Latest news with #shorttermrentals
Yahoo
4 days ago
- Business
- Yahoo
Airbnb's Cash Cow Can Thrive Despite Its Challenges
Key Points Airbnb faces regulatory hurdles that management must attempt to overcome. The company benefits from significant demographic tailwinds. Airbnb is a cash-flow machine and a great stock to own. 10 stocks we like better than Airbnb › The travel industry is a lucrative but tricky realm in which to do business. This is especially true when it comes to short-term rentals. Navigating local regulations and international expansion while satisfying thousands of hosts and even more guests are a few of the daunting challenges faced by Airbnb (NASDAQ: ABNB), one of the leaders in the space. Its management is working to increase its cooperation with localities and promote what it views as commonsense regulations while maintaining its ability to operate freely. Still, in some major markets, such as Hawaii, New York City, and Paris, local and state governments have imposed stringent restrictions on how short-term rentals can be operated. Many homeowners' associations also have rules that are unfriendly to owners who want to turn their properties into short-term rentals. However, the news isn't all bad for Airbnb. The market it operates in is massive and continues to grow. There are also demographic tailwinds, as younger generations tend to gravitate toward Airbnbs more than their parents. Short-term rentals (labelled vacation rentals on the chart below) make up a significant portion of a market that is forecast to exceed $1.1 trillion by 2029. What does this mean for Airbnb? Cash, and lots of it. Terrific business model Airbnb is just a software platform at its core. There is also a customer service element. However, companies in this industry lack the factories, expensive equipment, and other major infrastructure that many other industries have. Property and equipment purchases are often referred to as capex (short for capital expenditures) and reduce the amount of cash a company can keep. Free cash flow is one reason why software companies, such as CrowdStrike (NASDAQ: CRWD) and Palantir (NASDAQ: PLTR), often trade at higher valuations than companies in other industries. For instance, Intel (NASDAQ: INTC), a semiconductor designer and manufacturer, spent $5.2 billion on capex in its most recent quarter, a whopping 40% of its revenue. Airbnb spent just $14 million last quarter on capex, less than 1% of its revenue. Meanwhile, its free cash flow -- the amount that's left over after operating expenses and capital expenditures -- has soared. The $4.4 billion shown above is 40% of revenue over the same period. A 40% free cash flow margin is an incredible figure and bodes well for shareholders. Airbnb uses its cash to fund growth initiatives and reward shareholders through stock buybacks, which reduce the number of shares available, thereby increasing the value of each remaining share. Think of a company like a giant pizza, and every share is a slice. If the number of slices decreases, each of the remaining slices represents a larger portion of the pizza. Airbnb has repurchased $3.5 billion worth of its stock over the last 12 months, accounting for approximately 4% of its total market capitalization. It's likely to continue in this pattern for a long time, given its fantastic cash-producing business model. Is Airbnb a buy? Since free cash flow is what attracts me to Airbnb, the price-to-free-cash-flow ratio is my preferred metric for valuing the company. Airbnb currently trades for around 20 times free cash flow. This is well under its 2024 high of 29, and slightly below its 3-year average of 22. It is also lower than rival Booking Holdings, which trades for 23 times its own excellent free cash flow. In short, Airbnb is a better value based on cold, hard cash. Booking Holdings is also a fantastic company and is worth having in a portfolio. However, its market cap is more than twice that of Airbnb's, which means that Airbnb could have an easier time growing faster from here. At this valuation, it is an excellent buy-and-hold stock. Should you buy stock in Airbnb right now? Before you buy stock in Airbnb, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Airbnb wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025 Bradley Guichard has positions in Airbnb and CrowdStrike. The Motley Fool has positions in and recommends Airbnb, CrowdStrike, Intel, and Palantir Technologies. The Motley Fool recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy. Airbnb's Cash Cow Can Thrive Despite Its Challenges was originally published by The Motley Fool
The National
5 days ago
- Business
- The National
UAE Property: ‘How can I increase summer occupancy in my RAK rental unit?'
