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Airbnb, Inc. (ABNB) Q1 2021 Earnings Call Transcript

ABNB Earnings Call - Final Transcript

Airbnb, Inc. (NASDAQ: ABNB) Q1 2021 earnings call dated May. 13, 2021

Corporate Participants:

Ian Lee — Head of Investor Relations

Brian Chesky — Co-Founder and Chief Executive Officer

Dave Stephenson — Chief Financial Officer

Analysts:

Justin Post — Bank of America Merrill Lynch — Analyst

Mario Lu — Barclays — Analyst

Colin Sebastian — Baird — Analyst

Naved Khan — Truist Securities — Analyst

James Lee — Mizuho — Analyst

Brian Nowak — Morgan Stanley — Analyst

Mark Mahaney — Evercore ISI — Analyst

Jed Kelly — Oppenheimer — Analyst

Justin Patterson — KeyBanc — Analyst

Lloyd Walmsley — Deutsche Bank — Analyst

Brent Thill — Jefferies — Analyst

Brian Fitzgerald — Wells Fargo — Analyst

Stephen Ju — Credit Suisse — Analyst

Deepak Mathivanan — Wolfe Research — Analyst

Kevin Kopelman — Cowen — Analyst

Tom White — DA Davidson — Analyst

Presentation:

Operator

Good afternoon, and thank you for joining Airbnb’s Earnings Conference call for the First Quarter of 2021. As a reminder, this conference call is being recorded and will be available for replay from the Investor Relations section of Airbnb website following this call.

I will now hand the call over to Ian Lee, Airbnb’s Head Investor Relations. Please go ahead.

Ian Lee — Head of Investor Relations

Good afternoon, and welcome to Airbnb’s first quarter of 2021 earnings call. Thank you for joining us today. On the call today we have Airbnb’s Co-Founder and CEO, Brian Chesky; and our Chief Financial Officer, Dave Stephenson. Earlier today, we issued a shareholder letter with our financial results and commentary for our first quarter of 2021.

These items are also posted on the Investor Relations section of our Airbnb’s website. During the call, we’ll make brief opening remarks and then spend the remainder of the time on Q&A. Before I turn it over to Brian, I’d like to remind everyone that we’ll be making forward-looking statements on this call that involve a number of risks and uncertainties. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors.

These factors are described under forward-looking statements in our shareholder letter and in our Form 10-K filed with the SEC on February 26, 2021. We urge you to consider these factors and remind you that we undertake no obligation to update the information contained on this call to reflect subsequent events or circumstances. You should be aware that these statements should be considered estimates only and are not a guarantee of future performance. Also during this call, we will discuss some non-GAAP financial measures.

We provided a reconciliation to the most directly comparable GAAP financial measures in the shareholder letter posted to our Investor Relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. And with that, I’ll pass the call to Brian.

Brian Chesky — Co-Founder and Chief Executive Officer

All right, thank you very much, Ian, and thank you everyone for joining us today.

I want to start by acknowledging the state of the pandemic. COVID-19 cases continue to surge in parts of the world such as India and our thoughts go out to our host, guests and employees in India during this difficult time. There is much more work to do to limit the spread of the pandemic and many people are still hurting and we know how lucky we are to be in the position we’re in today.

2020 was the year that none of us will ever forget. It was also a year which travel fundamentally changed forever. Airbnb changed as well. We sharpened our focus on our core business to hosting and we got back to where, back to its truly special by Airbnb, the everyday people who host their homes and offer experiences and we emerged as a stronger and more efficient company. Our business rebounded faster than anyone expected and it shows that as the world changes, we are able to adapt.

Now turning to our Q1 results. Our business dramatically improved with the rollout of vaccine and the easing of some travel restrictions, while conditions aren’t yet normal, they are improving. People’s desire to travel, combined with our tightly managed expenses drove a return to a positive topline growth that materially improved adjusted EBITDA. In Q1, our revenue was $887 million. This was an increase of 5% year-over-year and it exceeded Q1 2019 levels as well. But here is the most important fact. Our business improved without the recovery of two of our strongest historical segment, urban travel and cross-border travel. We expect to return of urban across border travel to be a significant tailwind over the coming quarters.

Now as our top line recovers, we are maintaining our focus and our financial discipline to improve our profitability. Our adjusted EBITDA loss was $59 million. This was approximately $190 million better than the same period in 2019 and it was $275 million better than a year ago, and essentially the same revenue. Now, these results show that we are improving our variable cost. We’re being disciplined with our marketing and our fixed costs. Our strong performance also indicates the beginning of the travel rebound. Just a few hours ago the Director of the Centers for Disease Control said, “if you are fully vaccinated, you can start doing the things that you had stopped doing because of the pandemic”.

What we think this means is that more people will be comfortable traveling and it further strengthens our view that we are going to see a significant travel rebound. In fact, we expect this rebound unlike anything that we have ever seen before. And we expect travel to be very different than before. People are discovering that they don’t have to be tethered to one location to live and work. And what this means is that people are more flexible about where and when they travel. People can now travel anytime, people are also traveling everywhere. They’re not just going to the same 20 or 30 cities, they are visiting smaller cities, towns and rural communities and when people do travel, they are staying longer.

24% of our nights booked in Q1 were for stays of 28 nights or longer. People are not just traveling in Airbnb, they are now living on Airbnb, and these trends are not going away. The world is never going back to the way it was and that means that travel is never going back to the way it was either. So let me tell you about what we’re doing to prepare for what they had. Our single priority in 2021 is to prepare for the coming travel rebound. To do that, we’re perfecting the end to end experience of our core service. This includes educating the world about hosting, recruiting more host, simplifying the guest experience and delivering a world-class service.

Now I’m going to briefly share how we’re executing against each of these areas. First, we are educating the world about what makes Airbnb different, hosting. In late February, we launched our first large-scale marketing campaign in five years made possible by host, we’re educating guests about the benefits of being hosted and we are aspiring more people to become host. Now, while still early the campaign is being well received. In markets where we’re running the campaign overall traffic is up, first-time bookers are up, traffic from prospective host is up and our brand favorability is up.

