Airbnb Stock vs Expedia: Which Is Best?

Airbnb Stock vs. Expedia: Over the last two painful years for the travel industry, businesses adopted video conferencing over in-person meetings, and tourists simply stayed home. Vacations turned into staycations which decimated airlines, cruise operators, car rental agencies, hospitality providers, and the many large and small companies that depend on visitors for revenue.

For example, in January 2020, Royal Caribbean Cruises stock traded above $135 per share. When the market crashed in March 2020, it went below $25 per share, and today, it is still under $60 per share. Things were so bad for Hertz Global Holdings that it entered Chapter 11 bankruptcy in May 2020, and Delta Air Lines stock is still trading well below pre-pandemic prices.

In 2021, the World Tourism Organization reported that international tourism declined by 73 percent year-over-year. That is equivalent to one billion fewer people traveling in 2019 and 2020. Even now, with vaccines bringing the health crisis under control, the industry has yet to fully recover.

As of March 2022, travel spending remained five percent lower than it was in 2019, and overseas travel was still down 52 percent as compared to 2019. However, these figures are an improvement over 2021, which has investors in travel-related companies feeling mildly optimistic.

Two of the brands that have investors’ attention are Airbnb (NASDAQ:ABNB) and Expedia (EXPE). Both have unique features and characteristics that saw them through the moratorium on travel, and both say they are well-prepared to thrive in a post-pandemic world. Of course, what investors really want to know is this: Airbnb stock vs. Expedia – which is best?

What Is The Difference Between Airbnb and Hotels?

The sharing economy, also known as the gig economy, has transformed the ways in which consumers can access the services they need. More importantly, it has given individual providers the opportunity to participate in large industries that were once under the exclusive control of major corporations.

Ridesharing companies like Lyft and Uber connect those who have personal vehicles with people in need of a ride. Airbnb does the same thing with hospitality – a service generally referred to as “homesharing.”

Unlike hotels and motels, Airbnb doesn’t typically own rental properties. Instead, it gives those with extra space a platform to list their rentals, connect with travelers, and collect payment.

Hosts benefit from listing with Airbnb because they can reach a much larger audience than they would on their own. Better still, Airbnb offers a variety of protections that independent hosts don’t enjoy, including screening of and feedback on guests.

Travelers like Airbnb for similar reasons. They are better protected from unscrupulous property owners, and there are niche listings that ensure they can secure the exact travel experience they want.

Was The Airbnb IPO Successful?

The hospitality industry struggled through the pandemic, and Airbnb was no exception. Listings went down dramatically from May 2020 to March 2021 due to concerns on both sides of the transaction. In a June 2020 survey, 47 percent of hosts said they felt unsafe having guests in their homes.

Meanwhile, 70 percent of Airbnb users said they were afraid to stay in Airbnb properties. More than 64 percent of travelers changed or canceled planned Airbnb stays between March 2020 and May 2020, and Airbnb hosts predicted their revenue would decrease by 44 percent during the critical months of summer 2020.

In fact, Airbnb revenue did decline by an alarming 72 percent in the months immediately following the March 2020 market crash.

The company was forced to delay its IPO, which was originally planned for early 2020. However, Airbnb shocked market experts by turning a profit in the third quarter of 2020.

It completed its IPO and began trading publicly in December 2020, and the response was enthusiastic. Within days of its debut, Airbnb stock price doubled, which put the company’s value at more than $100 billion.

Airbnb succeeded in large part because of its rapid response to challenges presented by the pandemic. Through flawless execution of a recovery strategy, Airbnb properties became more attractive than their traditional hotel counterparts.

The company encouraged longer-term rentals for employees working remotely, and it positioned Airbnb as a smart choice to boost income for property owners who were laid off from their primary jobs due to the pandemic.

Since the IPO, Airbnb has had some ups and downs, as is common with any newly listed tech company. Today, its market cap is over $70 billion.

Will Airbnb Stock Go Up?

Airbnb is currently focused on the Work Anywhere/Live Anywhere employment trend.

More than 40 countries are welcoming virtual workers with a special digital nomad visa, and Airbnb intends to be the top choice for finding temporary housing worldwide.