Question: I am buying an apartment in Ras Al Khaimah and want to rent it out for short-term rentals soon. How can I optimise summer occupancy and which local regulations must I adhere to? MP, Dubai Answer: Ras Al Khaimah is fast becoming a destination of choice, not just as a go-to staycation destination for the UAE holiday market, but also for longer-term visitors and tourists. With the arrival of the Wynn Al Marjan Island resort in 2026/2027, the emirate is likely to become more popular as a short-term destination. Here are a few things to remember and adhere to. By law, all tenancy contracts in RAK must be registered through the RAK Municipality e-portal. The fee is Dh25 ($6.8) plus 5 per cent of the annual rent. Unregistered contracts are unenforceable, stripping landlords of eviction rights and security deposit recourse. Standard residential leases are allowed up to four-year terms, but short-term leases of say two to four months must still comply with the Rent Act's eviction notice requirement, which is a minimum 90 days, and the security deposit rule, which is 5 per cent of the annual rent. Offer two- to four-month summer lets bundled with free utilities, complimentary AC servicing and optional maid services. UAE residents that enjoy staycations value turnkey, worry-free stays. List on leading short-let platforms such as Airbnb, local short-term rental agents and collaborate with GCC-focused travel agencies to tap into regional leisure traffic. Ensure your unit is presented in the best possible fashion by furnishing with high-quality appliances, blackout curtains, high-speed Wi-Fi, and a dedicated workspace to attract both families and remote working professionals seeking respite from the summer heat. Employ revenue management software to adjust nightly or weekly rates based on occupancy forecasts or get comparable data from portals and local holiday home agents. Look out for any local events that will potentially capture higher premiums. Conduct professional cleaning and safety inspections between tenancies to maintain high review scores. Offer flexible check-in/out times and transparent cancellation policies to build guest trust. Monitor competitor rates regularly to ensure your pricing remains competitive without eating into your yield. By combining regulatory compliance with targeted marketing and professional service levels, part-time RAK landlords can boost summer occupancy from roughly 45 per cent (unmanaged) to over 75 per cent, capturing premium short-let rates and maximising annual income. Watch: Businesswoman moves from Dubai to RAK to find some quiet Q: I would be interested to understand what are the emerging areas in Abu Dhabi and Sharjah in terms of capital appreciation, rental yields and which developers I should work with? CP, Sharjah A: While Dubai commands the headlines, Abu Dhabi and Sharjah are quietly delivering attractive risk-adjusted returns in well-priced, master-planned communities. I will list below some top picks that I think combine credible developer track records, infrastructure momentum and balanced capital appreciation. Starting with Abu Dhabi, the main master developer is Aldar. Some of its main projects are: Al Reem Island: Boasting a 7.2 per cent year-on-year price rise in the first quarter of 2025 and gross rental yields of 7.6 per cent for apartments, Al Reem Island blends waterfront views with high-street retail. The Central Market and Gate Towers precincts have strong presales, minimising completion risk and ensuring pipeline transparency. Yas Island: Driven by entertainment megaprojects such as Warner Bros, Ferrari World, Sea World, Yas Waterworld and the Yas Mall expansion, luxury apartments command 6.5 per cent to 7 per cent yields, with prices up 6.6 per cent in early 2025. The upcoming first Disney World in the Middle East will further elevate property prices and demand for both long- and short-term rentals. Al Ghadeer: A reclaimed land community by Aldar located on the Dubai-Abu Dhabi border, it offers entry-level pricing (sub-Dh1 million studios) and yields near 9.9 per cent, underpinned by affordable payment plans and infrastructural upgrades connecting to Sheikh Mohammed Bin Zayed Road. Main projects in Sharjah include: Aljada by Arada: This is a fully integrated town centre featuring three schools, 25,000 residential units, a 4.4-kilometre retail boulevard, hotels and public plazas, along with large green spaces and family entertainment areas. Aljada's off-plan apartments yield 5 per cent to 7 per cent, with an expected 7.5 per cent return on investment on handover. Arada's track record of delivering three large-scale projects on time adds to investor and end-user confidence. Tilal City (Sharjah Asset Management): Modelled on Mediterranean lagoons, Tilal City's early studio and one-bedroom launches delivered 6 per cent to 8 per cent yields, with mid-teen capital growth forecast as schools, clinics and malls open next year. Maryam Island: Launched in 2024, this waterfront mixed-use island has seen soft-launch price uplifts of around 8 per cent within six months and yields of around 6 per cent. This is driven by Sharjah's tourism push and the project's proximity to the Corniche.
