Airbnb, Inc. (NASDAQ:ABNB) Evercore ISI 2nd Annual Technology, Media & Telcom Conference Call September 7, 2022 8:45 AM ET
Company Participants
Ellie Mertz – Vice President of Finance
Conference Call Participants
Mark Mahaney – Evercore ISI
Mark Mahaney
I’m Mark Mahaney, Head of Internet Research here at Evercore ISI. Thrilled to have Ellie Mertz here. Elena Mertz. Ellie Mertz here, VP of Finance at Airbnb. Ellie, you’ve been with Airbnb for five years, seven years, nine years.
Ellie Mertz
Almost 10.
Mark Mahaney
Almost 10 years. So I’ve known Ellie for a long time. She was at Netflix prior to that. But clearly one of the people at the company who probably knows the business that – and it must be a handful of people at the company who really know the business, and Ellie one of them. So we’re thrilled that you’re here today. So thanks.
We’ve got 35 minutes. I’ll leave five minutes at the end for Q&A. At the end, I’ll ask, just raise your hand, we’ll get you the mic.
So Ellie, thanks for joining us today. And I think the first thing I want to ask you is talk about Airbnb’s business, leisure travel, alternative accommodations in a recessionary environment. We just had this monster pent up travel demand, summer great. And we almost certainly are going to see weakness, consumer weakness, especially out of key markets, like Europe. What does that mean for Airbnb’s business?
Ellie Mertz
It’s a great question. I think it’s on a lot of people’s minds than questions we’ve gotten over the last couple of months as people have been trying to read the tea leaves with regard to what is ahead of us and what does it mean in terms of discretionary consumer spend.
I would say when we think about the macro conditions and the potential for a recession, we think about it across both sides of our marketplace. So, Brian would tell you that he founded the company at the height of a recession over 10 years ago when he and Joe needed to find income to pay rent. And so, when we think about that side of the equation, we would say anytime is a good time to start hosting because there’s great economic empowerment that you can derive from being a host. But when the macro conditions are bad, it’s even a better time to start hosting. And so, from that perspective, we think that there’s certainly not an upside to having poor economic conditions. But from a host perspective, it does give us incremental opportunity to really share with prospective hosts the benefits of coming to Airbnb and starting hosting.
On the consumer side, it’s a different equation. Obviously, the prices on our platform, as well as across all of hospitality have gone up quite dramatically over the last couple of years. And so, one thing that we look at to really engage, are we continuing to be a good value proposition and price competitive? Just looking at the average ADRs on our platform compared to comparable hotel ADRs and what we find is that, historically, there’s been a huge value gap, meaning that the value derived from an equivalent or the same size urban Airbnb listing has historically been materially higher than the average ADR when you look at a like-for-like market comparison.
And what we see today is that there still continues to be that gap, despite the fact that ADRs on our platform have risen. And so, as we think about kind of the go forward, to the extent that there’s pressure on consumer spending, we believe we continue to add or provide considerable value for the costs as compared to other accommodation providers.
The other thing that’s important to note about our platform is that there’s just such a huge diversity of offerings. So, you can come, choose your budget, and maybe what you get for that budget has changed, but there’s still a very broad range of prices available on Airbnb that we think provides a nice cushion on the consumer side as we think about what might happen during a recession.
Mark Mahaney
On that first point, the ability to keep growing supplies really key, I’m sure, for your business and it’s super sensitive for investors too. Have you seen signs that in slow growth markets that you’ve seen more people willing to get that side hustle to start listing their properties? Like, is there enough evidence that you’ve seen over time that bad, tough economic conditions lead more people to become hosts? Is that theory? Or do you have facts behind it?
Ellie Mertz
I would say we’ve seen the kind of corollary, which is where there is demand and where guests are looking for Airbnbs, the supply grows accordingly. So, that’s what we’ve seen vary dramatically over the last couple of years as demand on our platform shifted, in particular, to non-urban markets, that’s where we saw a big surge with regard to supply acquisition. And we’ve seen similar trends with regard to urban coming back online and returning to growth. So the urban supply has followed the urban demand.