The platform’s users are going beyond resort towns and must-see tourist cities. They are booking rural stays in much higher numbers, and these stays tend to be longer than the average before the pandemic.

From July to September of 2021, a fifth of Airbnb’s bookings were for a month or more. In the 12-month period ending September 30, 2021, more than 100,000 people booked Airbnb properties for three months or longer.

Airbnb is growing, as evidenced by its $47 billion in gross bookings for 2021. That’s almost double the figure for 2020, and it is 23 percent higher than 2019. Overall, that makes Airbnb stock a buy.

What Is Expedia Used For?

Expedia Group has a simple mission: To power global travel for everyone, everywhere. It accomplishes that goal by giving travelers the tools and resources they need to find affordable flights, rentals, and accommodations without giving up safety and service quality.

The company owns 20+ well-known travel brands, including, Travelocity, Orbitz, and Trivago. Through these sites, consumers can secure services in more than 70 countries.

At the most basic level, Expedia is a tech company that specializes in travel rather than a travel company. It uses a variety of advanced technologies to perform travel-related metasearches, which saves consumers the time required to research booking and price details from multiple providers on their own.

Expedia was originally launched in 1996 as a part of Microsoft, and it became an independent company in 1999. A variety of mergers and acquisitions followed, which led to the Expedia Group structure that formed in 2018 and remains in place today.

Is Expedia Stock A Buy?

Expedia suffered through the pandemic, which came on the heels of what then-CEO Barry Diller called a “disappointing” 2019. Revenue dropped from $12 billion in 2019 to just $5.2 billion in 2020. During the fourth quarter of 2020, the company had a net loss of $412 million.

As travel slowly recovered through 2021, Expedia began to recover as well. By the fourth quarter of 2021, it achieved a net profit of $276 million. However, Expedia stock declined when fiscal first-quarter results were announced in May 2022, though the company had good news to report.

Gross bookings were up 58 percent year-over-year, and sales hit $2.25 billion – an 81 percent year-over-year increase.

The problem was that investors had hoped to see robust travel after the 2021 holiday season – ideally, back to pre-pandemic levels – but that didn’t materialize. Gross bookings were still 17 percent lower than before the pandemic, and the company had a net loss for the quarter.

Though travel isn’t suffering from the same pandemic-related challenges that caused a decline in demand over the past two years, there are a number of other issues that are preventing full recovery.

Inflation is at a 40-year high, which means consumers are less likely to spend on vacations. Interest rates are going up, making it less appealing to borrow funds for leisure travel, and rising gas prices due to the Russian invasion of Ukraine have disrupted budgets for many households.

A long list of market experts have stated that they expect a recession within the next year, and current market behavior hasn’t given evidence to the contrary. As of late May, trends indicate the market is on the cusp of bear territory, which is defined as a 20 percent drop from the most recent high point.

A bear market is, among other things, a sign of consumer pessimism – and pessimistic consumers tend to stay home. That’s not promising for Expedia stock, and most analysts are saying this is not the right time to buy.

Expedia Stock vs Airbnb: Which Is Best?

Though Airbnb and Expedia are both tech stocks and they are both tied to the fortunes of the travel industry, Airbnb is in a better position to navigate the current market successfully. Expedia is an intermediary between traditional travel and hospitality providers and consumers. It offers a comprehensive search of other companies’ products.

Airbnb, on the other hand, provides a unique connection between individual property owners and travelers. The platform is structured in a way that gives Airbnb some control over quality standards, which makes it a top choice for those who do want to travel in these uncertain times.

Analysts are evenly split on whether Airbnb stock is a buy, but if the question comes down to which is best – Airbnb stock vs. Expedia – the answer is clear. Airbnb is most likely to deliver returns for shareholders.

Those who aren’t ready to go all-in on a single travel company but want to take advantage of the industry’s recovery may wish to consider an exchange-traded fund (ETF) that invests in a variety of travel-related businesses. Two of the most popular include the ETFMG Travel Tech ETF and the U.S. Global Jets ETF.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.