« back to reports
Morningstar-PitchBook: Airbnb's Network Effect Offers Investors a Unique Stay

3Q 2018

Morningstar-PitchBook: Airbnb's Network Effect Offers Investors a Unique Stay

July 19, 2018

In this report, developed in collaboration with Morningstar, we explore Airbnb’s development and predict its expansion, growth opportunities, and potential risks. We foresee Airbnb leveraging its strong network advantages to continue to rapidly gain alternative accommodation market share, expand into new vertical markets, and maintain momentum for higher profitability despite increasing competitive and regulatory pressure. We value Airbnb’s equity in the $53 billion to $65 billion range and see the company primed to exit via an IPO in 2019-2020.

Key highlights:

  • We expect Airbnb's core alternative accommodations market to experience 16.6% online industry growth annually on average the next five years, above the 9.4% lift we expect for total online travel.
  • Airbnb's platform of 250 million monthly visitors and 5 million listings drives a network effect advantage, positioning it for attractive long-term growth.
  • Airbnb's network advantage allows it to reach 45% online booking share of the alternative accommodation market in 2022 versus the 30% portion we estimate it held in 2017.
  • We expect Airbnb to expand into hotel, experience, and transportation verticals the next few years, and for these markets to make up 19% of its total bookings in 2022 from 3% this year.
  • Increased competition and alternative accommodation regulation present headwinds to Airbnb's long-term growth, mitigating its healthy competitive position.