Tuesday, June 19, 2012

Airbnb to earn $183M in 2012 (I think)

Today Airbnb released a very impressive infographic celebrating 10M nights booked through the service. It is an incredible accomplishment by a fantastic team. If you haven't already, be sure to check it out here.

Given my love for numbers and a desire to better understand the growth of the sharing economy I decided to take and hour, fire up excel, and see what I could derive from the various Airbnb data points across the web.

I was curious about their growth in rate of booking per month. What velocity is the service growing at? Based on the data points within their info graphic I derived a bookings per month number which has dramatically increased in 2012:

Perhaps the most astonishing aspect of their annoucement is the rate at which they climbed from 5M to 10M bookings in only a 143 day period. An average of 34,965/day. If that rate continues they will be on target to book between 12.7-15.7M rooms in 2012 assuming a 0% growth rate.

Looking at the growth rates between major announcements (1M  May/2011, 5M Feb/2012, 10M Jun12) their Compound Annual Growth Rate (CAGR) is around 227%, or ~19% month-over-month growth. If this continues, Airbnb will be booking 3M nights per month by the end of 2012 likely hitting the 22M bookings by the end of December.
So what does this mean for Airbnb revenue? Assuming a 13% commission with an an average rate of $80/night based on 17.6M nights book in 2012 Airbnb will earn ~$183M in 2012 (after host payments before all operating expenses). I really don't have any insight into operating expenditures so I'm not going to speculate about valuation, but a company with revenues of $180M+/year running a CAGR of 227% will not having any trouble finding investors (if they are needed). 

As a founder of a collaborative consumption company, ToolSpinner, it is extremely encouraging to read about the continued success of those who are leading the way. I wish Airbnb the best and look forward to their 20M booking announcement on Thanksgiving.


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