Jordan Times
6 days ago
- Business
- Jordan Times
'Class war': outsiders moving to Puerto Rico trigger displacement
CABO ROJO, Puerto Rico — Gloria Cuevas thought she would live forever in her pink, century-old house on Puerto Rico's west coast -- but then her landlord decided to transform the home into an Airbnb. Cuevas left her home -- now purple and split in two -- and her beloved city for another further south, forced out by the rising cost of living and an explosion of short-term rentals on the US Caribbean island territory. Puerto Rico -- long a draw for sun-worshipping tourists -- is also a hotspot for foreign investment and offers tax incentives to attract outsiders. "At first, I couldn't come back here," Cuevas, 68, told AFP, gazing at the home she once made her own. "It made me feel sad and angry at the same time." Cuevas's experience is becoming an all too familiar tale across the island, where signs promote mansions for sale, and the Airbnb logo is plastered on homes where locals once lived. Intensifying Puerto Rico's gentrification are laws that encourage primarily wealthy mainland Americans to move there in exchange for preferential tax treatment. The programme originally enacted in 2012 was meant to spur economic growth and attract investment on the island, an unincorporated territory under US control since 1898. Those relocating must acquire residency and buy property to keep the significant incentives -- but many Puerto Ricans as well as some US lawmakers say this is driving up housing prices and encouraging tax evasion. "Colonialism kills us, it suffocates us," Cuevas said. "It's a global theme. It's a class war." 'Unfair' - Ricki Rebeiro, 30, moved to San Juan more than a year ago, bringing his packaging and marketing business that services cannabis companies with him. He told AFP that basing his work in Puerto Rico saves his company millions of dollars annually, and that he pays zero personal income tax -- what amounts to the equivalent of "a whole second income" that he says he tries to reinvest locally. "I believe that the locals are probably upset that they're not reaping the same benefits of somebody like me," said the entrepreneur, whose family is based in Pennsylvania and Oklahoma. The system is "unfair," Rebeiro said, "but I also don't believe that I should be the one to blame for that. I didn't structure the programme". Puerto Ricans in recent years have slammed their government for what they say is a hyperfocus on outsiders at the expense of locals, as the rich -- including people like the famous content creator-turned-boxer Jake Paul -- move in. 'This is ours' In Cabo Rojo, a seaside city about an hour's drive south of Rincon on the island's western coast, some residents are taking the matter into their own hands. During a recent canvassing effort, a group of activists urged their neighbours to protest a massive development project called Esencia, which would transform more than 810 hectares of recreational land and more than three miles of beaches into a $2 billion luxury resort and residential development. Dafne Javier's family goes back generations in this area -- her great-grandfather was the last mayor in the municipality under Spanish occupation, and the first under US rule. The 77-year-old said the Esencia project would "totally change the landscape", creating a gated town within a town. Protesters say it would destroy the natural habitat of some endangered species, while exacerbating problems with potable water, electricity supply and trash pick-up. Project investors have called Puerto Rico "one of the most promising growth markets in the world" and vowed Esencia would create "thousands of jobs". But those jobs will be minimum wage, Javier predicted, and the wealthy newcomers "won't mix with us". Christopher Powers is married to a Puerto Rican with whom he has children, and has lived in Cabo Rojo for 20 years. "They have no idea what they're destroying, and if they do have an idea what they're destroying, then they should be ashamed," he told AFP of the developers. "Not only is it ecologically destructive, not only will it be an economic disaster for those of us who live here, but it's also against the sort of spirit or values of the Caborojinos." Cuevas is hopeful her story and others like it will crystallise for her fellow Puerto Ricans what they stand to lose. "We have to keep fighting. We have to educate our youth. Have you heard of Bad Bunny?" she said, referring to the Puerto Rican global superstar whose music and current residency in San Juan has amplified discussion of gentrification and cultural dilution, on the island and beyond. "This is ours," Cuevas said. "We're not going to leave."
CBS News
7 days ago
- Politics
- CBS News
Ocean City, Maryland, votes against restrictions on short-term rentals
Voters in Ocean City, Maryland, rejected an ordinance that would have put restrictions on short-term rental properties. The ordinance failed during a special election Tuesday, with 800 votes for and 834 votes against the measure, according to the city government. The ordinance, passed by the mayor and city council in March, would have initially imposed a minimum five-night stay for homes rented in certain single-family neighborhoods or mobile home communities. These changes would have gone into effect for 2025 and 2026. By January 2027, the measure would have required a minimum 31-night stay for homes rented in those designated communities. The ordinance would have impacted Ocean City's R-1 single-family districts and MH mobile home district. Currently, there are five R-1 districts in the city, and one mobile home district. More than 4,000 homes would have been affected by the ordinance. After it was passed by city leaders last year, the rental ordinance received sharp criticism, especially from the Ocean City Maryland Property Rights group. The group launched a petition that led to the special election. In it, advocates claimed the changes to short-term rentals would threaten property rights and lessen Ocean City's appeal as a vacation destination. "A ban on short-term rentals in Ocean City won't just hurt hosts," the group said in their petition. "It will hurt Ocean City's economy, its appeal to family vacationers, and its community spirit." The petition encouraged residents to vote against the ordinance. WJZ has reached out to the mayor's office for comment.
