Much has been written about the meteoric rise of Airbnb in the travel sector and its stratospheric valuations in the private venture market, about to cross $20 billion if recent reports are to be believed.
Now the research arm of investment bank Piper Jaffray has come out with a comprehensive — and much talked about — report on the sharing economy, which includes revenue and growth estimates for the sharing economy poster-child. The PJC report says that it believes Airbnb enabled about 40 million room nights in 2014, and that in 2015 it could reach 1.5 million listings, from the 1 million listing it had mid last year.
Building out its revenue estimates model, PJC says that Airbnb’s only meaningful revenue model is its guest booking fee, which ranges between 6% and 12% based on the value of the transaction — a higher room night rate means a lower booking fee.
Of course, as the report says, these numbers are rough estimates since Airbnb is a private company that does not disclose its revenues, (much to competitors’ chagrin) but they highlight the dynamics of Airbnb’s model, especially when you compare to other online travel giants AND to other hospitality and accommodation companies it is increasingly competing against.
The table above says that Airbnb almost hit $4 billion in gross booking for 2014, on a revenue estimate of around $423 million, and that the revenues will cross the half billion mark, to about $675 million by end of the year, a big 55 percent jump over last year.
At a current $20 billion valuation in the venture market, that puts it about 30X of its estimated revenues, and raises concerns when it does its eventual IPO in the short to medium term.
In another table, PJC analysts charted out what it believes will likely be the general peer group for Airbnb and its comparative valuation, the online travel companies including Priceline, Expedia, and HomeAway. It’s closest competitor would be Priceline at 6X. Priceline currently has the largest market cap of any travel company.
Airbnb is the second most valuable travel startup, ranking behind Uber’s $41 billion valuation. Airbnb closed a $475 million round in April 2014 at a $10 billion valuation. It has raised nearly $800 million since its founding in 2008.
When Airbnb last raised money, we compared the value of an Airbnb listing with that of a room in a traditional hotel. Airbnb ranked third among its competitors. With the new valuation, each Airbnb listing would be worth nearly as much as a room is worth at Hyatt, which gets the greatest value from each room.
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