Mark Mahaney
That point about the gap with hotels. So, your point is that you think the value prop is priced at a material discount to hotels or something like that. And so, the extent that people during tougher economic times are going to still want to travel, but travel more cheaply, that’s a benefit to you?
Ellie Mertz
Yes. So, we’ve looked at it through time. And the way we try to do a comparison points to hotels is not just look at our global averages. It doesn’t really tell you anything. What we tend to look at is, what is the like-for-like pricing within the same urban market? So what would the average – for example, average hotel price be in, say, Atlanta relative to the average one or two bedroom listing in Atlanta, just to use that example. And what we see over time is that there has been a bit of compression as our prices have risen, but there continues to be a meaningful value gap, which means that consumers can find great value on Airbnb.
Mark Mahaney
Can you talk about the travel environment today? So, I think I saw on the paper this morning that Labor Day weekend, per TSA…
Ellie Mertz
Taking my industry data point.
Mark Mahaney
I’m sorry. Per TSA data, this was the first holiday that’s actually surpassed pre-COVID Holidays per TSA in terms of the amount of travel. And so, the setup on this question is, I think people sort of assume – the market may have assumed that travel peaked in July, August, and now with – no recessionary impact, but now it’s coming – and now travel demand is coming down. The Labor Day data doesn’t seem to suggest that. What are we doing here? Are there clear signs that travel demand is softening?
Ellie Mertz
Another good question. I think, just to set the stage, I’d like to like backup to say what has happened in travel over the last couple of years. I think if you look at the broader industry, this Labor Day data point is important because it’s saying, overall, are we getting back to where we were in 2019 and beginning to see real growth.
And the contrary history of Airbnb over this last couple of years is that we’ve returned – several quarters ago, we returned to 2019 levels and now are seeing compounding growth. It’s important to put that distinction out there, to give you a sense of kind of where we have been in this recovery relative to the rest of the industry.
Just to put a point on that, if you look at our last quarter results, our nights were up 24% relative to 2019. And more importantly, the spending on our platform was about 70%. So 70% more consumer spending on Airbnb as of Q2 as compared to the pre-COVID period. And so, what that tells you a little bit about is there was the travel rebound of the century, as we call it, and we did see it play out. And where we are today, we’re seeing nice, stable compounding growth. I think that second piece is really kind of different than what people have been looking to see in terms of the tea leaves of consumers’ sentiment and potential impact of a recession.
If you go to our comments from the last call, we shared there has been a little bit of volatility month to month. But more broadly, our Q3 outlook was for stable growth in the current quarter on a year-over-year basis as compared to Q2, which I think gives you a sense of at least what we’re seeing on the continued strength of, one, people’s desire to travel, and second, their desire to travel on Airbnb.
Mark Mahaney
That Labor Day data point wasn’t too surprising to you? How about that as a context question, like that highest holiday season?
Ellie Mertz
No. It shouldn’t be surprising. Like, we should all assume that travel is going to get back to where it was before and return to growth. We’ve seen that on our platform for several quarters. And I would say the broader industry is catching up because people want to travel.
Mark Mahaney
I think one of the issues maybe with the Q3 outlook was we had such a huge, whatever, the biggest travel recovery in the century or something like that. So, may have [indiscernible] a little bit the Q3 comps because there was so much earlier demand. So maybe the thoughtful way to do it is to look at the Q4 outlook. So what did you say or what can you say about what the early Q4 demand is like and how that looks with prior periods?
Ellie Mertz
Obviously, I can’t Q4 outlook, but what I can say is what we shared on the earnings calls that we’re seeing very strong demand for Q4 when we look at our backlog. So, looking at how many nights have been booked at a certain point as compared to a prior period, seeing very strong growth for Q4, stronger than Q3. And I think what that tells you is a couple of things. One, people are eager to get their trips booked. So, the lead times have come in relative to prior periods. I think also, it’s a response to the pricing environment, guests are eager to book out further in advance, so they have the widest selection of quality and pricing that they can search from.
Mark Mahaney
Let’s switch and just talk about ADRs because you mentioned those kind of that 70% growth in revenue or bookings and the 24% growth in room nights. So, clearly, there was this massive increase in ADRs. And I think it was something like 40% versus 2019 levels in Q2.