Second, we are recruiting more hosts and we are setting them up for success. To build on the momentum of our marketing campaign, we launched an accompanying digital campaign that’s focused on recruiting new hosts, and we’ve completely redesigned the end-to-end experience of bringing the host on Airbnb. We’re making it easier for anyone to start off things. Third, we are simplifying every part of the guest experience. In February, we launched a flexible dates feature. It allows guests to browse options while being flexible on the exact date of their trip. Now since the feature launched, there have been more than 90 million flexible based searches on Airbnb, 90 million searches since just February with flexible dates, this new feature we created, and guests who used this feature have converted at a higher rate than guests who do not.

Now, this is just one of many improvements that we are making to the guest experience. And finally, whenever our guests or hosts need us, we must deliver world-class service. So to prepare for the travel rebound, we’re improving our community support product, enhancing our safety protocols and we’re scaling our operation by ramping our third-party support.

Now I want to wrap by highlighting a major announcement that we have coming up in less than two weeks. On May 24, we will announce the most comprehensive update to the Airbnb service in 12 years. As part of the special announcement, we’re going to share insights on how travel is fundamentally changing along with the updates we made to prepare for what’s ahead. We’re going to deal a simpler and more aspiring guest experience. And we are going to show you upgrades that make it even easier to be a host on Airbnb. So watch the announcement with Airbnb.com on Monday, May 24.

So to summarize, we are pleased with the strong Q1 results, we are encouraged by the trends that we’re seeing driving these results and we are executing against our 2021 plans to prepare for the travel rebound, and we think this travel rebound will be like — unlike anything we’ve seen before. We think this is a travel rebound of the century. So travel is coming back and Airbnb is ready.

And with that, Dave and I look forward to answer your questions.

Questions and Answers:

Operator

[Operator Instructions] And your first question comes from Justin Post with Bank of America.

Justin Post — Bank of America Merrill Lynch — Analyst

Great, thanks so much for taking my question. I just really want to focus on behavior change which could benefit the Company, first hosts and also guests. I think in the letter it said post listings were stable with Q4, but it seems like you’re really encouraged by what you’re seeing. So maybe you could dive in there and tell us what is encouraging about what you’re seeing with hosts and whether you see, expect a lot of new listings to hit the market over the next year. And then similarly on the gas side, how do you think this pandemic is going to increase willingness to use alternative accommodation? Are you seeing some positive signs there? Thank you.

Brian Chesky — Co-Founder and Chief Executive Officer

Thank you very much, Justin. And so why don’t I start and Dave feel free to add in after I go. So let’s start with hosts and then we will get the guests. So Justin let’s just start with, we have 4 million hosts on Airbnb and I think if you ask people a year ago, would we have had such a stable host community, they probably would have expected that. What we have today are hosts that offer 5.6 million listings and these 5.6 million listings are about a million more than we had this time in 2019.

And what we’ve actually seen is a large growth in non-urban listing. So we have to have a 30% growth in non-urban and Vacation Rental listings as well. Now, it’s important to note that 90% of our host are everyday people they are individuals and the reason why is as we’ve made hosting on Airbnb easier more and more hosts are coming to Airbnb as well. Now, specific to what we’re doing. We launched our first global campaign in five years made possible by host, as I said, we also have an accompanying host campaign. Both of these campaigns, we are seeing significantly larger traffic of prospective hosts to the platform.

The next thing we’re doing is we’re making it even easier to become a host by reducing the number of steps to become a host. And as we reduce the number of step conversion rate for hosts gets even easier. We now are allowing hosts to be paired with other super hosts to help them get started and we have webinars as well. And then finally, we have new tools and services that’s going to make it even easier for host to list and be successful. I’ll just end this first thing by saying on May 24, we will induce a number of new tools and services I think are going to make it much easier for hosts to get started. And I want to point out that new host that join Airbnb, 50% of them get a booking within four days of acquisition. And I think hosting is coming at the perfect time for many people in the world.

Because Airbnb, we started actually after the great recession in 2008 and at that time, there were many hosts, many people that were looking at Airbnb as a financial lifeline. I think if you think about the number of hosts on Airbnb the top occupations of our hosts are health-care workers, educators and people in food and hospitality. These are industries that have been hit really, really hard. So our job is to tell the story of hosting, the fact on Airbnb you can make $8,000 in United States on average, if you have one listing which is 5 times you can make what an average American gotten a stimulus check. So these are some of the things we’re getting going and we are just getting started ramping and I expect us to get millions of more hosts in the coming years on Airbnb.

Now as far as trends for guests, Justin, I’ll also cover this as well. As I said before, I think two things are true. Number one, this is a travel rebound that is starting that is unlike anything we’ve ever seen before. I think the Q1 results kind of demonstrate this. But the other thing that we’re seeing is that travel is going to be very different than before. Probably the biggest changes are the following. Number one, I don’t think this is travel is ever coming back, the way it was before the pandemic, it’s at least not going to look like it did. I do think a new kind of business travel may emerge, many employees are working remotely, they’re going to need to go back to headquarters occasional you’re going to see longer stays going in cities and so we’re seeing elevated bookings in urban markets for stays of longer than 28 days.

But the bigger trend is going to be flexibility. I think that all of us working around the world, the most about if we’re privileged enough to say this are more flexible than we were before the pandemic because of the world of their means the world where can work anywhere. It’s a world where many people are also choosing the live anywhere. And this has created three travel trends. Number one, people can travel anytime. This is why we have a flexible base feature where instead of saying I want to travel through July 5 to July 10, you can say, I want to go somewhere for a week and a week or a month any time of the summer. There are 90 million people use this feature and as more people use the future conversion rate goes up.

The second thing we’re seeing is length of stay is increasing. In 2019 at this period of time, 14% of our nights were longer than 28 days. Now 24% of our nights are longer than 28 days. What that basically means is a quarter of our business is in travel is living. After 28 days, you’re probably not traveling. And I think what this is a trend up is that traveling and living are going to begin to blur together. So this is the second trend we’re seeing. And the third, is people are now traveling everywhere. If you look at the concentration of our revenue, it is much more distributed than it was a couple of years ago and this is because people aren’t just going to same 20 or 30 cities. They are getting in cars and they are traveling small towns and rural communities, many which don’t even have a hotel.

