Earnings Call Transcript - ABNB Q3 2025

Operator, Operator

Good afternoon, and thank you for joining Airbnb's earnings conference call for the third quarter of 2025. As a reminder, this conference call is being recorded and will be available for replay from the Investor Relations section of Airbnb's website following this call. I will now hand the call over to Angela Yang, Director of Investor Relations. Please go ahead.

Angela Yang, Director of Investor Relations

Good afternoon, and welcome to Airbnb's Third Quarter of 2025 Earnings Call. Thank you for joining us today. On the call today, we have Airbnb's Co-Founder and CEO, Brian Chesky and our Chief Financial Officer, Eli Mertz. Earlier today, we issued a shareholder letter with our financial results and commentary for our third quarter of 2025. These items were also posted on the Investor Relations section of Airbnb's website. During the call, we'll make brief opening remarks and then spend the remainder of time on Q&A. Before I turn it over to Brian, I would like to remind everyone that we will be making forward-looking statements on this call that involve a number of risks and uncertainties. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described under forward-looking statements in our shareholder letter and in our most recent filings with the Securities and Exchange Commission. We urge you to consider these factors and remind you that we undertake no obligation to update the information contained on this call to reflect subsequent events or circumstances. You should be aware that these statements should be considered estimates only and are not a guarantee of future performance. Also, during the call, we will discuss some non-GAAP financial measures. We provided reconciliations to the most directly comparable GAAP financial measures in the shareholder letter posted to our Investor Relations website. These non-GAAP financial measures are not intended to be a substitute for our GAAP results. With that, I'll pass the call to Brian.

Brian Chesky, CEO

Thank you, Angela, and good afternoon, everyone. I appreciate you joining us. I’m thrilled to report that Airbnb had another strong quarter. Our revenue grew by 10% year-over-year, reaching the upper range of our guidance. Adjusted EBITDA surpassed $2 billion, marking our highest figure in any quarter to date. Gross booking value rose by 14% year-over-year, and nights and seats booked increased by 9%. Both metrics accelerated in Q2, exceeding our expectations, driven by robust performance in the U.S. market and average daily rates. We are fostering this growth through four main strategies: enhancing our service, expanding Airbnb globally, broadening our offerings, and integrating AI throughout our app. I want to share some key updates on each of these strategies. First, we are improving Airbnb for our hosting guests. We understand that a better product leads to increased usage. Since this past May, we intensified our development efforts, implementing 65 major improvements intended to drive further growth. One significant enhancement is the introduction of Reserve Now Pay Later in the U.S., which has effectively increased bookings in Q3 and will be expanded more broadly next year. We have also upgraded our maps, addressing the issue of users leaving our app for external mapping services by adding nearby landmarks, public transit info, and restaurant listings, as well as various map views. This improvement is expected to enhance user experience and boost conversions. Additionally, our revamped cancellation policy now allows hosts to offer a new option where guests can cancel for free up to 14 days before check-in. All guests can cancel for free within 24 hours if they book more than seven days in advance. These updates are reducing customer service inquiries and increasing bookings. Second, we are expanding Airbnb into more global markets. Although international expansion is a multiyear strategy, we are already seeing positive results. In the past year, average nights booked in our expanding markets have grown twice as fast as in our core markets, with significant new user acquisition in key areas. For instance, first-time bookings have increased by over 20% in Japan and nearly 50% in India year-over-year. Third, we are driving growth by diversifying our offerings. In May, we began expanding Airbnb services beyond the initial launch of experiences. Guest feedback has been very positive, with service experiences averaging a rating of 4.3 out of 5 stars, while our core business boasts a rating of 4.8 out of 5. This strong feedback indicates growth potential. In Q3, nearly half of those who booked an experience did not have an Airbnb stay, providing additional motivation to use our platform. We are also scaling the number of high-quality service experiences, receiving over 110,000 applications from potential hosts, and the supply has nearly doubled since last quarter. We recognize that guests often book experiences to meet others, so we’re making them more social. Before booking, guests will be able to see who else is attending and where they're from. They can also message other guests they encounter during experiences. In the connection section of the Airbnb Profiles tab, guests can view the people they've met during experiences, making it easy to reconnect. This aligns with our goal of providing what guests want while enhancing community interaction. Outside of experiences, we are introducing hotels on Airbnb. While a small number of hotels were previously listed, we are now developing a dedicated hotel business. We initiated a pilot program in Los Angeles, New York City, and Madrid, partnering with boutique and independent hotels. This pilot includes new search filters, updated hotel displays, and room type selections, creating a product tailored for hotels. We are strategically recruiting hotels in markets where Airbnb options are limited. Finally, we are extensively integrating AI throughout the app. In the past year, we have established a foundation for a more intelligent and personalized Airbnb. We now have over a dozen AI projects underway, focused on creating a more tailored experience for guests and hosts, as well as making discovery easier. In Q3, we launched enhanced AI customer support, which features smarter and faster responses, enabling actions like canceling or changing reservations directly from a chat interface. This new feature, originally launched in the U.S., has cut the need for human agent interactions by 15%. We plan to extend this feature to more countries and languages in the upcoming year. Additionally, we’re developing AI-powered search to facilitate deeper interactions, allowing users to converse with the app about their needs and craft their ideal trip. We are utilizing AI not simply to engage users further on-screen but to help them connect with real-world experiences. As AI content becomes more prevalent, we believe people will increasingly seek genuine connections in the real world. A commitment to Airbnb signifies a belief in the value of authentic human connection amidst the rise of artificial intelligence. Now, I’ll pass it over to Eli.