Ellie Mertz
Yeah.
Mark Mahaney
So, just talk about the sustainability of this because I think there are investors who think that you’ve had these massive tailwinds to ADRs for a variety of reasons. Is a mix shift – the higher ADR markets have really recovered dramatically, but then going into next year, you’re going to have this mix shift towards lower ADR markets and some of this massive – I don’t know if inflation is the right word, but inflation in ADRs that we’ve seen in the last six to nine months just isn’t sustainable, we’re going to have this big ADR Reckoning in 2023, just talk about that.
Ellie Mertz
Let me just give some context in terms of what has happened to our ADRs over the last two years. When the pandemic hit, what we saw was a massive business mix shift towards effectively all higher ADR segments. So, North America was the strongest. North America has the highest ADRs. Non-urban markets are the strongest, also the highest ADRs. And so, material business mix, that was the sole initial driver of all of the ADR appreciation that we had seen.
A year ago, what we started telling the Street was that you should expect some of this business mix to regress, as we saw APAC come back online, EMEA return to growth, there would be this business mix normalization, probably not to 2019 levels, but there should be some movement back. And the fact of the matter is that we have seen that movement back and its impact on ADR, but it has been more than offset by real price appreciation. So, that is the piece that every quarter for the last year has really – I wouldn’t say surprised us, but has certainly been higher than we would have anticipated. And it has more than offset the business mix shift back as well as the FX headwinds that we have seen. So, for the go forward, we continue to forecast quite accurately the various impacts of business mix shift. It’s that second component, the price appreciation, that is, frankly, a bit more difficult to forecast.
What I would say is that we haven’t been managing our business around the maintenance of these very high ADRs. Obviously, the unit economics of our business are extremely strong across a wide variety of ADRs. And so to the extent that they moderate next year and beyond, we’ll be managing that.
The other thing I should note is that a lot of the lower ADR nights that could come back online, like APAC, for example, would be effectively all accretive, in that part of the reason that the ADR is up from a business mix perspective is that there’s this dominance of North America and EMEA. We would love to see APAC recover and with that see some downward pressure on ADR because that’s a big portion of our potential future market that continues to be very depressed relative to 2019 as compared to all the other regions.
Mark Mahaney
Two things. You said, the business unit economics would be very strong across a range of ADRs. So, do I interpret that as – the wonderful thing about Airbnb are these really high margins that you’ve had, roughly 30% EBITDA margins and we kind of think you can go north of 40% on that, but that’s our call. Those margins aren’t as ADR sensitive as maybe the financial markets think?
Ellie Mertz
I would say our revenue and our margins are absolutely sensitive to ADRs. My point is, if you think about – let’s just back up to where we were at the time of the IPO. There was no assumption that we would be at ADRs of this level and we were managing multi-year plan to get to the long-term margins under the assumption of lower ADRs. So, as we think about the go forward, you should expect, to the extent that ADRs do moderate, we will be working to manage that through the P&L in terms of continuing to optimize our variable costs, maintaining very high marketing efficiency and managing our fixed expenses very closely.
Mark Mahaney
I’m sorry, just so I got this right. So, ADRs do come down next year? I just made that up. EBITDA margins hold?
Ellie Mertz
I’m not going to make a guide for 2023.
Mark Mahaney
That was a hypothetical question,
Ellie Mertz
Thank you. My point is, they’re good margins at lower ADRs. And we’re going to manage to both growth and profitability over time, even if ADRs come down a bit.
Mark Mahaney
That’s your point, that you were going to get to the 30% margins at lower ADRs.
Ellie Mertz
That’s exactly right. Just to double click on that, the guide right at the time of the IPO was that our long-term EBITDA down margin target would be over 30% at the ADRs at the time without any incremental monetization. So, just through managing our operating expenses. And so, what you’ve seen over the last couple of years is we’ve gotten there, quite candidly, much quicker than we would have anticipated. So, the business recovered very quickly. We have been very diligently managing our cost structure. And then third, we’ve had this tailwind of ADRs. So, from 2019, pre-pandemic, we were saying negative 5% EBITDA margin. And last year, we were at 27%. So all of those things have lined up to deliver this massive EBITDA margin expansion. The ADR was the one piece that is a kind of unexpected, nice tailwind. And it’s something that, to the extent that it moderates, we’ll have to manage against.
