Airbnb, one of the biggest unicorns with a $30 billion value, finally turned a profit in the second half of last year and expects to make a profit this year. These two factors place the short-term home-rental marketplace on strong footing if it pursues an IPO as early as this year, according to a story in Bloomberg. Airbnb's profit is rare among major unicorns such as Uber, which lost an estimated $3 billion in 2016.
Airbnb vs. Uber
So why is Airbnb flourishing and in the black while ride-hailing company Uber is in the red?
There are several reasons. Airbnb is simply more cost-effective in maintenance and in the fees it charges than Uber, said Bloomberg News. Airbnb takes a small fee from hosts in addition to taking in a commission of only six to 12% from guest fees. Plus, Airbnb does not rake in expenses when it comes to cleaning and maintaining properties. Last November, Airbnb became ever more entrepreneurial when it launched new customized tours for travelers seeking to soak up the indigenous sights and sounds of the local scenes, as illustrated by mushroom-collecting expeditions and guided tours of neighborhood art studios. (For more, see also: How to Make Money With Airbnb: Risks & Rewards.)
Uber, on the other hand, was so fixated on conquering China, a market nearly impenetrable to outsiders, and squashing local rival Didi Chuxing, that the exact opposite occured. Last summer, Uber finally conceded defeat and sold its China operations to Didi for $35 billion. (For more, see also: Uber to Sell Chinese Business to Didi Chuxing.)
And with homegrown competitor Lyft gaining in the cutthroat U.S market., Uber, the world's most valued startup, has been "consumed with keeping fares low" in order to retain its edge, added the news outlet. Consequently, Uber has been racking up losses while Airbnb's revenue surged more than 80% last year, noted Bloomberg News, citing a source close to the company.
Revenue Soars Despite Legal Scrapes
Airbnb's success in 2016 is even more remarkable since it was battling cities like San Francisco and New York, which passed laws limiting the number of nights hosts can list their homes. And to make the Uber brass flush with jealousy, Airbnb still, incredibly enough, has most of the $3.1 billion it raised, claimed that same source when speaking to Bloomberg News.
But that may not be for long as Airbnb is reportedly in talks to acquire payments startup Tilt for about $50 million, unnamed sources divulged to the news outlet.