So again, the big trend is flexibility. People are traveling anytime, anywhere and are staying longer, we think all these trends are here to stay. And I’ll just end by giving one more thought. I think there is a mass shift from mass travel to meaningful travel because people miss traveling. In fact, in many surveys people say the thing they missed the most that was taken away from the pandemic at least from out of work to be is travel but they don’t miss business travel may not miss standing in line in front of the Museum or a selfie, landmark getting a selfie stick, getting a photo with a selfie stick. What they really missed is spending time with the people they care about, and we call this meaningful travel, with friends and families we think Airbnb is really a great way to do that. So those are the trends that we’re seeing.

The two trends like you think are going to inverse are, we are going to see a recovery of urban travel and the recovery of cross-border. This has been our bread and butter before the pandemic. And I think those are significant headwinds for us.

Justin Post — Bank of America Merrill Lynch — Analyst

Great, thanks for that very detailed answer. Appreciate it.

Operator

And your next question comes from Mario Lu with Barclays.

Mario Lu — Barclays — Analyst

Great. Thanks for taking the questions. The first one’s on listings counts. So you said we have similar levels. The last quarter around 5.6 million but with guests campaign that you guys are running. Is there like a timeline that we should expect to drive that number up or you mentioned in the past that a quarter of guests eventually become when should we expect that number to increase?

Brian Chesky — Co-Founder and Chief Executive Officer

Yes, Dave. Why don’t I give you this question and it’s a great question, Mario. And I’ll also say that in Q1, 28% of our hosts were now prior guests as well. That number is increasing but Dave, I’ll hand it over to you.

Dave Stephenson — Chief Financial Officer

Yeah. To be clear on the start, it’s that of on the guests, 25% or 24% were former were new hosts were former guests. So just to be clear, the percentage, it’s early. We’re seeing strong listing counts, 5.6 million has been very stable. I think actually one of the things, it’s been really impressive. During this time is that our host churn in Q1 ’21 is actually lower than our host churn in the same period in 2019 and actually our churn in 2020 will be lower than what it was in 2019. So just, it all just shows how the resiliency and the stability of our supply, and we are just optimistic that as things continue to rebound as we continue to educate people about the benefits of hosting and all of the tailwinds that Brian just outlined on will continue to see a strong host growth going forward.

Mario Lu — Barclays — Analyst

Great and just one follow-up on domestic versus international. So I’m not sure if you can see this in your data yet, but just curious to hear. If you’ve seen some substitution in terms of domestic bookings versus international as the vaccine rates increase. And do you think the domestic rates will remain above 2019 levels even after borders open up. Thanks.

Brian Chesky — Co-Founder and Chief Executive Officer

Yeah, Dave, you want to take the clinical.

Dave Stephenson — Chief Financial Officer

Yeah, I mean it’s unsure exactly where everything will settle out for domestic versus international, clearly right now 80% of our nights in Q1 were domestic. So we’ve seen domestic travel being consistent with the strength all around the world. Historically, our strength has obviously been in urban areas and cross border. So prior to kind of pandemic about 50% of our nights were actually for cross border nights and honestly with that not occurring. Clearly, there has been some substitution where people are going to stay domestically, where they might have taken a cross-border trip. But again our urban cross borders and our strength we know that many of these trips will be incremental and such that when travel rebounds to more typical peak we will have growth in overall travel just due to the hesitancy right people are hesitant to travel right now it’s, they are vaccinated or maybe they can’t probably to some of the lockdowns and border. So we know that many of the trips will be coming back and will be incremental to what we see today.

Mario Lu — Barclays — Analyst

Great, thank you.

Operator

And your next question comes from Colin Sebastian with Baird.

Colin Sebastian — Baird — Analyst

Thanks, good afternoon. I have a couple of questions on investments and spending, I guess, first off, what gives you the confidence that you can moderate sales and marketing spend in the second half without impacting bookings or listing levels if that’s still the plan. And then, in terms of product development, obviously, Brian you are making some announcements soon but, but how do you think the pace of R&D or product development spend now the business appears to be returning to normal or whatever normal means now, is it perhaps time to look at reaccelerating hiring or what are your thoughts on that. Thank you.

Brian Chesky — Co-Founder and Chief Executive Officer

Yeah. Thank you very much, Colin. Dave, why don’t I take this at a high level and you can obviously go into more detailed analysis. So Colin, a couple of things, maybe just first start and talk about our marketing strategy, and then I’ll answer your very specific question about H2 marketing. First of all, we take a very different approach to sales and marketing I think than our competition. What we have is a full funnel integrated approach to marketing and what we integrate is PR, brand marketing and performance marketing.

And really PR in addition to word of mouth is a thing that really built our brand over the last 10 years and because of that Airbnb is a now and used all over the world and this has led to 90% of our traffic being unpaid direct even as recently as Q1. And even in this past quarter with elevated marketing, we have similar traffic levels of 2019 but we spent 50% less on marketing. So we think that if you have a product that is unique and different that the role of marketing isn’t to buy customers and the role marketing is not chisel, the role marketing is education and so what we have done is we’re doing our first brand — we did our first brand marketing campaigns at a global level in five years. It was a campaign called made possible by hosts and it’s really just taking real photos from real guests and real shift the highlight would make Airbnb different which is host.

We want our hosts to be as mainstream as the homes and faces on Airbnb. Now, while the results are still early as we said, we have seen elevated traffic levels. And to answer your question on H1 versus H2. We decided to front load spending, we were prepared for travel rebound unlike any other, so we don’t want to spread the money over the course of the year. So we disproportionately cut spending in H1 to really capture as much of this demand as possible, and I think what we’re seeing at the timing is going to bear out to be the right timing. And then as far as and I also answer product them on a high level and then Dave, you can, you can also go in.