Eli Mertz, CFO

Thank you, Brian, and good afternoon, everyone. I'll start with a review of our Q3 financial results and then I'll walk through our outlook for Q4. As Brian mentioned, Q3 was another strong quarter for Airbnb. Gross booking value grew 14% year-over-year to $22.9 billion, driven by strong growth in both bookings and price. Nights and seats booked increased 9% year-over-year, representing a 2-point sequential acceleration from Q2, primarily due to the strength in the U.S. In Q3, nights growth across each of our major regions remained steady or accelerated sequentially. Latin America grew in the low 20s. Asia Pacific grew in the mid-teens, and both North America and EMEA were up in the mid-single digits. Notably, we saw a meaningful acceleration in the U.S. from Q2 to Q3, in part due to the launch of our Reserve Now Pay Later payment offering. Now turning to our Q3 financials. Revenue for the quarter was $4.1 billion, up 10% year-over-year. In terms of profitability, we generated $2.1 billion of adjusted EBITDA, representing a 50% EBITDA margin. And finally, net income was $1.4 billion, while EPS was $2.21, growing 4% year-over-year. Net income was impacted by a one-time $213 million valuation allowance related to corporate alternative minimum tax credits due to the enactment of the One Big Beautiful Bill Act on July 4. On a go-forward basis, starting in 2026, we anticipate that the One Big Beautiful Bill will materially reduce our effective tax rate due to the preferential changes to tax on foreign earnings. Next, I'll turn to our balance sheet and cash flow. We continue to generate significant cash in Q3, delivering $1.3 billion of free cash flow. Over the past 12 months, we've generated $4.5 billion, representing a free cash flow margin of 38%. At the end of Q3, we had $11.7 billion of corporate cash and investments as well as $7.2 billion of funds held on behalf of our guests. Our strong balance sheet allowed us to repurchase $857 million of our common stock during the quarter. During the trailing 12 months, we have repurchased over $3.5 billion of our common stock, using approximately three-quarters of our free cash flow. We believe returning capital to shareholders is a key component of our capital allocation strategy, reflecting our confidence in the business and our commitment to delivering long-term value. As of the end of Q3, we still had $6.6 billion remaining on our repurchase authorization. Since introducing our share repurchase program in 2022, we've reduced our fully diluted share count by 8%. Now let's shift to our Q4 and full year 2025 outlook. As we start the fourth quarter, we are encouraged by the continued momentum. Despite more difficult year-over-year comps, we're seeing strength in longer lead time bookings, partly driven by our Reserve Now Pay Later offering in the U.S. The strength in bookings supports our positive outlook for the rest of the year. In Q4, we expect to generate revenue of $2.66 billion to $2.72 billion, representing year-over-year growth of 7% to 10%. This includes a small foreign exchange tailwind after factoring in our hedges. We expect our GMV to grow low double digits year-over-year, benefiting from a modest increase in ADR due to price appreciation and FX as well as continued growth in nights and seats booked. For Q4, we anticipate year-over-year growth of nights and seats booked in the mid-single-digit range. Last year, we saw a meaningful acceleration of growth from Q3 to Q4. Our Q4 2025 guide takes this tougher comp into consideration. On a year-over-two-year basis, we do anticipate a sequential acceleration from Q3 to Q4. On profitability, we now expect our full year adjusted EBITDA margin to be approximately 35%, up from the 34.5% floor previously shared. As we look forward to 2026, we're focused on maintaining strong margins while continuing to invest in growth initiatives. We will share more about our 2026 outlook on the next earnings call in February. In closing, our Q3 results demonstrate our disciplined execution across our strategic priorities as we continue to build a stronger company for the long term. With that, I will open it up to Q&A.

