Milennials. Tech knowledge, low cost budget, experiences (Don't go there, live there!) Framework: Porter's 5 Forces Overview of 'safety' of Airbnb 2 main competitors - regular hotels + other online intermediaries Possible competition from partnerships Airbnb can also do this (travel packages, Uber) Industry Rivalry Industry Rivalry: Medium Bargaining Powers Bargaining Power of Suppliers - Low Alternative - Empty apartments Bargaining Power of Buyers - Low Lack of competition Couchsurfing.org Amazon and Craiglist may join? (legal + social) Threat of Substitutes Threat of Substitutes - Medium/ High Threat of New Entrants - Medium/ High Platform could be replicated Strong customer base Another competitor would need lower prices or another