Airbnb shut down its marketing efforts last week, saving an estimated $800 million annually. But it likely will need to make more-substantial cost reductions across the board as the spread of coronavirus ravages its business.
An analysis of Airbnb’s profit statements shows that the company spends much more on fixed costs—such as product development, facilities and employee pay—than rivals such as Booking Holdings and Expedia. Airbnb in the past has balanced out some of those higher costs by spending less than its rivals on sales and marketing—but all travel companies have slashed advertising costs lately. That shifts the focus to those other costs.
The privately held travel giant spent the equivalent of 32% of its revenue in the first nine months last year on product development, facilities and employee compensation, compared with 21% for each Booking and Expedia, according to an analysis by The Information. Airbnb’s spending on these costs amounted to $169,151 per worker, 80% more than Booking and double that of Expedia over the same period (see chart).