10th October 2022
Why You Should Buy Airbnb Stock
While the pandemic continues to devastate the world, widespread vaccination has helped the government ease their restrictions on travel. Fortunately for Airbnb, this means a boom in sales, with new hosts cropping up all over the world.
Airbnb’s massive market opportunity has set the scene for a new kind of hotel alternative since its opening in 2009. With an asset light business model, hosts and non hosts alike can opt to buy a share of this global conglomerate. Read on to find out why!
Airbnb is notorious for having an asset light business model, which in layman’s terms means reducing the amount of capital the company invests in. This has helped Airbnb generate a steady, solid cash flow.
Since the company doesn’t own any listings advertised on their site, whether public or private, it instead takes a percentage of each booking. Airbnb doesn’t need to invest a massive sum into hotels, motels or even privatised buildings.
The company also saves on utilities and expenses, including landscaping and staff.
An Addressable Market
Despite Airbnb’s massive market, it still has the power to rise above even their current margin. In a 2019 study, it was found that people spent $1.4 trillion on hotels and motels overall. As travel restrictions were drawing closer in 2020, this margin predictably crashed.
Overall spending in this category indicates that 2020 was a “below the level” year for the travel industry. To that end, it’s reasonable for Airbnb to serve as a massive market in the industry, and is only being poised to rise further beyond their means within the next year.
Giving Travellers More Selection
Airbnb naturally offers more choice to their customers. This is due to the company having a tight business model and offering more alternatives by virtue of this. This increases the chances of a customer finding a place that suits their preferences and needs. If you’re a family of four, you want something much different than the lawyer on an out of town business trip.
By comparison, hotels and motels do not change, and often hold a “one fits all” business model. Airbnb fills the gap within this market, thus making it a prime target for investors and hosts looking to dabble in investing and the stock industry as a whole.
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