Mark Mahaney
And of those three things that drove the ADR expansion – so scale, ADRs, and then the third one was cost efficiencies – that kind of surprised you how quickly EBITDA margins could ramp, so double click on that, the cost efficiencies. Like, versus three years ago, pre-pandemic, where did the cost efficiencies – or where are they most striking to you?
Ellie Mertz
It’s really EBITDA and the P&L, right? So, when we provided the outlook at the time of the IPO to get to those long-term margins, it really was contingent on being thoughtful and carefully managing the P&L from top to bottom. It was the variable cost we focused on, incremental efficiencies of our use of AWS, our payment processing costs, as well as all of our operations and support. From a marketing efficiency perspective, if you followed our financials, you would note that there was a really step down sea change in terms of the marketing intensity between, say, 2019 and the period that has followed. And that was really a strategic change in terms of how we manage our marketing.
We, back in 2019, realized that – we believed we have the strongest brand in travel and so we should be investing behind that brand, as opposed to competing via Google against a bunch of – buying every single transaction. And so, we pivoted at the beginning of 2020 pre-pandemic to reduce our overall marketing intensity and focus it more on brand investments. And the thinking there was, again, because of the strength of the brand, we had the opportunity to put money behind that brand and to support the consistently very high direct and unpaid traffic that we maintain.
So, today, it’s been the case for some time that 90% of our traffic is direct and unpaid, which gives you a sense that we don’t need to be spending at the level of other travel companies to buy each of our transactions. And as a result, we’re able to have much less marketing intensity on the P&L.
Mark Mahaney
If this helps you, I would describe your marketing as – prior to the pandemic was slim fast and then you went to ultra slim fast. So if that helps.
Ellie Mertz
This is like a dated reference.
Mark Mahaney
All right, let’s keep going. What about on the consumer side? So, the next couple of questions get to this ability to sustain premium growth. This has been a premium growth company. Can you really sustain it? And there’s been a couple of features just on a consumer side, and I’m particularly interested in categories. And the question is, OTAs have been wonderful businesses at executing against travel demand. Could Airbnb actually create travel demand and can things like categories do it? And, of course, when you launched it, we all on the Street want to see it next quarter. But I think it takes a while. So, just talk about your ability to generate demand, to actually expand the demand by things like I’m Flexible categories, maybe there are other things you think that are just on the consumer side that can really sustain or energize growth better than maybe the market thinks.
Ellie Mertz
Sure. Let me just talk a little bit about the May release because you mentioned some of the things that we released in our product release back in May. The first thing I should note is that when we think about product innovation, we really are trying to design for the long term. We’re trying to anticipate where guest behavior is moving and get ahead of it to support it. And that’s very much the case with our I’m Flexible tools as well as categories.
So, to give you a sense of kind of what they are and what they mean for the business, I’m Flexible and our category search is really our attempt at redefining – making a paradigm shift in terms of travel search. So, if you think about the last 20 years, when you’ve gone to make any kind of travel purchase, you come with a couple of pieces of information. You come with the date you want to travel, the exact place that you want to go and you probably come with how many people you’re going to travel with. And no matter what site you go to, it is the same search experience. Very specific terms and very specific results.
And so, as we think about kind of the differentiators of our product, we want to move the search paradigm to be a bit more exploratory, to do a couple of things. One, allow us to merchandise and highlight what is the core differentiator for Airbnb, and that’s our unique supply. If you have a ton of very similar hotel rooms, it’s a very different search experience than if you have unique listings all over the world that are in interesting categories and really are an opportunity for discovery. And so, the first objective there is really highlighting the differentiator.
The second is using merchandising to better distribute demand where we have supply. And we think that’s also a big kind of both unlock for our business, but also a differentiator.
The third output of that is really moving the guest experience on Airbnb to further up the travel planning journey, if you will, to inspiration. And we think we’re very uniquely positioned to do that, given the depth and breadth of the content.