Yahoo
21-07-2025
- Business
- Yahoo
Airbnb: A Capital-Light Compounder Hiding in Plain Sight
There are very few businesses in the world where demand grows, margins expand, capital needs shrinkand yet the market stays skeptical. Airbnb is one of them. For most of its life, Airbnb has been misunderstood. It was called a tech startup. Then a travel rebound play. Then a meme IPO. Today, it's simply a cash machine that runs with no physical inventory, minimal capital expenditure, and compounding brand equity in 220 countries. This is not a story stock. It's a structurally advantaged platform with embedded network effects, high-margin scale, and a founder still running the show. This could be described as simple, proven, and unusually resilient. Let's break it down. Warning! GuruFocus has detected 3 Warning Sign with ABNB. Airbnb is a global travel platform that connects guests to hosts offering short-term rentals, long-term stays, and experiences. It doesn't own properties. It doesn't operate hotels. It simply facilitates transactions between supply and demandand collects a take rate for doing so. Guests book stays. Hosts provide homes. Airbnb charges both. It makes money when people travel, but unlike hotels or airlines, it has no physical assets tying it down. The business model scales with almost zero incremental cost. Airbnb isn't just a booking site it's a global operating system for travel. By the end of 2024, over 5 million hosts had welcomed guests across 220 countries and regions. The company has now facilitated more than 2 billion guest arrivals a staggering figure that reflects both the platform's global reach and repeat engagement. In 2024 alone, travelers booked 492 million nights and experiences. That kind of volume isn't a one-off surge it's the compounding power of a model that grows stronger with every stay. Revenue is driven by Nights and Experiences Booked (NEBs), average daily rate (ADR), and take rate. Margins are lifted by the platform's asset-light DNA, which removes most fixed costs and creates operating leverage as volume scales. Airbnb's product segments include: Stays (the core): short- and long-term rentals. Experiences: in-person or virtual activities hosted by locals. Airbnb for Work: corporate and team travel. Its power lies not just in what it offersbut in what it doesn't need to offer. There's no capex drag, no inventory risk, and no geographic dependency. The global travel accomodation (lodging) industry is massive, it is expected to reach over $2 trillion by 2033but it's still quite fragmented. Hotels, hostels, and vacation rentals all compete for travelers' wallets. Online Travel Agencies (OTAs) like Booking Holdings (NASDAQ:BKNG) and Expedia (NASDAQ:EXPE) sit between supply and demand, collecting fees. Airbnb operates in this same spacebut with a fundamentally different structure. Let's run it through Porter's Five Forces: Competitive Rivalry: Highbut mostly indirect. Expedia owns Vrbo, Booking pushes alternative accommodations. But Airbnb's brand has become a verb. No competitor has matched its community, design, and product consistency at scale. Threat of Substitutes: Moderate. Hotels remain an alternative. But the pandemic changed traveler behavior. People now seek privacy, kitchens, flexibility, and unique experiences. Airbnb wins here. Buyer Power: Low. Millions of users, no major customer concentration. Supplier Power: Fragmented. Hosts are individuals or small operators, with little collective leverage. Barriers to Entry: Very high. Network effects, brand trust, and regulatory relationships are hard to replicate. The trust loop (reviews, identity, payments, safety) is a deep moat. Its primary moat is a combination of network effects, brand, and scale efficiency. As more hosts join, more guests book. As more guests book, more hosts list. This feedback loop creates high switching costs for both sides. It also benefits from a growing data advantageAirbnb sees pricing, booking trends, and guest preferences across millions of listings. This allows better matching and dynamic pricing over time, improving user experience and profitability. The moat is widening. New features like AirCover (insurance), verified listings, and AI-driven matching deepen customer loyalty. Competitors can replicate some featuresbut not the trust that's been built over 15 years. Brian Chesky, Airbnb's co-founder and CEO, still controls the narrative. He owns around 11% of the company economically but holds over 30% of the voting power through high-vote Class B shares. That gives him both skin in the game and the final word a setup built to prioritize long-term compounding over short-term noise. Chesky has shown flexibility as a leader. In 2020, when the pandemic froze travel, Airbnb laid off 25% of staff and rewrote its roadmap to focus on