Operator, Operator

Your first question comes from Richard Clarke with Bernstein.

Richard Clarke, Analyst

I guess you've mentioned the Reserve Now Pay Later quite a lot during the prepared remarks there. Just what percentage of the acceleration in the U.S. has come from that? Any early signs of what cancellation rates might look like on those bookings or your expectations of what they might look like? And any other payment tools you can maybe bring out that might help drive an acceleration of bookings into next year?

Eli Mertz, CFO

Yes, certainly. Thanks for the question, Richard. In terms of the Reserve Now Pay Later offering, we launched it at the beginning of Q3. It is specifically something that has been offered to U.S. customers who are traveling domestically and are choosing listings that have a flexible or moderate cancellation policy. It is not offered to the entirety of the U.S. guest population. That being said, of those that we offer or provide the offering to, it is vastly popular. About 70% of people that we offer Reserve Now Pay Later take us up on that offering. Now to your question of cancellations, we obviously tested this product pretty extensively before launching it in the U.S. to ensure that the benefit of the incremental lift in bookings from the payment offering was not more than offset by increased cancellations. Yes, there are increased cancellations, but we're highly confident that the net impact of the product is a lift to the net bookings.

Operator, Operator

The next question comes from Eric Sheridan with Goldman Sachs.

Eric Sheridan, Analyst

As you look out over the next two to three years, can you talk a little bit about how investors should be thinking about the duration of execution and depth of investment needed to accomplish your goals with respect to international markets and improving sort of the density of the business beyond its core markets today?

Eli Mertz, CFO

Yes. Thanks for the question, Eric. We began our efforts around global market expansion really in earnest about two to three years ago, selecting specific markets to obviously take a more local approach. By local approach, I mean making sure that the product was appropriately localized as well as our marketing messages localized as well. I would say we've been quite judicious in terms of choosing the markets and ensuring we are having a comprehensive approach to make ourselves seem local and relevant. Each of them takes a bit of a different timeline. Our earliest expansion markets were in Latin America, Brazil being the first key market. In that case, we were able to achieve significant market share and continue to see incremental meaningful market share gains every year. Latin America is at the front of what is possible in terms of our global markets efforts. Other markets, like Japan, we focused on more recently. We began our efforts there about a year ago, particularly local marketing to make ourselves more relevant. I hope you've seen from the investor letter that we are making progress there. It's just earlier. The short answer is that each market will take a different amount of time, but we're seeing really good success in terms of those targeted markets, and we have remained consistent in our investments.

Operator, Operator

The next question comes from Justin Post with Bank of America.

Justin Post, Analyst

I'd love to hear an update on events and experiences. Is it contributing so far, and do you expect a bigger contribution next year? Additionally, for those who book these events, are you noticing better retention or any signs that it's enhancing the overall platform's velocity?

