Lee Horowitz: So maybe on ADRs, you guys continue to surpass expectations with FX-neutral growth that probably came in the quarter at mid-single digits up year-on-year. Would appreciate that looking at the ’23 pricing initiatives and mix will impact your ability to grow. but we’ve seen underlying pricing continue to offset these mix impacts. So when you think about 2023, why can’t ADRs grow again, given the strength of the overall industry is supportive of pricing for you guys.
David Stephenson: Yes. Thanks on the ADRs. Yes, we were pleasantly — there’s 2 edges of the ADR. ADRs were up 5% year-over-year in Q4, excluding the impact of foreign exchange. Obviously, foreign exchange brings you down to kind of minus 1% when you bring back nights that come, say, from euro or our GBP-denominated nights. And what we forecasted for going forward is modest decline year-over-year in ADRs largely driven by changes in mix, right? People going back to cities, cities are accelerating more cross-border travel mix towards lower ADR regions. It’s a double-edged sword, clearly for the financials. It’s helpful to have the higher ADR rates because they drive greater revenue, greater flow-through and greater profitability.
But obviously, also ADRs are 36% higher than they were in 2019. So it’s more expensive for guests to stay on Airbnb and frankly, other places. I think the benefit that we’ve had is that even while ADRs are higher, we’re providing great value. right? The ADRs on Airbnb still can provide a great location, maybe a fully stocked kitchen, a washer and dryer, all the reasons why you might want to stand at Airbnb versus other alternatives. And so as we look forward in the year, we just want to make sure that we continue to provide great value to our guests. And that’s why we’re building some of the tools that Brian’s talked about, which are things like giving tools to host to make sure that they understand the prices that guests are paying and making sure that they are providing — continue to provide great value to guests.
So then the other thing we’re doing is, even as ADRs might come down modestly through the year through — largely through mix, and maybe some through pricing. It’s just making sure that we’re being really rigorous in our cost structure to kind of support declining ADRs, which is why we anticipate our EBITDA margins for the full year to be roughly the same as 2022 in that the headwinds from lower ADR rates will be offset by our efficiencies that we kind of drive internally.
Lee Horowitz: Great. Helpful. And then one follow-up on supply, if I could. Clearly, the product initiatives are driving impressive supply growth as everyone by seller rates and you guys are showing at this point. When I think about how that plays through into 2023, is there anything that we should be thinking about that can keep you from maintaining at these elevated rates, particularly given the fact that you will continue to iterate on the supply funnel to make it easier for hosts to come to the platform?
David Stephenson: Yes. Very proud of the continued growth in our supply. And we highlighted in the letter because it’s super important that we do our best to get a — have a balanced marketplace, right? If we get too much supply too quickly, then hosts aren’t happy because they’re not getting enough bookings. We don’t get enough supply early enough, then guests are not happy because they don’t get the kind of selection they want. And actually, what we highlighted in the letter is that we have grown our supply by 26% since 2019, and yet our nights and experiences booked have grown by 24%. So we’ve actually had a nice balance in that, and then I’m very proud of the fact that we’ve had 6.6 million active listings here in the last year and $900,000 more from the beginning of the year, which just shows the strength of Airbnb and why host want to come to where there is demand.
And then we’ll just make it easier for hosts to become host on Airbnb. So this will be a forever journey for us to keep providing supply where there is demand. And I think we’ve been doing it incredibly well for the last 10, 12 years, and we’ll continue to do that.
Brian Nowak: Yes. I think we just say, look, I think we’re I think we’re building a bit more of a muscle to around this. And I think it’s been a really big focus of ours. So whether it’s the product innovations, the awareness, focusing on even building, supply in key markets. I think it’s been a really great muscle the team has built.
Operator: Your next question comes from the line of John Colantuoni with Jefferies.
