There is a season to sow and a season to reap — and after sowing for a little over eight years, Airbnb is finally reaping the benefits of its hard work.
In the second half of 2016, Airbnb became profitable for the first time — a feat that Uber has yet to reach.
According to a report by Bloomberg Technology, people close to Airbnb say the company is expected to maintain EBITDA (earnings before interest, taxes, deductions and amortizations) profitability through 2017.
Over the past year, Airbnb’s revenue increased 80 percent, even though several cities — such as New York and San Francisco — and even some states have passed laws to prevent hosts from using the platform to make certain short-term rental deals.
“Investors have been impressed with Airbnb’s potential. The company has raised a total of $3.1 billion in venture backing, which makes it the fourth highest-valued venture-backed company in the world with a valuation of $30 billion,” CNET reported.
“The source told CNET that almost all of that $3.1 billion the company has raised remains on the balance sheet.”
Other factors that lead to profitability include little competition from similar companies, no maintenance costs, and the company’s expansion into other parts of the travel experience, which include guided tours, flight-booking tools and reservations, and investments in promising startups.
Beyond the company itself, real estate agents who use the platform to create revenue through short-term rentals could benefit from Airbnb’s new profitability.
In April, Inman writer Teke Wiggin shared the story of Las Vegas real estate broker Iddo Gavish, who raises cash from investors to buy single-family properties and lease them out on platforms, such as Airbnb, from $100 to $1,500 a night, depending on the property.
Although short-term rental funds like Gavish’s are growing in popularity, real estate professionals should be mindful of local regulations on short-term rentals that could land them in hot water if broken.
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