Brian Chesky, CEO

Yes, I can take that, Justin. Thanks for your questions. We are really excited about the progress of experiences on Airbnb since we relaunched the product on May 13 earlier this year. A couple of things we're noticing. First, a significant percentage of people booking experiences—about half—do not have an Airbnb stay linked to their reservation. For services, for instance, 10% of those individuals have never booked on Airbnb before. We believe this is attracting a new audience to our platform. Additionally, we think it encourages people to return to Airbnb even if they don't plan to book a home. We believe that services and experiences could eventually lead people to also book a home along with their service. The second point we are observing is local demand for service experiences. This product was primarily designed for travelers, but we launched Airbnb Originals, which are featured experiences provided by some of the most intriguing individuals in the world. In Paris, for example, 70% of Airbnb Originals are booked by locals. We believe we have created a product that appeals to residents in their own city. Regarding the timeline for this to generate meaningful income or revenue for the company, we anticipate it will take a few years. We're focused on refining our approach in a few key markets. It's important to note that although we operate in over 100,000 cities worldwide, for the first two years of our existence, the majority of our revenue came from just one city, New York City. While most marketplaces must grow city by city, we are taking that approach with service experiences, even though it’s a broad platform. Our initial focus is on Paris and Los Angeles, where we are seeing substantial traction. As these markets develop, we will expand this strategy to dozens more cities, eventually reaching hundreds. It may take three to five years for service experiences to become a significant aspect of our business, but I am very optimistic about their potential. In terms of retention velocity, it's still early to accurately assess, as we need about 12 months to effectively measure user retention on Airbnb. However, service experiences are an excellent way to promote home bookings. Previously, we only advertised our home product, but now we feature home service experiences in a single advertisement. This combined advertising method boosts bookings for both home and service experiences, making our offerings more unique and differentiated. We believe this creates a favorable situation for the platform.

Operator, Operator

The next question comes from Jed Kelly with Oppenheimer.

Jed Kelly, Analyst

Great. Just looking forward, and it’s good to see you're getting reacceleration in the U.S. How should we think about potentially layering on hotels more, especially in some of the markets where you're shut out?

Brian Chesky, CEO

Yes, I think hotels are a really promising opportunity for Airbnb. We’ve been a proud owner of the Hotel Tonight app for a long time. But we’ve always believed that the biggest opportunity for hotels is on Airbnb itself because we don't need to market hotels for people to come to Airbnb. We have billions of visitors a year. Airbnb is accessed by approximately 1.6 billion devices every year. There’s a huge amount of traffic in a city like New York, for example. There are millions of searches generated from that market. We approached hotels in New York City with some of the most interesting boutiques and independence and said we have huge amounts of traffic coming to New York City. The majority of people arriving on Airbnb would be open to booking a hotel if there wasn't a home available. We believe many of these individuals are using other apps to book hotels. If we added hotels to our platform with a best-in-class commission and a beautifully designed product page specific to hotels, we saw significant demand. These hotels were enthusiastic to participate. While we are conducting pilots in L.A., New York City, and Madrid, we are observing interesting momentum. If you type in New York City on Airbnb next weekend, you will see some of the hotels that have been listed, and they’re compelling offerings. We believe that while some trips might be better suited for hotels, many trips are better suited for homes. For urban markets, if you're traveling for business or require a plug-and-play experience, a hotel may be the better choice. However, if hotels aren't available, we can provide an excellent alternative. The hospitality market will serve as a complementary offering for Airbnb, particularly in areas constrained by supply. There is minimal cannibalization expected between homes and hotels as they cater to different audiences. Hotels will be fundamental in closing our supply gaps, and the interest from hotel owners confirms this potential. The famed challenge has always been bringing homes onto the platform but recruiting hotels tends to be far more efficient. This is why we are excited about this supplemental opportunity alongside our core business.

Operator, Operator

The next question comes from Lloyd Walmsley with Mizuho.

Lloyd Walmsley, Analyst

I wanted to stay on the hotel team and really just understand the long-term scope of your ambitions here. It makes sense that you're using this for backfill in areas where you don't have a lot of inventory in the traditional rental side. But do you see a path to really expand the hotel merchandising and booking experience beyond the backfill? We get the question a lot from investors like why would I go to Airbnb book a hotel? Is there a long-term case beyond the backfill?

