Airbnb (ABNB) has spent years telling investors artificial intelligence could transform travel.
Now it has a number to back up that claim.
Airbnb shares surged about 14% on Aug. 7 to their highest level in four years after the company raised its annual revenue-growth outlook and reported better-than-expected second-quarter results, Reuters reported.
Revenue increased 17% to $3.61 billion, while the company now expects full-year revenue growth in the mid-teens rather than its previous low-to-mid-teens forecast.
But one figure buried in those data may matter more to stockholders. Airbnb claimed its AI customer-support assistant upgrades helped reduce support costs per booking by 16% compared to a year ago, according to Reuters.
This is important because AI investment across corporate America has posed a tough challenge for investors: Where is the refund?
Airbnb is starting to offer an answer. Instead of just adding a chatbot to its website, the company is using AI to answer consumer problems, improve search, and accelerate product development.
And for travelers, that may mean speedier help and easier booking.
For stockholders, it may be something even more precious; it may mean higher revenue while costs do not grow at the same pace.
Airbnb’s travel demand stayed strong, despite headwinds
Airbnb’s quarter came against an uncomfortable backdrop. Consumers have pulled back because of geopolitical risk, higher travel costs, and inflation.
Still, global travel demand remains strong as Airbnb posted $3.61 billion in quarterly revenue and raised its outlook, Reuters confirmed. Gross bookings totaled $27.2 billion, and adjusted profitability also beat estimates, according to Investors Business Daily.
Related: Airbnb CEO delivers eye-opening message on future of travel
Another advancement could grow the market Airbnb can serve: Hotel room nights on the platform are growing approximately three times faster than home listings.
That alters what Airbnb can do. The company’s first hotel disruption was offering residences to travelers. Now it can progressively sell hotel inventory along with those homes.
That gives travelers more options and allows Airbnb to compete for vacations that would otherwise have gone to Booking Holdings, Expedia, or a hotel’s own website.
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Another example is Airbnb’s customer-service numbers. CEO Brian Chesky said AI improvements helped reduce support costs per booking by 16% compared with last year, Reuters noted.
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Airbnb is also using artificial intelligence for search and product development.
The company has already created machine-learning techniques to improve the matching of properties with individual tourists. Airbnb researchers built a retrieval system using embeddings, which went into production and showed a statistically significant gain in booking conversion in testing.
That’s important, since Airbnb doesn’t require AI to invent a whole new product category. Instead, it can employ the technologies to improve an existing marketplace.
A slight increase in conversion across millions of searches can lead to a significant booking volume. A reduction in support costs can also flow directly into margins.
Consumers don’t have to reserve Airbnb because of AI. The technology just needs to make each booking more profitable.
Airbnb investors now have a different growth story
The surge in the stock suggests that Wall Street is beginning to see Airbnb differently.
The company’s theme for years has been whether travel demand will stay strong postpandemic.
That argument is changing. Airbnb now has other growth paths beyond just getting more people to book regular home stays. These include:
- Hotel inventory increases.
- Artificial intelligence can lower costs and increase conversion.
- New services provide existing consumers more reasons to use the platform.
- Overseas expansion offers access to markets where Airbnb is still less mature.
What Airbnb investors should watch
- Hotel room growth could determine whether Airbnb successfully broadens beyond home rentals.
- AI-driven customer-service savings should continue improving if the technology is truly scalable.
- Booking growth will reveal whether consumers remain resilient as economic uncertainty increases.
- Higher conversion rates could provide incremental growth without requiring proportional marketing spending.
- The raised full-year outlook will make future misses more costly.
Airbnb’s latest quarter hasn’t shown that AI will transform travel overnight.
It showed something more useful — that the technology is starting to save the company money.
That may be the most important result Airbnb reported for shareholders who have watched companies spend heavily on artificial intelligence with little in the way of a payoff.
Related: Airbnb quietly makes big change customers need to know about