When we think about I think your more specific question, Mark, is, like, well, what does that do for the business and when am I going to see it? And I started with the comment that our product development is really focused on the long term, I would say. If we just look at those features, I’m Flexible, and categories, the short-term benefit is you see huge engagement with guests. So, a good portion of our traffic is using this guest search flow and exploring new places. And what we’re seeing is that they explore a broader range of destinations and dates, which is really the intended impact of the product. That’s the short term.
Over the long term, I think it’s really the objectives that I mentioned. It’s really reinforcing our differentiator, making sure that, when people come to Airbnb, they know that we are providing or we are the only place to find the unique content. And as a result, they come to us earlier and really are inspired to find new and interesting places as opposed to coming with a set destination in mind.
Mark Mahaney
Is it possible to already see evidence that you’ve seen more inspirational activity on Airbnb because of some of these features on the consumer side?
Ellie Mertz
I think you see it in terms of how people search. So, again, there’s a broader range of destinations that people are engaging with as well as a broader range of dates as compared to the kind of typical search paradigm. So, yes.
Mark Mahaney
Let’s go switch to the supply side. I think there’s debates in the financial markets there about sustainability of these margins, sustainability of growth, what happens to the business when ADRs don’t grow as quickly as they have been? And then, it’s the supply. And the concern is, I don’t know, it’s like 6 million listings, I forget, but it seems like the number hasn’t really been able to grow that much. How much more possible real estate is there in Lake Tahoe on a July 4 weekend or in Montauk on a July 4 weekend? So just talked about the ability to keep growing supply.
Ellie Mertz
A couple of things here. One, yes, a kind of leading question for investors that we’ve gotten since IPO and, frankly, before the IPO and one data point I just provide that we shared in our last earnings letter is that if you look at the growth of our active listings at the end of Q2 as compared to 2019, who was up almost one for one with our nights growth. So, nights growth was a 24%. And I think total listings growth was 23%. So there has been – it doesn’t always need to be a linear progression. But I share that data point to somewhat debunk the theory that we’re not growing supply quickly enough.
The second thing I would note in terms of how you phrase the question is, yes, there are going to be markets, Tahoe, Montauk, whatever the case may be, where there are going to be supply constraints. We see them – you see them every summer. If you try to find a place in Tahoe to book for July and June, you’re going to be a little SOL.
And I think the beauty of our platform is, with these new features and with the real depth and breadth of listings that we have, we have the opportunity to take demand and more better distribute it to places that there are great listings. So, we think of the example of Tahoe, if a consumer is looking to just have a mountain lake getaway and they want to drive somewhere in California, we have thousands of listings that will meet that need, but without a new search paradigm, they may not find them because they’ll come with a very specific idea in mind of I want to go to Tahoe. And so, I think one of the biggest levers at our disposal is this redistribution of demand to the places we have supply.
I would say more broadly where we assess kind of where we are in terms of the overall supply journey, we would say we’ve only scratched the surface. So, you mentioned the supply numbers. It’s over 4 million hosts, over 6 million active listings, and we really think that’s just getting started. And so, when we develop our product roadmap, it’s really with the thought in mind of what do we need to be doing to recruit and unlock the next generation of hosts? And so, the way we put together our roadmap is to look at what are the obstacles people tell us they have to consider hosting? Do they think they don’t have a place that’s going to work? Do they think it’s going to be difficult? Are they worried about strangers? Are they worried about property damage? And so, we look at that list of obstacles and really have defined our product roadmap to hit at those obstacles, resolve them or lessen them.
And you saw that very clearly over the last couple of years in terms of, one, we’ve done a lot of brand marketing targeting hosts and the intent there is to really change the consideration set. And we’ve seen that in terms of the perceptional changes from hosts or prospective hosts that have seen our brand campaigns. Second, we’ve completely revamped the onboarding process for our hosts to make it easier and quicker. We’ve launched an Ask a Super Host program, which allows a prospective host to get in contact and actually get their questions answered by someone who does host and is very passionate about.