Brian Chesky, CEO

Yes, it's a good question, Lloyd. I think so. I imagine that Airbnb in the future will be the best one-stop shop for travel. For us to achieve this vision, we need not just homes, services, and experiences, but a broader portfolio of offerings. Hotels will be one of those components. Our focus is primarily on boutique and independent hotels, as a large percentage of hotels are in this category, especially in places like Europe. Hotels have expressed interest in having another listing channel like Airbnb. For now, we are testing this strategy to ensure the hotel business is incremental. Over time, it could expand significantly. Our goal is to understand traveler intent. If a guest is traveling for business or has last-minute one-night accommodations, we should probably prioritize hotels for their needs. On the other hand, some people wish to have a more immersive local experience, ensuring they shouldn't see many hotel options. We envision a future with even greater personalization, as we refine our hotel offering and how we integrate them into our application.

Operator, Operator

The next question comes from Kevin Kopelman with TD Cowen.

Kevin Kopelman, Analyst

Great. Brian, in the past, you talked about launching one to two new billion-plus opportunity products and services each year. How are you thinking about that for 2026? Should we expect that the focus for next year are the initiatives you've already been discussing today, such as hotels, AI integration, and the continuing of experiences and services? Or do you anticipate additional new major launches next year that haven't been discussed yet?

Brian Chesky, CEO

Yes, Kevin, I would say that we essentially have three businesses this year. We launched service experiences, and we are beginning to pilot hotels. We believe both service experiences and hotels could each be multibillion-dollar businesses. We anticipate maintaining a new business every year. I probably shouldn’t say much more beyond that for next year, but I am very excited about our current focus. We’re discovering an effective model for innovation to incubate new businesses. In the past, we thought we had to launch a business globally across every market right away, increasing the challenge. We aim to take a more entrepreneurial route, generating various pilot launches in specific cities. This allows us to develop a range of pilots simultaneously, determining which are successful before scaling them. For instance, with hotels, we aim to start in three markets. We are confident that we will expand further as needed. There are also various segments demonstrating promising growth opportunities, such as luxury accommodations. I am not suggesting we will launch something significant there, but we are identifying a range of segments and supply types we consider exciting. Expect new businesses annually.

Operator, Operator

The next question comes from Ronald Josey with Citi.

Ronald Josey, Analyst

Brian, I want to follow up on two comments you made earlier. I think in prepared remarks, you talked about testing the new AI-powered search coming online and rolling out next year. Would love to hear your thoughts on just the experience overall, the interactivity. And just any early thoughts on the testing you've done, how it's changed sort of the use case or the interactivity within Airbnb overall. And then you talked, I think you might have said that it could take three to five years for experiences and services to be material to the business. But yes, supply is doubling quarter-to-quarter. We're seeing great results thus far, particularly expanding beyond the core Airbnb stays. Talk to us about from here to three years, what we can look for, for milestones?

Brian Chesky, CEO

Yes. Let’s start with the second question, and then I'll elaborate on AI. I want to underpromise and overdeliver regarding service experiences, aiming for product market fit, meaning we believe the business is functioning effectively and we have a playbook in place ready to scale. With service experiences, I aimed to pick a handful of cities. We selected the two top cities globally for Airbnb, Paris and L.A. They are diverse enough to test various hypotheses across these locations. Our focus has been on achieving product market fit in these cities and applying the lessons learned to others. In Paris, for example, we identified three types of travelers: first-time visitors, repeat visitors, and locals. Each group desires different types of supply. For first-time guests, we offer more landmark-focused experiences, while repeat visitors and locals seek alternative activities. We have had encouraging growth year-over-year in Paris. We are closely tracking product market fit for successful scaling. Regarding AI, our strategy is multifaceted. We believe Airbnb stands to gain significantly more from AI than most travel companies because we lack SKUs. Customer service, a critical realm where we began our AI endeavors, is exceptionally complex. Our customer service agents encounter unique issues that arise frequently. We’re realizing immense efficiency improvements. We then applied this learning to how we manage AI search. We want to allow guests to input queries in natural language, enhancing interaction and driveable, personalized responses.