So at a high level for product development. Here’s what here’s here’s what we’ve learned. Before the pandemic, we were a divisional structure. We had our core business the homes to be outside of business travel. We had, we had, we were getting a number of other divisions we had many divisions and because we have many divisions we had multiple product development groups and what we did is, when we became a functional organization and we got much more focused on hosting, we realize that we could be much, much more efficient as one of the reasons our product development group is much smaller than it was two years ago and that’s allowed us to move really, really fast.

And I hope that you see on May 24 that even despite the team being smaller and more nimble, we’ve been able to increase the piece of development. I think people are really impressed by, we were able to deliver. So that’s a high level. But Dave I don’t know if you want to jump in and talk more specifically about the numbers.

Dave Stephenson — Chief Financial Officer

In our product development spend will increase in the lower rate and that we’re not going to have to add back significant number of fixed resources in order to accommodate the business gets back to the size of 2019 and beyond. So there’s going to be very disciplined in any additions to our expenses. And then, as Brian said, we’re just seeing great success with our marketing strategy, which we actually started modifying prior to COVID and solidified during COVID and are continuing to see strength here in Q1. So marketing as a percentage of revenue will be higher in early this first half of the year than will be in the second half of the year. But we’re very encouraged by the results.

Colin Sebastian — Baird — Analyst

Great. Thank you.

Operator

And your next question comes from Naved Khan with Truist Securities.

Naved Khan — Truist Securities — Analyst

Yeah, thanks a lot. Brian maybe give us some talks about the reopening of urban travel in terms of timing, how are you can be awarded. Is that something that you think might happen in the back half of this year or you think that’s further out.

Brian Chesky — Co-Founder and Chief Executive Officer

Yeah. Thank you very much Naved for the question. Well let me preface this, my answer into two comments. Number one, I’ll be — I’ll try to be careful predictions is any one of us who have been making predictions last year to crumbled. The third thing I’ll say is no matter what happens with travel. I think there is, we showed last year our model is inherently adaptable and so we are adaptable to any travel changes but that being said, I do think we have quite a bit of data. And so with the data we have and we’re seeing, I think I can give you some indications, although it’s going to be a little hard to pinpoint.

We are seeing that as restrictions lift and cross-border begin more people travel to city. We’re also seeing that the nature of travel to cities is changing. For example, more and more people are booking longer term stays in cities. The length of stay is going up. And one of things we know is that the longer you stay somewhere, the more you are inclined to stay in the home. So I think that as restrictions lift in countries, as vaccinations rise, we think this is a significant tailwind to both urban travel and cross-border travel. So we’re very, very bullish. It’s a little hard to pinpoint, but I think the comments from the head of PDP today, the lifting of restrictions across Europe. These are all really, really good signs, there is no reason this wouldn’t be a huge tailwind to urban travel and cross-border.

Dave Stephenson — Chief Financial Officer

Yeah. Our urban travel growth rate has increased every month this year and continues to do so through April and early May. So we’re just seeing continued positive momentum.

Naved Khan — Truist Securities — Analyst

Thanks. That’s very helpful and maybe a quick, quick follow up to this. I mean so, Brian, funding your business travel, maybe the different people just travel to headquarters and then event maybe with Airbnb. Is there a — do you see a good opportunity to maybe take share and that’s in the segment versus previously this targeting in our business travelers going into cities?

Brian Chesky — Co-Founder and Chief Executive Officer

Yeah, I mean in New York City, in Los Angeles, a number of these cities, we almost have as many nights booked for stays longer than 28 days, as we do stays under 28 days, and York City actually the majority is over 28 days now, so I think that is a huge opportunity. If you think about where business travel going in the future. It seems it will be intuitive to me that as companies offer more flexibility, more people are going around the world but they’re not all going to want to live remote they’re going to have to come back to visit. And so I think you’re going to start to see longer stays. I think in addition longer stays you may also see traveler business travelers cobbling together.

So let’s say three different employees work in three different cities have to come back to headquarters, they may not all get three different hotel rooms Airbnb they might get one house, they can split the costs that you be around the dinner breakfast table in the morning. So I think the things that benefit Airbnb business travel is good travel and longer stay travel, those two things I think are disproportionately beneficial to do in-home and these are general tailwind for business travel. Now, to be clear, I mean people will of course travel for business. Again, I think the bar to get on a plane to go to will be higher than before.

Naved Khan — Truist Securities — Analyst

Thank you.

Operator

Your next question comes from James Lee with Mizuho.

James Lee — Mizuho — Analyst

Great, thanks for taking my questions here. A couple of question regarding the supply side. And can you guys talk about maybe in supply and demand balance by region, a little bit here, where do you see surpluses. Where do you see deficits and are you also looking to increase the supply by tapping into professional host, and on 90% individual or even hotel supply. And also secondly and what is, what are the key friction that you’re seeing right now for your host signing up and that you’re looking to address with these new tools you are about to introduce? Thanks.

Brian Chesky — Co-Founder and Chief Executive Officer

Yeah. Dave, do you want to take the supply and demand. I can probably take the increase in per host and key friction?

Dave Stephenson — Chief Financial Officer

Sounds good. Yeah, I mean on supply demand really what we’re seeing, because cross border and on urban travel has not yet fully rebounded, the places that we’re seeing the surpluses or deficits in demand, we have surplus of supply will be more the urban markets and where we can see some tightening of and especially US and non-urban at for the peak of the summer is clearly going to be some of the most constrained of our markets. So we’re actively working against each of those areas, but on each side, on the supply side, the culture that we are doing our best to increase hosts and bring on more supply as possible for periods in constrained markets.

And then we’re also using go back to our marketing expenses before where we use search engine marketing is targeted approach especially in markets where we have will be surplus on supply and not enough demand. And so being kind of pointed at that. So we look at every individual market is different, and we will use different levers to try to manage that balance over time.

Brian Chesky — Co-Founder and Chief Executive Officer

Yeah, and James why don’t I — why don’t I jump in and say this, one of the things that Dave just said, I want to put underline under — highlight. Before the pandemic most people came to Airbnb and they knew exactly where they are going and they knew when they were going. So we asked the question search bar where you are going and we asked, when are you and you put in dates. The Holy Grail for matching supply and demand is to be able to also control where you can point demand, but we can’t point demand where we have to apply for guests are flexible if they’re predisposed to really one of travel. Now the guests are telling us that they are much more flexible about where they travel, we can point to manage where we have supply, this is probably one of the most important things we have and it explains why with 90 million searches were used with a days feature conversion went up. So that is just another thing I want to underline.