John Colantuoni: I wanted to start with the new pricing and discounting tools that you’re rolling out. It sounds like the expectation is that they’re going to be sort of a net headwind to ADR. So can you just walk through the strategic rationale for the new products. I assume it’s about sort of improved customer experience, but it would be great to get your perspective on that. And second, nights and experiences on a quarter-on-quarter basis in 4Q and 1Q seem to be back on trend with the historical seasonality we saw pre-pandemic. Is this sort of the right way to think about the trend in nights and experiences throughout the cadence of the year?
Brian Chesky: John, I’ll start. On pricing and discounts, let’s just take a step back. Airbnb, we started 15 years ago. And when we started, we started as an affordable alternative to hotels. And I think that affordability and great value is 1 of the key reasons that people use Airbnb, and we have to continue to make sure that we have that value. And as long as people feel like they have the best product at the best value for Airbnb, I think we’re going to deliver a huge amount of growth in years to come. And so there’s really 3 things that we’re doing. The first thing is transparent pricing with all-in pricing display. In Europe, in many countries around the world, we actually do show total price. But in the United States, the convention for travel companies show a low base rate.
And then when you get to check out, there’s additional fees. But we spent a lot of time listening to our guests and hosts. And we’ve heard from our guests, it’s not — a lot of them want to be able to see the total price upfront. And we spent a bunch of time in December, we rolled out total pricing includes all fees before taxes — Since we’ve rolled it out, the impact on our bookings has been neutral. Now I know there was a lot of — we did — there was a lot of speculation around what happened to show up on pricing. But I think that the response has been very positive. And we chose a very specific implementation and implementation we chose as a price toggle where you can turn it on or off. The basic idea is if people to control of how they want to see prices but also the active can the toggle on helps people understand why our prices are changing and why they might be displayed different than competitors.
So again, the impact has been neutral on bookings in the short run, but I actually think the impact on booking in the long run is going to be very positive because it’s just a better experience, and it gives people more control. The second thing is we are now prioritizing better value listing in search results. So in other words, we’re going to take the total price in the total price into account when we’re prioritizing bookings. And then the third thing we’re going to be doing is we’re building new tools, pricing tools for hosts so that they understand the final price that they’re showing to guests. One of the things we learned when we talk to hosts, they don’t know the final price guests are paying. And if they did, they modulate some of the fees.
I think in the short run, it may have some modest impacts on ADR, but in the long run, I think what it’s going to do is drive a lot more demand here at Airbnb, I don’t know, Dave, do you want to add anything or take the second question.
David Stephenson: No, I think you hit on all the key points on ADR. We’re not anticipating a significant decrease in ADR as a result of the pricing tools. We just want to make sure that we’re being transparent and helping host make sure that they’re setting prices that are appropriate for their listings. So I think that on the nights and experiences trends, we’re finally beginning to reach a point where the year-over-year comparisons are much more consistent. And so I think 2023 won’t look exactly like 2022, but it’s a much better guide than kind of historic years. So we are getting back to — you’d be able to use year-over-year as a trend line for your forecasting.
Operator: Your next question comes from the line of Mario Lu with Barclays.
Mario Lu: First one is on the listings growth number, the $900,000 year-over-year. I was wondering if you could help break down that number further. For example, were most of these listings completely new listings or were a good portion of it reactivated say in urban areas? Just trying to see how this growth organic versus travel normalizing?
David Stephenson: Yes. I mean the real thing about listings is think about how all listings work. In any given year, we have brand new listings, we have reactivated listings and then we have deactivated listings and some combination of each of those 3. I’d say that the trends of each of those have been kind of up and to the right. In other words, I think we’re showing improvement in fewer deactivations and strengthening of our new activations. And so the sum total of each of those is all contributing towards our growth, but I don’t have any other more specific breakout to give to you. I mean I think the other — maybe the only other highlight I would give is it wasn’t in just kind of 1 region, like we were seeing broad-based growth of listings around the world and then even by listing type.
