Working from Wherever


  • Intro
  • Real Estate Market
  • How to play the rental real estate market?
  • Airbnb ($ABNB)
  • Bull Case
  • Bear Case
  • Catalysts
  • Key Metrics/Valuations
  • Conclusion


Vacations and travel are back. Hard.

Everyone and their cat have decided that this is the year to make that trip to Italy, or Vienna, or even just over the river and through the woods to Grandma’s house. Wherever you are going, vacation is back on the menu! And with that comes a need for the perfect mountain cabin or hut on the beach. Heck, even a big van in the parking lot near a beach would be enough after these last two years!


A new survey by vacation rental platform Vacasa found that 63% of Americans are planning to travel this summer, with destinations near the water or by national parks being the most popular, at 57% and 36%. It also found that three out of four travelers surveyed are going to stick to domestic travel this year. (Source: Travelpulse)

The World Travel and Tourism Council is forecasting that US travel and tourism this summer is expected to exceed pre-pandemic levels by 6.2%, accounting for nearly $2 trillion in US GDP.

Even if vacation travel is not on your radar, given the rise in remote worker capabilities over the last few years – more workers than ever are traveling around the world to work in a different city. 

The flexibility afforded many workers nowadays means that whether you take that Zoom call in your basement, the nearest Starbucks, or from an Airbnb in Budapest – as long as you can make your standard video call small talk, nobody cares where you are!

With this increase in travel for vacation and remote work, it would be worthwhile to consider looking into ways that we can invest in this market. There are many ways to play into this – airlines, hotels, resorts, the list is actually rather long. But for this edition of Insiders, we are going to focus on the real estate side – specifically, short term rentals and vacation property.

Real Estate Market

Now you might be expecting to see something about how great it would be to join us on this Timeshare journey – just imagine all the fun for you and the family if you had access to hundreds of properties anytime during the year (as long as you booked the place 10 weeks in advance, and you have enough points, and you are in the Platinum Tier…). 


Timeshares are not our investment focus here. While those sales pitches may be worth the 3 day resort vacation or a free meal at your local steakhouse for some of you, that is not what we are interested in here.

Why does an increase in travel mean that specifically, the vacation rental market will benefit? 

Let’s go back to Economics 101 – Supply and Demand. Right now, there is pent up demand for vacations and travel. The way the world has been over the last few years, many people have decided to forego their vacation plans due to concerns over safety or to save their money. 

Well, now that most of the world has opened back up, everyone is ready to get out and explore! Demand has gone straight up – people want to travel and they want to go see the beautiful places of this world.

If demand is up, that means either supply will need to increase to meet at some equilibrium price, or prices will skyrocket for the current supply in the market. Meaning either a bunch of new houses will need to be built to serve as rental property, or prices of current rental property will go up because everyone wants to get in tomorrow. 

Either way, this feels like a win-win scenario for the travel and vacation industry - they build more houses to support the traveler and gain more travelers willing to pay, or they raise prices and current travelers pay a premium for that 1 bedroom bungalow by the beach. 

How to Play the Rental Real Estate Market?

There are many ways to play in the real estate market, many of which are not available in public markets. And while privately investing in vacation property may be an option for some, it can be much more complicated to invest in and even more complicated to get out of. 

With that in mind, we are going to focus on one company that has been positively impacted by the “return to normal” we are seeing and the expected boom for vacations and short-term rentals for 2022 and beyond: Airbnb.


Airbnb ($ABNB)

You can think of Airbnb like this: your best friend lives in Toronto, and you desperately want to visit this week only, but he’s going to be out of town the whole time. Instead of canceling your trip, he gives you his entire apartment to live in for the week! He charges less than a hotel and just asks that you clean up after yourself. He even left a binder full of his favorite restaurants and local activities!


Airbnb operates a platform that allows users to access short-term rental property in 220 different countries ranging from private rooms to entire houses. These properties are managed both by professional services and individuals who are looking to make a few extra dollars with their spare rooms or second houses. The platform not only provides users a homier experience than staying at a hotel, but it also allows users to list their excess space to renters and travelers.

Airbnb was one of the first movers in this space, recognizing that not everyone is interested in staying in a hotel when they go on vacation. Many people like the feeling of being at home in another city or country, rather than stuck in a tight space with 1,000 of their “closest” friends.

Airbnb has raised over $9.9 billion since the company was formed in 2008, ending with a $3.49 billion raise in its Initial Public Offering at the end of 2020. Today, the company is valued at $77 billion.