Now, regarding your next two questions. Let’s talk about travels and hotels. I mean obviously Airbnb created a new category in travel because we created tools that allowed everyday people in individual to become host. And yes, at a 4 million hosts 3.5 million are individuals. That being said, we welcome all hospitality providers on Airbnb and we have hundreds of thousands of professional hosts and professional hospitality providers. The way we think about it is when the guests comes to Airbnb they’re looking for a place to stay and so we don’t want them to leave without having found something they want.

Typically, they come to look for individual hosts that’s we’re known for. But we want to make sure that we have professional host and hotels to serve those customers and to fill in our network gap. So we’re continuing to develop new tools and services over the coming years to continue to welcome our — these providers onto our platform. And I think they’re going to obviously benefit from all the demand that we have. Now as far key friction to becoming the hosts, one of the things we’ve seen, probably the main learning we’ve had and as we make it easier, more people do it, that’s the name of the game and make it easier, more people do it.

Before Airbnb was really hard to rent your home on the Internet, people did it which is hard and we made it easier, and on May 24, we’re going to show a number of tools, a number of offerings and innovation that we have, that can make hosting even easier. We’re reducing the number of steps to become host we’re making it even easier by providing more tools and support and we’re going to offer some better tools and services for hosts once they become host. And so I think all these things will reduce the number of friction as well.

James Lee — Mizuho — Analyst

If I can answer all questions also on the whole side too, are you seeing increased competition for acquiring those and maybe potentially pressure on your takeaway. Thanks.

Brian Chesky — Co-Founder and Chief Executive Officer

Dave, do you want to take it on?

Dave Stephenson — Chief Financial Officer

Sure. Right now, what we’re seeing is the number of guests step back to what are hosts count, we have 4 million hosts around the world. The vast majority of those are individual hosts, 2.5 million of those are individual hosts, and I think that’s very different than what we see competitive platforms doing. And so what we end up seeing with 4 million hosts that we have is — give me the last part of the question, sorry I lost my — lost my train of thought.

James Lee — Mizuho — Analyst

Yeah. Increased competition for hosts and maybe potentially pressure on take rates.

Dave Stephenson — Chief Financial Officer

Yeah, no the question on the take rates. Right now, we’re not seeing the preference. We think that we have a really great value to the take rate that we give, will be charge rates that give good day to our guests and our hosts and what we see on the take rate side is making sure that when we give value back to our hosts, but then we are able to take an of appropriate revenue from that. So we’re not really seeing any pressure at that driving for increasing or decreasing the number of hosts that we have on Airbnb.

James Lee — Mizuho — Analyst

Okay, thank you.

Operator

[Operator Instructions] And your next question comes from Brian Nowak with Morgan Stanley.

Brian Nowak — Morgan Stanley — Analyst

Thanks for taking my questions. I have two, the first one — on the, is on the 2020 new users that you added. It was a great year to sort of analog new users to the platform. I’m curious to hear about what you’re seeing from those new users from a retention or booking perspective now as you’re in this 2021 and how that compares to what you’ve seen in the user cohorts in the past. And then the second one just to go a little bit more into the monetization of the take rate you talk to us about any of the any of the tests or experiments you have been doing around insurance or ancillary service sales or to take rates are sponsored listings and ways you can think about that take rate potentially adjusting over time for more services to your hosts for guests. Thanks.

Brian Chesky — Co-Founder and Chief Executive Officer

Yeah. Thank you very much, Brian. Dave, why don’t I think the second question months initially. But why don’t you take the question on new users. What are you seeing from retention in booking.

Dave Stephenson — Chief Financial Officer

Yeah. So what we’re seeing for new users it’s early, but all of the early data for the new users that we’ve acquired here during 2020 is that the retention is very consistent with what we had for users in 2019 and before. So I think one of the benefits that we’ve seen in 2020 is just, we’ve actually given the lower the barrier for entry for new guests to kind of come to Airbnb and for the first time, you don’t have to hop on a plane, not to go across the border as we said over 50% of our late historically been cross-border to do that to try Airbnb now you can kind of drive just a couple of years down the road and good check us out and what we’re seeing from the early results is that the retention rates are very consistent with what we’ve seen in the past.

Brian Chesky — Co-Founder and Chief Executive Officer

And then on to Brian, to your question on monetization and take rate, we absolutely see lots of opportunities to increase our monetization and take rate for both guests and hosts. For example, one of things we’ve said is that many of us tools in terms we’ve offered in the last 5 years are incremental will be have you have to charge more for example, unlike our competitors we offer free and protection of $1 million against theft property damage and personal liability and countries all over the world. And as we add of these services, we do not charge incrementally for these our general principles, we always want to give away more value than we’re taking but we do think there’s opportunities for us to do to offer some more tools and services I think with take rate.

Now that being said focused is critical and we are focused on the most opportunity. The most opportunity right now is to capture as much travel demand as possible and be ready before anyone else is for this travel rebound. So we are making sure that we have enough hosts for this travel season, we simplified the guest experience and we we’re providing world-class support. So that’s we’re focused on this year. But make no mistake we have many opportunities in the years ahead.

Brian Nowak — Morgan Stanley — Analyst

Great, thank you both.

Operator

And your next question comes from Mark Mahaney with ISI.

Mark Mahaney — Evercore ISI — Analyst

Okay. I’ll stick with one question just on the supply side. Will you address the issue of whether increasing local restrictions is a factor that’s limiting your supply in especially new city in some of the larger cities and I realize that travel hasn’t really recovered there fully, but just address the issue whether, how much for constraint new local regulations on rentals etc is on your ability to expand supply. Thanks a lot.

