Brian Chesky: Chris, I would just say, I mean all of the above, I think hotels are important ways to fill a network gaps. I think people come to be here because we have something unique they can’t get anywhere else. But we also have a huge amount of traffic, and so we want to make sure people come here to me they don’t leave without finding something. So I think you can think about our product a few ways. Number one, our core business has a huge amount of growth ahead of us. And so we just want to first perfect the core experience by making it easier to find the right Airbnb, providing better service each step of the way and providing better value. Next, we have a lot of emerging use cases. those emerging use cases are longer stays, obviously, which is more than 1/5 of our nice book.
We also have experiences that we’re really focused on and continuing to fill out our network gaps. And then finally, beyond just all those are obviously new products and services over the horizon. So we kind of have a very balanced portfolio of all of the above.
Operator: Your next question comes from the line of Kevin Kopelman with Cowen.
Kevin Kopelman: So a quick one. Given you have $10 billion in cash on the balance sheet and generated $3 billion in cash flow last year, not including the funds held on behalf of guests. Can you just give us an update on how you’re thinking about capital allocation and share repurchases? And do you see a potential for repurchases to go beyond offsetting stock comp?
David Stephenson: Yes. really pleased with our cash position, right? We ended with $9.6 billion of cash on the balance sheet at the end of the year. That is after buying back $1.5 billion of stock. We have $500 million left on the existing repurchase approval, and we anticipate that will be executing early in the year. But clearly, we’re also in — still in growth mode like we are using this balance sheet to make sure that we can invest in growth for the business in the future. Clearly keep enough cash for potential M&A opportunities, which could exist. And then to the extent that we can return stock and cash to shareholders through share repurchases that will be our primary vehicle that you would anticipate this year. We’re going to have about $1 billion of stock-based compensation.
We’ll at least be offsetting that through share repurchases and — but I don’t have anything more to say beyond that at this time, but we’ll continue to evaluate what the appropriate amount of cash is to keep and how much we should continue to return to shareholders. But remember, we are still heavily in growth. We want to be able to invest in the long-term growth of this business.
Operator: Your next question comes from the line of Stephen Ju with Credit Suisse.
Stephen Ju: So can you talk about the typical behavior from the new host when they’re onboarded? Do they start making only a small number of days available. And as time goes on and they get more comfortable with hosting they maybe make more time slots available throughout the course of the year because it seems like we’re really preoccupied with the total host number because honestly, as disclosed, but I’m wondering if the aggregate availability growth has historically been a number that’s been much higher than the property host growth?
Brian Chesky: Yes, Stephen, I can start. The general trend we see is that most people come to Airbnb with kind of more casual intent to host occasionally. Sometimes people come dara host on a one-off basis, for example, on this past weekend in Phoenix, we saw a really big surge of new listings for Super Bowl. What we noticed is that over time, hosts generally increase the number of days available and they tend to get more productive every year. And so more and more nights get booked on a single listing. And then we also see a number of hosts add a second, third or fourth listing depending upon what markets they’re in. So the general idea is that host get more productive, they eventually book more nights. Their ADR typically goes up as they accumulate more reviews.
One of the things we recommend new hosts do is when they don’t have reviews to start a little bit more affordably. And then as they accumulate rate reviews, they can command a little bit higher kind of market pricing. And so those are the general trends we see a general uptick in ADR is to get more reviews and to build a reputation. They add more nights. And then occasionally, you’ll see some people add additional listings depending upon the kind of segment they’re in.
Operator: Your next question comes from the line of Doug Anmuth with JPMorgan.
Douglas Anmuth: I just wanted to circle back on your comments on EBITDA margins for ’23. You talked about maintaining margins with the variable cost efficiencies kind of being the offset to lower ADRs? Can you just walk us through a little bit more on those cost efficiencies that you’re thinking about? And then kind of related, how should we think about marketing spending? It sounds like you’re going to shift more of the brand into 1Q. Is that just driven by a pull forward in bookings or more of just a shift in your strategy?
David Stephenson: Yes. The way we anticipate our EBITDA margins for this year is that one of the headwinds is this anticipated ADR decline that we talked about earlier on the call, and that the ways in which we are going to be able to offset the margin impact of those declines will be through fixed cost discipline. We’re going to continue to grow, but we’re going to grow modestly. So think of our headcount growth being in the 2%, 3%, 4% range. So we’ll keep having very good fixed cost discipline. We’ve already addressed marketing in a minute because we’ve already addressed a lot of the marketing reductions, but we’re just seeing strong improvements in our variable cost reductions as well, everything from community support costs, cost of payments costs, infrastructure costs.
All those areas are just important and ongoing efforts for us to drive profitability. As I mentioned earlier, we’re still in heavy growth mode. I am not in profit maximization mode. I have a long list of things that we can invest in to drive further profitability. But I know that I can also afford with our headcount growth profitability improvements that can offset the ADR declines, and that’s what we’ll be investing in this year. And then we can keep working on the other variable cost improvements over time. And then in terms of marketing, we’ve had the major step change reduction in our marketing expense. That was actually a strategic change all the way back in 2019. That’s proven to be incredibly effective from 2020 all the way through 2022.
And what we’ve seen in 2023 is that marketing costs as a percentage of revenue for the full year will be about the same as what it was in 2022. But what we are doing is shifting some of the timing. We’re just getting even earlier in the year to make sure that we’re getting our message out to guests around the world. So they’re ready to kind of make their bookings for kind of peak summer travel season, which is in the summer. And so I think it’s just we’re getting more efficient and effective at the timing. And we think bringing forward a little bit more marketing into Q1 as a more effective use of our dollars.
Operator: Your next question comes from the line of Nick Jones with JMP Securities.
Nicholas Jones: Can I go back to kind of the Airbnb friendly apartments. What does it look like to get property managers on board with this? And I guess, how much of the apartments that they’re managing start to get unlocked? And I guess, what kind of runway do you see in these key markets to add on kind of meaningfully more property managers?
Brian Chesky: Yes, I can start, Nick. So yes, I mean this new program is something that we developed because actually, we started getting a lot of inbound from real estate developers. And they started — we started saying if we made our buildings Airbnb friendly, would it make the building more appealing, especially to young people that are moving to markets in certain cities. And so we did a partnership. We started with working with Greystar, Equity Residential, over 10 other companies, and we’ve launched. We have 175 buildings in like Houston, Phoenix, Jacksonville — and the vast majority of these units are kind of — we expect if they were put on Airbnb, that would be a typical kind of ADR. They’re usually 1 bedroom studios.
The tenants sign a sublease to a fixed number of days a year, they can rent typically less than 180 days. So the whole idea is these are people’s primary homes, and they rent them when they’re gone. And I think we’re going to get a lot of demand because there’s a lot of benefits to landlords. Number one, a landlord get visibility control around who’s doing what in their building. Number two, they get a lot of free demand of people that want to lease their apartments. And three, they get a cut on the commission. So based on what we’re seeing, there’s been a lot of positive word of mouth, many REITs and developers are engaging with Airbnb. We think we’re going to be able to send a lot of traffic to them. And so I think this is a program that’s going to grow quite a lot.
And I also think what is strategic to us beyond all the incremental apartments that unlocks is we’re now developing relationships with many of the biggest landlords in United States. And if that happens, I think you’re going to see leases generally being more friendly to Airbnb.
Operator: Your next question comes from the line of Bernie McTernan with Needham.