core hosting. That discipline helped the company return to profitability quicklyand today, Airbnb runs leaner than most tech peers. Capital allocation has been rational. Airbnb doesn't pay a dividend but uses excess cash for buybacks. No splashy M&A. Just excess cash funneled into buybacks. Since 2023, it has repurchased $6.5 billion worth of stock, with another $2.5 billion still authorized. No empire-building. No gimmicks. Just a machine quietly returning cash while it compounds. The compensation plan is increasingly tied to FCF and adjusted EBITDA growthaligning incentives with durable profitability. This is not a management team chasing quarterly targets. They're optimizing for optionality, longevity, and resilience. It is the managerial candor with rational capital deployment. The numbers tell the story. Airbnb has graduated from blitzscaling to sustainable, capital-light compounding. In 2019, revenue was $4.8 billion. By 2024, it reached $11.1 billiona CAGR of ~18.2%, despite a pandemic pause. More impressively, net income grew from a ($674 million) loss in 2019 to $2.65 billion profit in 2024nearly 24% net margin. Gross margin sits at 83%, among the highest in travel. Operating margin reached 23%, thanks to disciplined cost structure and high incremental margins. Free cash flow was $4.5 billion in 2024, a 40% margin. ROIC stands at 28%, versus an estimated 11.5% weighted average cost of capital. Airbnb creates value with every dollar it touches. And it does it with minimal reinvestmentcapex was only $34 million last year (0.3% of revenue). The company is net cash positive, with $10.6 billion in cash and $2 billion in zero-percent convertible debt. It has no liquidity issues, no looming maturities, and full flexibility to investor return capital. At ~$139 per share, Airbnb trades at around 35x trailing earnings and 17.4x forward FCF. That's not cheapbut I do not think it's expensive for what you're getting. This is a 24% net margin, 40%+ FCF margin business, growing double digits, with high ROIC of 28%. The market is pricing in mid-teens earnings growthexactly what Airbnb has been delivering. Among platform-based businesses, Airbnb stands out for its combination of profitability, capital efficiency, and strategic clarity. Booking Holdings, despite a lower free cash flow margin of 33%, trades at a premium 21.4x forward free cash flow. Expedia appears attractively priced at 11.3x, yet faces structural headwindsincluding brand fragmentation, ongoing technology integration challenges, limited traction in alternative accommodations, and continued dependence on paid traffic. Marriott, by contrast, posts a robust 39.4% free cash flow margindriven by its scale and recurring revenue modelbut trades at a premium 26.3x forward FCF. Airbnb, with its capital-light structure and global brand strength, strikes a more compelling balance. It combines high free cash flow margins with lower reinvestment needs, supporting a more scalable and flexible growth profile. For investors evaluating high-growth platforms, these comparisons underscore the long-term value of monetization efficiency, structural leverage, and disciplined capital allocationkey elements as the company transitions from top-line growth to durable free cash flow generation. This isn't a bet on travelit's a bet on platform leverage in a massive, fragmented market. No investment is risk-free. Airbnb faces: Regulatory tightening: Cities like New York and Barcelona are cracking down on short-term rentals. This could limit supply or require costly compliance. Macroeconomic risk: Travel demand can fall in recessions. A weaker consumer, or geopolitical shocks, could hit bookings. Brand reputation: Safety incidents or bad PR can erode trust. Airbnb must maintain its host screening, guest review, and resolution systems. Competitive response: Hotels are adapting. OTAs are investing in alternative lodging. But Airbnb's moat still appears intact. These are real risksbut manageable. Airbnb has diversified geographically and pivoted before. Regulation may constrain supplybut that could increase pricing power for remaining listings. Airbnb isn't cheap on traditional metricsbut it's not traditional. It's a capital-light, global platform with widening moats and disciplined leadership. This is a wonderful business at a fair price. Not a bargain-bin stockbut a structurally advantaged one that could quietly compound for a decade. Many investors could think Airbnb is a cyclical travel name. But the numbers say otherwise. This is a cash-generating platform with software-like economics and global scale. If you want durable growth without the capex, with a founder still running the ship, and a model that gets stronger the more it scalesthis might just be your long-term compounder. This article first appeared on GuruFocus.