Brian Chesky — Co-Founder and Chief Executive Officer

Yeah, I can take that at a high level, Dave you can feel free jump in as well. Mark, thanks for the question. What we saw with COVID was actually a positive reset in our relationship with cities all over the world. Now, first, let me just start by saying we now collect remit taxes in 30,000 jurisdictions we quite a remitted to date $2.6 billion of transit occupancy taxes. What happened with COVID is two things. Number one travel went from being concentrated in very few top cities to distributing everywhere thousand cities around the world. Though we do see an urban recovery, we don’t see that trend completely reversing because I think in a sense, you could say the genie is out the bottle and other people have realized that there is all of these really cool small towns, rural communities and small cities, many of which don’t even have hotels. And so they’re really important destinations.

The other thing that we’ve noticed though is that a lot of cities have been hit really hard by the devastating economic effects of the pandemic. So you will see major cities have had major tourism shortfall, major tax shortfall and because it is what do we actually seen is a lot of cities, reaching out to us and that we struck over 100 partnerships over the course of just the pandemic with destination marketing organizations, which as you know are basically tourism bureaus and tourism, from Scotland to Portland we’ve been doing partnerships with cities all over the world and to scale our partnerships to thousands of cities, we launched last year the city portal as well. So Dave, I don’t think if you want to add anything to that.

Dave Stephenson — Chief Financial Officer

And I think that’s key, we also added this new capability last year the city portal, which is another tool to enable cities to understand what goes on with our business in each of their communities. And I think that’s been another positive tool for cities to feel like they can work with Airbnb to help their economies rebound.

Mark Mahaney — Evercore ISI — Analyst

Okay. Thanks, Brian. Thanks Dave.

Brian Chesky — Co-Founder and Chief Executive Officer

Thanks Mark.

Operator

And your next question comes from Jed Kelly with Oppenheimer.

Jed Kelly — Oppenheimer — Analyst

Hey, great. Thanks for taking my questions. I guess, Brian going back to business travel. I guess it’s kind of like a two-part question. I guess number one would be, where are you in terms of talking to companies talking to businesses sort of making the ability to work from anywhere through Airbnb a benefit and then, like a follow-up, you mentioned work from anywhere you are — your company’s of course based San Francisco. So how do you see basically potentially using the work from anywhere trends to sort of save costs to make your business more efficient, if you can add more employees working outside the Bay Area. Thank you.

Brian Chesky — Co-Founder and Chief Executive Officer

Yeah these are two really good questions. Let me start with the first line. So, as you point out, and as I said, one of the kind of one of the trend that has been pretty, pretty remarkable over the last year is as more people have more flexibility, they can work from home and that means they can work from any home often on Airbnb and so one of the things we’re doing is we’re continually try to make it even easier for guests to be able to search anywhere around the world, and on May 24 we’re going to show you some new tools and new ways to make the experience of searching on Airbnb especially allowing you to search with more flexibility even easier.

Again, the type of flexibility we’re looking at is people staying longer, booking anytime and and be able to go anywhere, not just to same stop, top destination. So we are going to continue to look at innovation area. And I think the other thing I’ll just point out is again in 2019, only 14% of our nights booked were longer than 28 days. That’s now 24%. And so we think that the huge growth area for us, we think basically a quarter of our business is not even travel anymore. There is a lot of innovation opportunities for us, we’re a designed by companies at our heart. And I think going to offer a lot of really interesting opportunities.

Now, specific to our San Francisco employee base. Let me talk a little bit about what I told our employees a couple of weeks ago. I told them, there’s two guiding principles, number one, we want to model the live anywhere lifestyle, so by modeling that are anywhere lifestyle. We’re going to allow more flexibility for our employees. So I told our employees, they don’t have to come back to the office until next September. We’re going to allow a lot of flexibility and even if you do ask people to come back, they are going to have a lot more flexibility before as people aren’t going to be expecting to come back to office five days a week, every week. We think that is really not how most workplace in 21st century are going to operate.

That being said as a creative led company. We also do you think that in person collaboration is important. So we want to find some balance between what modeling to live anywhere lifestyle and allowing for in-person creative collaboration and that’s we’re designing, we want to get it right. We don’t want to rush into that. So that’s where working out over the course of next year.

Jed Kelly — Oppenheimer — Analyst

Thank you.

Operator

And your next question comes from Justin Patterson with KeyBanc.

Justin Patterson — KeyBanc — Analyst

Good, thank you very much. Brian, just extending on the question on the platform uptick. It’s really designed around exploration and discovery without spoiling your announcement on the 24th, I’m curious about how you think about the opportunities with funnel at Airbnb provide inspiration for travelers that the fleet they stay and things to do are such that Airbnb really starts to drive that natural you just a much the before.

Brian Chesky — Co-Founder and Chief Executive Officer

Thank you, Jeff. It was a little bit hard for me to hear you, but I think the question was what are we doing to drive more inspiration and discovery on Airbnb inspiring where you can go and what you can do, correct. I want to make sure I didn’t — I couldn’t hear the last end of the last question. Okay. I’ll answer that. So yes so inspiration is something that we’re really focused on. Actually if you go to Airbnb.com right now if you type in Airbnb.com you’re going to notice on our top of our homepage. There is a big piece of art and it sets the greatest outdoors. So we just launched wish list that are curated by Airbnb and if you get inspired you’re going to see a number of wishlist. So this is just the beginning of a number of things we’re doing to try to inspire more travel.

On the homepage below that you’re going to see that we’re now merchandising places you can go nearby so between wishlist, nearby travel in some of the updates we have on May 24. I think that’s going to continue to drive more and more inspiration. On May 24, though we are going to showcase some new exciting features that I think are going to inspire people around flexibility. Because ne of the things we’ve seen is if you were more flexible about where you travel and when you travel then with that kind of means for some people is the home becomes a destination. Not only where you see is less important than the type of home you are staying.

And so we’re, this is how we’re thinking about it. And hopefully, if you can join and then we can show you something we are working on.

Operator

And your next question comes from Lloyd Walmsley with Deutsche Bank.