Operator, Operator

The next question comes from Trevor Young with Barclays.

Trevor Young, Analyst

Brian, you highlighted some of the 65 major improvements you've made to the app. Some are enhancements, while others are policy or payment adjustments that remove friction or pain points for guests. What are some of the remaining pain points that you see that still need more work either from a guest or a host perspective?

Brian Chesky, CEO

Trevor, we made 65 improvements, but there aren’t any silver bullets in our business. It will take hundreds of additional improvements in the coming years. The most important aspect of our business is maintaining rapid product development velocity. We believe the team that moves the fastest will win in travel. To answer your question directly, we can point out particular features still being addressed. Our recent initiative, Reserve Now Pay Later, demonstrates the impact of adding more types of payment instruments and flexibility; it promotes quicker growth. In Brazil, we added installment options that significantly boosted growth. Around the world, we aim to offer a wider variety of payment methods, alongside ongoing experimentation with flexible cancellation policies. Quality is a major focus. For every person who stays with Airbnb, approximately nine people choose hotels. The primary reason for this is quality control. We are investing significantly in assuring quality across Airbnb. Competitive pricing tools for hosts are crucial; competitive pricing leads to increased bookings. Over the past two years, hotel prices have surged faster than those of Airbnb. Finally, we’re aware that location information and map quality have been critical issues. Maps have previously lacked precision and context. Understanding that our users interact with maps frequently, we seek to make them first-rate on the Airbnb app. Overall, our focus is on achieving consistency through many incremental improvements.

Eli Mertz, CFO

Brian, you made a point about no silver bullets, especially in quality and affordability. We’ve made enormous strides over the last couple of years. However, the road ahead remains vast with numerous opportunities for improving our product on both fronts. As such, you will see us continue to enhance our price competitiveness and bolster the qualitative aspects of our guest experiences.

Operator, Operator

The next question comes from Lee Horowitz with Deutsche Bank.

Lee Horowitz, Analyst

So going back to Brian's comments on another new business next year alongside the three to five-year timeline for services and experiences to scale, you are investing about $200 million more this year with some of that presumably rolling off next year. That said, your comments on margins for '26, while not specific, may suggest some of this $200 million proves sticky into next year. Can you unpack that a bit more as to what sort of the incremental investment plan looks like for 2026? And then second, there's still a perception in the market that your core homes offering in some of your largest regions has matured quicker than anticipated. Can you just comment on how you see things concerning the level of maturity and why perhaps homes as a percentage of leisure may have slowed in the last couple of years and why it could pick up in the coming years?

Eli Mertz, CFO

Yes, the question broadly concerns how we're thinking about our 2026 margins. While we aren’t providing explicit guidance for '26 margins, we noted in the shareholder letter our focus is on maintaining strong margins while investing in growth initiatives next year. The investments from 2025, including services and experiences, are expected to reach material scale, although 2025 was a heavy investment year. As we approach '26, we anticipate scaling revenues from these businesses. While there will be ongoing investments, we probably won’t experience the same intensity as during the initial launch phase. Therefore, you should expect us to balance investments across experiences, services, hotels, and AI while continuing to deliver strong performance from our core business.

Brian Chesky, CEO

With regard to our core business, I believe we have not reached maturity. It’s interesting to note that we started raising capital in 2009, and we are continually asked how large our market is. Each time, we've been surprised at its growth potential. While I can't predict the market size, for every person who stays in an Airbnb, about nine stay in hotels. I believe a substantial number of hotel guests would choose to stay in a home. Travelers increasingly prefer unique accommodations when traveling with groups or families. We continue to face quality control challenges; however, the strong supply enhancements are addressing this issue. Recent improvements in pricing tools also play a significant role in driving down prices and making us more competitive. We’re ensuring that we show total pricing upfront, which is enhancing the guest experience. Given the younger generation's strong preferences for local environments, they’re likely to choose Airbnb over conventional hotels.

Operator, Operator

The next question comes from Doug Anmuth with JPMorgan.