And then, we launched Aircover for Hosts back in November, which is comprehensive property damage and liability insurance, as well as a bunch of other protections for hosts. And that’s really targeting the concern of what happens if something bad happens in my property, which is a very rare incidence, but we need to make sure that both existing and prospective hosts know that they are covered on Airbnb and that our coverage exceeds that offer by anyone else.
Mark Mahaney
Is one of these things, do you believe, has it or will it really move the needle when it comes to hosts, especially that Aircover? I would imagine you had your early enthusiastic adopters as hosts. But, yeah, I could see how you get into the next range of people, it’s like, do I really want strangers in my house? Is it really worth the hassle? Is the Aircover – is that one of those things that really breaks through that?
Ellie Mertz
I think the Aircover is important. I think it’s one of a series of things that we’ve done and will do to increasingly kind of break down that consideration gap.
The interesting thing about Aircover for Hosts is one of the things that we did was we just made it like very simple to pursue a claim. So if you’re a host and a lamp gets broken, we wanted to make the claim process quick, seamless and get that check to you or that payment to you as quickly as possible. And what we found from improving the overall service levels was that NPS for hosts who have damage, so it’s not the greatest experience, but nonetheless, based on the improvements that we offered on the protections in the service, their NPS went up 70 points. Like, we’re making sure that hosts know that we are there for them, and it’s really important in terms of retaining the great hosts that we have as well as attracting the next generation.
Mark Mahaney
Let me ask three more questions and we’ll open it up. Airbnb has always struck me as a highly innovative product, these feature rollouts, and I know there are a lot of tweaks. Tweaks add up and some of them are bigger than just tweaks on the consumer and the host side. I think it’ll take time, but I think they can be really material. Like, what are the next things that you could try to solve? I’m sure the service isn’t perfect for consumers and hosts. If you could improve things, what would it be? Like, what’s next on the product development roadmap?
Ellie Mertz
Well, I can’t pre announce our releases. I think it’s safe to assume that we will, on the host side, continue to go through the list of challenges and just kind of work away at them to ensure that more people are considering hosting and those who consider get through the listing flow, stay with us and become successful hosts. So, that’s a, I would say, just an ongoing product journey to make sure that we’re working away at those concerns.
I think on the guest side, there’s really a desire to make the service feel hosted and not just be hosted by your specific host, but to make sure that the service is one that is high on hospitality. And so, working through continually improving the overall guest experience, which presumably should lead to more services in the future.
Mark Mahaney
As we look for what I call GCIs or growth curve initiatives, there’s a couple of these things that were kind of up there prior to the pandemic and then, for a variety reasons, were downplayed, Plus, Luxe, Experiences. Like, as we get out, hopefully, and economic normalization will get beyond the pandemic, which of these areas are going to be top priorities for you to start investing in again?
Ellie Mertz
I think to answer that question, I’d just like to step back and say, like, what did we do during the pandemic relative to those various sub-segments. So, back in Q2 of 2020, when our business really went to zero over the course of a month, we had to make a bunch of hard choices. And the hard choices involved recentralizing our org structure and really focusing on our core business. And as a result, a lot of these initiatives that had appeared in 2018, 2019, we just deprioritized, with the thinking being that, to get through the pandemic, we needed to focus on our strongest core asset, which was our core business.
That has been, I would say, a very successful strategy for us over the last two years, just being much more focused in terms of our overall corporate roadmap, the releases, et cetera. We’re, frankly, much stronger and more efficient for having done that, that restructuring and that centralization.
When we think about these adjacent segments, really, the focus is how do we leverage the overall platform, so that we are creating big scale bets as opposed to adding very kind of subscale adjacencies. So, when you think about things like Plus and Luxe, the effort really is to have a broader range of high quality listings. And so, you should see that in the overall product as opposed to kind of sub-brands relative to the broader singular Airbnb brand.
Mark Mahaney
And Experiences?
Ellie Mertz
Experiences, we continue to be very bullish on. As we’ve said many times, the pandemic was not the time to really put fuel on that fire with regard to scaling that business, but it is a focus in terms of future years, attaining the scale that we aspire to there.
Mark Mahaney
Will it be a major investment focus for 2023?