Lloyd Walmsley — Deutsche Bank — Analyst

Thanks. Two questions if I can. First, can you talk about how you think about occupancy rates or kind of room nights per active listing over the medium term. It seems like it’s been pretty stable over the past few years, but I’m wondering if this notion of like blending of travel and moving is kind of increasing so does season demand in a way where you can grow room nights in excess of listings, we’re getting more out of your existing listings. And then the second one. The average booking value per night looked really high in 1Q. If you peel back the onion and look within the same region the same property type, are you seeing pricing up or is most of is just mix shift and how do you think about this as maybe as travel normalizes a bit how would that impact ADRs going forward?

Brian Chesky — Co-Founder and Chief Executive Officer

Great, Lloyd. So I’ll take the first question occupancy rate, Dave you can take the second one. The answer to your question is yes. Occupancy rates we think averaged on a global level will go up as we get better at matching supply and demand. The basic name of the game is in classic travel a lot of people try to go to the same place on the same date. That’s why I kind of when you show to Paris in the center, and there’s a whole bunch of people in line at the land mark, because when it seems like same time. So the increase occupancy rates. There’s one of two things we can do. We can add more hosts to the same place everyone’s going to or we can point demand to other places.

And as length to stay increases as people shift from going to 20 or 30 cities to thousands of communities and as people become more flexible when they travel, we can then show the deal. We can show them for example. I know you want to go to we will make up the place France in July. But if you went in September you could — you could save a lot of money because there is fewer people there, or if you can point you instead of in Paris. We can point you to Brittany or some other, some other community. So there is a lot of opportunities for us I think to point demand where you have available supply, which will allow us to steadily increase occupancy.

So what it means is that we don’t need to increased supply it linearly with increasing revenue, we can get more productivity out of pilot we have. And Dave I don’t know if you want to take the ADR.

Dave Stephenson — Chief Financial Officer

Yeah. And our ADRs in Q1 were up 35% year-over-year that was after being up 13% year-over-year in Q4. The significant majority driver of the ADR increase is driven by mix. The rebound has been earlier in the US, which has a higher average daily rate. It’s been in non-urban whole home and even larger homes and each one of those is just on average a higher ADR. So the majority of the ADR that we’re seeing is from mix. When we actually look at on highly constrained markets in a highly constrained time period we’re seeing some pricing pressure within there that will probably be our lease up, but the vast majority of that is just driven by mix.

Brian Chesky — Co-Founder and Chief Executive Officer

And the other thing I want to say again is. Yeah, and the other thing I’d say is as demand increases on Airbnb that could also correspondingly increase supply. So again, one of the things we published in our S1 was 23% of our new available hosts in 2019 were guests that increase of 28% in our new available hosts I’d start out of guests in Airbnb in 2020. So we also think there is a really interesting flywheel where can point demand, we have supplied. We have a muscle to continue to add hosts. We can also convert guests to hosts and that number keeps increasing, that’s another big lever for us.

Lloyd Walmsley — Deutsche Bank — Analyst

Got it. Thank you.

Operator

And your next question comes from Brent Thill with Jefferies.

Brent Thill — Jefferies — Analyst

Dave, I don’t know any color you can add around the final unlock that comes over the next week close to 500 million shares. I know it’s not all those are eligible but is there any way you could just frame that there has been since of this unlock and what it means. Can you just, any color around that you could give would be helpful.

Brian Chesky — Co-Founder and Chief Executive Officer

Yeah. Dave, why don’t you take that?

Dave Stephenson — Chief Financial Officer

Sure. So we clearly — our unlock lot comes on Monday and there is and the key thing that we’re doing is to try to make sure that we’re ready for the unlock is do what we’ve been doing, which is deliver outstanding results, and deliver outsized kind of gross booking value revenue and driving for profitability. So there’s a lot more color I can give you on the unlock on Monday, be on that.

Brent Thill — Jefferies — Analyst

Okay. Thank you.

Operator

And your next question comes from Brian Fitzgerald with Wells Fargo.

Brian Fitzgerald — Wells Fargo — Analyst

Thank you, guys. We wanted to ask if you could tell us what you’re seeing with respect to experiences with supply dynamics there online versus offline, linkages to travel, conversion rates there and anything with experiences?

Brian Chesky — Co-Founder and Chief Executive Officer

Yeah. Thank you very much for the question. So here’s what I’d say about experiences. When we came back in the beginning of the year of 2020 I really thought Airbnb experiences would be a breakout year and last year. Turns out a pandemic was a very difficult year for experiences we had a product in the whole, we remain very, very bullish about experience over the long term. One of the reasons we remain bullish because the percent of guests that leave a five star review is experiences is higher and remains higher than percent of guests leave a five star review for home.

But the pandemic was difficult time for experiences to be launched online experiences with the way to have an experience not meeting your living room, and I am thinking that in the coming years experiences will be successful because there’s fewer alternatives there is fewer mass tour operators, bars, lounges and restaurants. They’re going to be operating the full capacity. So we do think there is a window claim along in on this one.

Brian Fitzgerald — Wells Fargo — Analyst

Thanks, Brian. [Operator Instructions] And your next question comes from Stephen Ju with Credit Suisse.

Stephen Ju — Credit Suisse — Analyst

Okay, thanks. So, Brian, I asked the same question to one of your competitors last week. So I’d be interested in your opinion. What is probably more of a macro consideration. So the consumer savings rate at least United States is probably at the highest level, it’s been since quarter two and it will take some time for all of us to wind down to I guess normalized levels, which brings up the scenario of consumer spend probably accelerating for the next several years and hopefully one, the likely destinations for all of these dollars is going to be in travel. So I know it’s early days of the recovery, but what are you seeing in terms of I guess a greater willingness to maybe say upgrade to the more expensive Airbnb or just in general, stepping up in the frequency as we recover here. Thanks.

Brian Chesky — Co-Founder and Chief Executive Officer

Very good question, Stephen, let me tell you what we’re seeing so far. One of the things as we did travel surveys in the beginning of the year and we surveyed people in the United States, we also surveyed people around the world and in our surveys what we found is that the out of active out of home activity people miss the most more than restaurants, more than bars, more than sporting events, more than concerts was travel. The kind of travel people miss was not business travel, it was not mass travel going to crowded destination. It was really just spending time with people, that they’ve not been on the during the pandemic.

