Airbnb books first full-year profit in 2017 as China business takes off

Airbnb books first full-year profit in 2017 as China business takes off
PHOTO: AFP

Airbnb is set to book its first full year of profitability, putting it in a rare class among large venture-funded Silicon Valley companies.

"The third quarter was the strongest quarter in the company's history and this year, we will be profitable, as measured by EBITDA," Laurence Tosi, chief financial officer of the home-sharing company, told CNBC.

A source familiar with Airbnb's financials said the company will end 2017 with bookings up approximately 50 per cent from 2016.

CNBC reported previously that revenue last quarter hit about US$1 billion (S$1.35 billion), up more than 50 per cent from the same period last year.

Making money - not losing it - puts Airbnb in stark contrast to other tech upstarts such as Uber, Lyft and Spotify.

Uber's losses widened last quarter to US$1.46 billion, a jump of nearly 40 per cent year over year, as the ride-hailing company faced increased competition from global rivals such as Didi, and as Lyft gains market share in the US

As Uber retreats from global markets such as China and Russia, Airbnb is scaling up its international presence. To woo Chinese users, it rebranded its Chinese operations with a Chinese name, Aibiying, and CEO Brian Chesky pledged to double investment.

According to the company, that push is showing early results. Airbnb told CNBC that guest arrivals at listings in China grew 180 per cent from the previous year to 1 million in the third quarter, making the market its second-fastest-growing country during the period, after Cuba. Just 3 years ago, in 2014, Airbnb had roughly 10,000 guest arrivals in China in the third quarter.

Airbnb expects to end 2017 with another China milestone - it's the top trending country for travellers on New Year's Eve, with the city of Suzhou, about 60 miles from Shanghai, taking the top spot.

But the company is facing challenges in China too - fierce competition from local rivals, an abrupt executive departure and regulatory crackdowns. Chinese home-sharing platform Xiaozhu raised US$120 million in a funding round led by Jack Ma's Yunfeng Capital this year, while another, Tujia, tapped investors for $300 million, led by Chinese online travel giant Ctrip. In October, the head of Airbnb's China business left just four months after taking the position.

Beyond China, Airbnb faced other challenges in 2017. Growth of listings is slowing in some of Airbnb's biggest cities, where it also faced stricter regulations.

Investors have focused on the bright spots, putting another US$1 billion into the start-up, bringing its valuation to US$31 billion - more than the valuations of publicly traded hotel giants Hilton and Hyatt.

Correction: A previous version of this story misspelled Laurence Tosi's first name.

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