Ellie Mertz
It will be more so than 2022.
Mark Mahaney
Okay. A CFO answer. All right. Last question for me, take rate. So, one thing that’s been happening in travel is all the travel results have been Googlefied. So what I mean by that is that booking – and it’s been very – in a way, if I can use the term host friendly, they’ve allowed location managers, hotels the ability to pay to show up higher in the search results and there’s a way to do it. I hope that’s beneficial to consumers too. But Airbnb hasn’t done that. And it certainly allowed booking and Expedia to extract better economics, more margin, more revenue. Is that something you would do? Is that something that’s – or is that just anti-Airbnb?
Ellie Mertz
I don’t think it’s anti-Airbnb. I would say it’s something that we consider regularly. I think the nuance around sponsored listings for Airbnb is that the majority of our supply are individual hosts, who only host on Airbnb versus many other platforms that have predominantly cross-listed listings that are predominantly property managers. And so, if you think about the host that wants to pay for sponsored listings, it is inevitably going to be more property managers, who are really making a business of their rental properties. And so, as we think about how to roll that out for Airbnb, we’ll just need to be extremely nuanced, so as not to effectively prioritize what is not differentiated, the property managers on the platform.
Mark Mahaney
So it sounds like something you may not do. You could do, but you have to be very careful how you roll it out.
Ellie Mertz
We would have to be just nuanced in terms of ensuring that our individual hosts are not disadvantaged.
Mark Mahaney
Okay. All right. We’ve got four minutes. Any questions. And, Spencer, could you pass the mic to the guy right behind you?
Question-and-Answer Session
Q – Unidentified Participant
A question on the broadening of the Experiences, so that – can you explain a little bit how that works? Say for example you’re looking for Tahoe in August like you were saying, does it say Tahoe is looking really busy, maybe you would like to go to Donner Lake? Or how does it kind of play itself out? And what goes on behind the scenes to make it happen?
Ellie Mertz
The search paradigm, if you come to either the app or the website today, is by default organized by categories. So instead of dropping in Tahoe, you would drop in lakefront or mountain cabin, or one of the – I don’t know how many categories that we have. And you can search based on that category across whatever map that you choose. So, it’s giving you visibility to all of those listings that meet the category that you want, even if you didn’t know the market to look for them in. So, say you weren’t familiar with Donner or Arnold or Shasta or fill in the blank, the categories allow us to extract from the thousands of listings at any given geo for the category that you’re looking for.
Unidentified Participant
[indiscernible].
Ellie Mertz
Yes, you can.
Unidentified Participant
[indiscernible].
Ellie Mertz
Yes. I was just answering, Mark, on – what we’ve seen is that there’s huge engagement. So lots of activity in terms of both using the category search feature, as well as using all of our I’m Flexible features that have been in the product for quite some time. And what we see is people doing the behavior that we would anticipate, which is they’re looking across broader destinations, a little more flexible about dates. It’s like I wanted to go for a week, I don’t really care what week it is, it’s sometime during the summer, we’re seeing the guests using the product in a way that we intended. Very encouraging really.
Unidentified Participant
Thank you. Craig [ph]. Have you seen anything regarding the US dollar strengthening against the euro in the Europe business?
Ellie Mertz
There definitely is a material FX headwind that you see in our GAAP results. In terms of the cross border impact of the dollar change, I would say it’s somewhat modest because, if you think about – let’s just think about like the different use cases, a European traveler going to the US is now disadvantaged based on the strengthening of the dollar. It’s a relatively small segment for us. US destination is predominantly domestic. So, there’s a small impact there, but it’s not a huge segment of the business. Meanwhile, for European travelers, the vast majority of their cross border is within the Euro zone. So there’s no impact there. And then, obviously, the US going to Europe, it’s a great time – I was in Greece for a month this summer, all Airbnbs, it’s fantastic, great pricing. I’m not quite sure if we’ve seen a boost in that or not, but it is obviously a good corridor right now.
Mark Mahaney
Any last quick question? And if not, I’m going to bring this to a close. So, Ellie Mertz, VP of Finance at Airbnb, thank you.
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