I think we generally just for what was taken away from us and travel and spending time of people is something that was taken away from us. Now with regards to your question about how we think people upgrading we have seen as we mentioned a material increase in the average daily rate in the United States, and this does give us a sense of consumer willingness to spend. Maybe another way of saying it is maybe before the pandemic, people were booking studio apartments in city. Now we’re seeing is a pretty big expansion of people booking entire homes typically even more bedrooms the number of guests per reservation has increased considerably. And so correspondingly people are spending more money.

I think that trend of course will get normalized over some period of time when other geographies recover and urban recovers. But I do think that we are going to see sustained confidence that’s no question.

Stephen Ju — Credit Suisse — Analyst

Thank you.

Operator

And your next question comes from Deepak Mathivanan with Wolfe Research.

Deepak Mathivanan — Wolfe Research — Analyst

Hey guys, thanks for taking the questions. Just a couple of quick ones. So first, can you talk about the implications of booking window Brian on second quarter and second half. Like there is a lot of summer booking — summer bookings happening right now already in markets like Europe and even in North America, is that, is that earlier than usual. Or does that mean that the recovery has been pulled forward by some capacity. Just wondering if you can provide some insights on that.

And then second question, I’m not sure if this was asked already. How are you thinking about the ROI on the targeted digital marketing programs aimed at host on of these on performance channels, any color on that you can add there would be great.

Brian Chesky — Co-Founder and Chief Executive Officer

Yes. Dave, why don’t you take these two questions.

Dave Stephenson — Chief Financial Officer

Sure. So regarding the booking window we’re seeing the booking window obviously in 2020 shrank dramatically right people were hesitant to travel they only started booking when they have high confidence in the mortgage travel what you are seeing here early in Q1 of 21 is the booking windows have expanded and in March, we actually saw booking windows consistent with those from March of 2019. So the windows are expanding. I think that what you saw historically even more confidence in the US, so that the willingness of travel and the booking window in US has expanded further than it has in Europe. But we’re starting to see some greater acceleration of our European business.

We’re seeing the European nights increasing the rate of year-over-year growth every month of the year since day the year including through April and May, and we’re seeing that as things like the lockdowns in France are removed and after the UK Prime Minister announced plan 6 lockdown in February we started seeing more acceleration in Europe. So the booking window trends are positive and give us improvement for what we’re going to see in the back half of the year, but we’ll just have to see what the lock-downs and other kind of travel restrictions look like for Europe in the back half.

And then regarding the ROI in targeted digital marketing for hosts. This is one of the levers that we have, when we do targeted digital marketing for hosts, it would be in specific areas that we know are more supply constraints and where we want to focus on it. We establish a return on that investment for the value of the hosts that we acquired through that channel, and it’s one channel, but it’s not the only one, it’s not the primary one. Again, the most important thing is kind of step back and educate people about the benefits of posting and then make it easier for them to host once they start considering it.

Deepak Mathivanan — Wolfe Research — Analyst

Got it, okay. Thanks, Dave.

Operator

And your next question comes from Kevin Kopelman with Cowen.

Kevin Kopelman — Cowen — Analyst

Great, thanks, quick one, could you give us an update on cancellation rate trends this year compared to 2019 with when I think the average listing being a little bit more flexible in the past. Thanks.

Brian Chesky — Co-Founder and Chief Executive Officer

You’re welcome. Dave, you want take this one for Kevin.

Dave Stephenson — Chief Financial Officer

Sure. So the cancellation rates obviously, were substantially elevated in 2020 versus 2019 they begun to moderate. So that they are substantially below where they were at 2020. But there’s still moderately elevated versus the 2019 rate. So we’re seeing a bit more return to normal the quite to historical normal rates.

Kevin Kopelman — Cowen — Analyst

Perfect, thanks Dave. Thanks, Brian.

Brian Chesky — Co-Founder and Chief Executive Officer

Thank you.

Operator

And your next question comes from Tom White with DA Davidson.

Tom White — DA Davidson — Analyst

Great, thanks for taking my question. Just one for me, a follow-up on ADRs and specifically, your expectations for the second half. I know there’s some color in the letter, but can you maybe unpack your thoughts on kind of all the different moving pieces there between the recovery in some of the structurally lower ADR markets recovery in urban and cross border, just curious to hear your thoughts on how it all kind of nets out the back half.

Brian Chesky — Co-Founder and Chief Executive Officer

So thanks, Tom. Dave I’ll give you this one.

Dave Stephenson — Chief Financial Officer

Sure. Yeah. I think that the best thing you do is actually kind of look at some of the guidance figures that we gave in the earnings call so we’re basically expecting because it’s harder to have visibility in the back half of the year we’re highly confident in the rebound, but it’s going to be coming all the early indications are that is there, but I think it’s hard to kind of precisely pin down what Q3 and Q4. We’re going to do. So it did do is give some perspective on what we expect out of Q2 and that is that our gross booking value in Q2 of this year will be higher than in Q2 of 2019 and that our revenue rate in Q2 will be similar to that of 2019. And then our EBITDA will be. Our adjusted EBITDA will be breakeven to slightly positive in Q2 of this year.

So I think those are kind of the key things because as we said as rebound comes back the pace at which it comes back in the geographies come back will all affect the mix of those ADRs. And we do expect to ADRs to moderate, but it’s hard to perfectly pinpoint down the specific of that mix.

Tom White — DA Davidson — Analyst

Okay, thanks guys.

Operator

I will now turn the call back over to the management team for closing remarks.

Brian Chesky — Co-Founder and Chief Executive Officer

All right, well thank you everyone for joining us today. I just wanted to recap, we are really proud of our strong Q1 results. We believe there are a testament to our focus and the adaptability of our model. And we’ve shown over the past year, that as the world changes Airbnb can adapt. I think we are now well positioned for the travel rebound ahead. As travel returns Airbnb will be ready, and our hosts will be ready as well. So, I hope you’ll join us on May 24 where will share insights and our travel is fundamentally changing and announce the most comprehensive update to Airbnb’s service in 12 years. Thank you. And we’ll see you then.

Operator

[Operator Closing Remarks]

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