Even though they have yet to become profitable, that hasn’t stopped people from using the product constantly – in 2020, Airbnb had over 193 million nights booked across the globe, 88 million in North America

This number skyrocketed to over 300 million nights in 2021. In fact, Airbnb is estimated to grow their gross bookings annually by a 26.7% CAGR (Compound Annual Growth Rate):

Source: Factset

Bull Case

  • Airbnb has accumulated over 4 million hosts and served over 1 billion guests since 2008, a foundation that is expected to continue to grow as they expand vertically into the experiences market, utilizing this already solid foundation to build upon.
  • Travel is not restricted to just vacations – the rise in remote work has also added to the increased bookings for Airbnb as some workers are taking “remote work” to a whole new level. This has been an added driver to booking growth and is not expected to slow down in 2022 and 2023.
  • Airbnb has a solid balance sheet position, maintaining a net cash position with only $2 billion of 0% convertible debt set to mature in 2026. This, combined with an expectation of reaching profitability in 2022, along with generating solid free cash flow between 2022-2026, puts them in a solid position to weather most storms and continue growing longer term.
  • Airbnb announced a permanent “work from anywhere” policy for employees, driving employee growth and engagement so much so that they saw over 1 million unique visits to their jobs page shortly after that announcement.
  • Airbnb currently has a 74.6% market share in the homeshare industry, followed by Expedia’s VRBO product at 20.8%. Their foothold in this space has such a wide margin ahead of competitors that most developments and improvements will be captured almost entirely by Airbnb as the industry improves and gains efficiencies.

Bear Case

  • Direct competitors like (BKNG) and Expedia (XPE) are actively pushing to further improve their foothold in the vacation rental/homeshare space. Given their already large position in general travel and vacations, this competition could negatively impact Airbnb moving forward.
  • Travel is naturally a cyclical industry – as the economy improves, more people will travel for leisure and as the economy contracts, less travel happens. With fears of an economic downturn on the rise, even as COVID fears wane, Airbnb faces potentially significant headwinds.
  • Airbnb has shuttered its business in mainland China due to regulation and competition that they have been unable to navigate. This could potentially impact their long-term growth play as there are only so many locations in the world and China is an extremely large market. It also could mean that when faced with heavy competition and lower prices, Airbnb opts to give up and leave the market instead of adapting and trying to improve its product offering.
  • Regulations and rules surrounding short-term rental property are variable based on location. They could cover everything from “there are no rules”  all the way to “fill out this 100 page application, get this specific insurance policy, and pay a fee to use your home as a rental.” With those types of unique barriers, growth can be stymied easily in many markets. 
  • Complaints also create a bad name for Airbnb as many fear the rise of short-term rentals in their neighborhood taking away the culture and local vibe owners were so attracted to initially.


  • 2022 will be a banner year for travel and will determine whether Airbnb is able to become profitable, or not. If they are able to handle the pent-up demand and navigate the looming fears of an economic downturn, it could provide a significant boost to their business and growth potential. 
  • 2021 has seen Airbnb post positive earnings for the first time in 3 years and if they continue on this trend towards positive Net Income for the year, investors will be even more inclined to play in this space.


Key Metrics/Valuations

Airbnb is covered by 39 different sell-side analysts and the consensus rating seems to be split between HOLD and BUY. According to Factset, this puts Airbnb in the Overweight Category at an average target price of $185 which implies a 12 month return of 52%.

Source: Koyfin

  • Current Price (as of 6/8/22): $123.77
  • Average Consensus Price Target: $185
  • 2021 Sales: $5.992 Billion
  • Cash & ST Investments:  $8.3 Billion
  • Debt: $2.4 Billion
  • NTM P/E: 58.4x
  • LTM Metrics:
    • EV/EBITDA: 102.1x
    • EV/Sales: 15.5x
    • P/S: 16.5x
    • P/B: 16.4x
    • P/FCF: 37.4x
    • FCF per share: 4.59


The pandemic has radically impacted the way people live their lives, but as things begin to return to a somewhat normal existence, service companies like Airbnb are poised to take advantage of the pent-up demand. 

Knowing that this demand is coming is the first step toward finding a play that fits your investment style. The next step is determining how exactly you want to play in this field. Airbnb currently dominates the Homeshare sector and appears well-positioned to take advantage of the coming travelers' storm, along with maintaining its position at the top of the leaderboard into the future.


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