Airbnb’s Valuation

imagesAirbnb is now valued at just over $25 billion dollars, which makes it more valuable than the hotel giant Marriott International, which has more than 4,087 physical properties in over 80 countries and territories around the world, and over 697,000 rooms (as of July 2014), and an additional 195,000 rooms in development, with a $21 billion dollar valuation.

CNN is calling it “crazy money“. Why? not just because they don’t own any physical buildings or rooms used for renting and sharing, but also because they lost over $150 million last year and are estimated to lose $200 million more in 2015, according to PrivCo.

According to The Wallstreet Journal;

Airbnb’s value would also eclipse that of rival travel site Expedia Inc. EXPE -0.11 % by nearly two times. Airbnb arguably commands a premium valuation due to its higher growth rate—roughly 90% projected over the past two years compared with 17% expected for Expedia, which analysts expect will have $6.5 billion of revenue this year. On the other hand, Expedia’s business makes money. Analysts forecast it will have earnings before interest, taxes, depreciation and amortization of $1.1 billion this year.

The current leader in hospitality, Priceline, has a market value of about $61 billion, and expects to generate $9 billion in revenue this year, according to analyst estimates, about 10 times Airbnb’s projection. Priceline’s expected Ebitda for the year is $3.6 billion.

The article goes on to say:

Airbnb generates revenue by taking a 3% cut of each booking along with a 6% to 12% service fee from Guests. To meet its lofty revenue targets, Airbnb would need to increase its share of the global lodging market from 1% to as much as 10% over the next five years, according to Douglas Quinby, an analyst with research firm Phocuswright.

So where is this all heading? It will be interesting to see what lies in store for Airbnb given its ambitious growth plans and its current valuation making it worth a whopping $24,000 USD for each of the 1 million property and room listings on their website.