It was like 1 of the earlier questions about how is the listing growth around urban again, in Urban was 1 of the accelerating areas. So we’ve seen really nice growth in the urban where that comes back. It just leads back to this marketplace dynamic that we have for Airbnb, which is we both work hard to get listings, proactively on our own and get them more organically where there’s demand. and where there’s not demand, that’s also where you’ll see deactivations or fewer listing growth. It tends to be self-healing over time.
Mario Lu: And the second one is on the lead time for bookings. In your outlook, you mentioned Europeans were booking summer travel earlier this year. So any commentary you could provide on just globally how lead times look thus far versus pre-pandemic? And any puts and takes to consider when thinking about the 20% room night growth is sustainable for the rest of the year?
David Stephenson: Yes. We’re really pleased with the European lead times coming up. Europeans will tend to book their summer travel here in the beginning of the year. and to see them booking even earlier on Airbnb relative to our historic rates has been really great to see. Just, I think, shows the optimism that they have to kind of travel this summer. And then broad-based, we are just seeing a slightly longer lead time more generally across Airbnb overall. So again, I just think that shows a nice optimism for people feeling confident that they can book for their summer travel season. So I think not much more to say than that.
Operator: . Your next question comes from the line of Justin Post with Bank of America.
Justin Post: Great. I think you give it in the K, but can you give us the mix of Asia in ’22? I don’t know if you can now — And then secondly, how do you think about the Asia recovery in China cross-border impacting results over the next 12 months?
David Stephenson: Yes. The — in the next 12 months, Asia is still recovering, right? Asia has still been down versus 2022 — I mean 2019 and — but they were the fastest kind of growing region in the fourth quarter. So we think it’s pretty optimistic about the opportunity. And as Brian even mentioned about China, like the long-term outlook for, for example, Chinese outbound travelers is something that we feel very bullish on for over the long term. And in terms of the fourth quarter, APAC was 12% of the business in the fourth quarter.
Brian Chesky: And maybe I’ll just say that I think the Asia Pacific is a huge growth area for us going forward. And it’s been a little bit of a slower recovery. And I think the reason why is Asia is historically more of a cross-border market. a lot of people in Asia is basically travel across countries. They don’t have as big of a domestic market in any of these countries for the most part. And that’s just been a slower recovery. But I think the one thing we’ve seen is that just means probably more pent-up demand, and Asia index is even higher on Gen Z travelers, which is a strong suit of Airbnb. So we’re really bullish over the next few years on Asia.
Operator: Your next question comes from the line of Lloyd Walmsley with UBS.
Unidentified Analyst: This is Chris on for Lloyd. Just can you start by helping us think about the range of outcomes for ADRs in the 1Q ’23 guide? I guess as we kind of lay out your guidance saying that take rates would be very similar to 1Q ’22 levels and gets you to, say, $20.7 billion potentially of gross bookings in 1Q, ’23, and you assume maybe a slight detail on room nights. I could get to a situation where ADRs are potentially flat to better. I guess, is you’re talking to ADRs being down slightly on a year-over-year basis. I guess, is — what would need to happen here for ADRs to be flat to better on a year-over-year basis in 1Q?
David Stephenson: Well, to be flat to better would be if there’s stronger overall just pricing? And if the mix came in differently, for example, maybe urban didn’t come in quite as strong as or cross-border Latin America, Asia didn’t come in quite as strong. So a lot of our ADR forecast for Q1 comes from the anticipated continued growth of urban, cross-border and regional mix. And that’s why we’re forecasting it down for just down slightly year-over-year. the implied take rate, it should be directionally the same as last year and maybe not precisely the same, I think you look back in 2022 and it will be a good guide for your take rate.
Unidentified Analyst: Okay. Got it. And just maybe 1 quick follow-up question on the product side as you guys were talking about really kind of expansion opportunities. How should we be thinking about hotel within that? Or should we be thinking about more of the expansion opportunities being related to the core business and experiences in ’23.