Douglas Anmuth, Analyst

Brian, Airbnb was notably absent from ChatGPT's app integration launch when other major travel players were there. Could you share your thought process here, and why you wouldn't explore that top of the funnel while also building out your own enhanced discovery and AI-powered search?

Brian Chesky, CEO

Doug, the simple answer is that we didn't think the integration was ready. We care a lot about how Airbnb shows up in the world. When I reviewed the demonstration, I found it to be a great concept but somewhat difficult to discover. It involved downloading the app via an external platform. We wanted to avoid being positioned merely as a data layer, like a commodity. For this, we need to build specific tools. When booking an Airbnb, we want to ensure personalized results that require an account on Airbnb. Messaging is a core component of our platform. We intend to integrate into chatbots in the future, and I expect to see Airbnb range across many surfaces on the Internet. We approach each integration with a few principles: we want custom integrations, we don’t want to appear as a commodity, we need to maintain our unique positioning, and we want to ensure that users understand Airbnb's distinctiveness.

Operator, Operator

The next question comes from Ken Gawrelski with Wells Fargo.

Kenneth Gawrelski, Analyst

Two, if I may, please. First, I wanted to press a little bit more, Brian, on the idea of reaccelerating the business. I think you spoke at the SCIF Travel Conference in mid-September and talked about how you believe the business should reaccelerate, I think you even said into the low teens, although I don't want to misquote you. Maybe if you could elaborate a little bit on that. And then the second one, maybe stepping back a little bit more on the AI search, et cetera. When you think about - how do you think, Brian, about third-party apps kind of creating a discovery experience on Airbnb? And you kind of just spoke a little bit about this, but maybe a little bit deeper concerning you developing your proprietary AI-powered search experience; do you think they will coexist? Or are you firm on having only the proprietary search experience build by Airbnb that would be able to access your inventory?

Brian Chesky, CEO

To begin with reaccelerating our core business, yes, I believe we will be able to do that. The reasoning behind this optimism is that for every person who stays in an Airbnb, approximately nine people stay in a hotel. With interviews conducted among hotel guests, many expressed willingness to stay in a home, and it has become clear that we are not claiming our share of the wallet. If we can address affordability, enhance the quality, expand our home options, and improve services, we could increase our share of priced dollar. We are relentlessly working to secure more homes in the top 300 markets globally. As we build more supply, prices are expected to drop, leading to increased bookings. More inventory fuels this upward spiral of bookings. Collectively, these methods suggest a significant potential to reaccelerate the business. We don't perceive any market as completely mature since policy constraints are the only limiting factors on supply growth. Hotels can provide a potential supplement where home bookings will be limited. Conclusively, we can see considerable growth potential in 2026 and beyond. As for third-party apps and our AI-powered search, I firmly believe that our own search experience remains unique and valuable while remaining open to partnerships. Given that 90% of our traffic is direct or unpaid, I want Airbnb to continue improving its travel-search experience. We think specialization will win us ground in this space, but we don’t discount the potential of other platforms accessing our inventory.

Operator, Operator

The next question comes from Colin Sebastian with Baird.

Colin Sebastian, Analyst

I know this is a follow-up to some of the other questions. But in terms of focus areas for the year ahead and sort of the new testing paradigm you outlined, Brian, could you talk about what impact that has on the time frame for other initiatives that you've mentioned before, like loyalty or even advertising? Or are those still on track for whatever time frames you were planning?

Brian Chesky, CEO

I believe they can be done alongside each other. Businesses like service experiences or hotels can work based on a city-by-city approach, while loyalty and advertising initiatives could scale quicker. They differ slightly, leading to quicker scaling. We are actively working on both loyalty and advertising. It’s crucial to note that Airbnb is one of the largest travel brands in the world without a loyalty program. My belief has always been that excellent product quality serves as the best loyalty mechanism. Still, I see potential for a well-crafted loyalty program that rewards our community. As for advertising, the travel search paradigm is changing due to AI advancements. We want to ensure we develop a solid search foundation with AI; thus, we are cautious with advertising developments until we get that right. Watch for more updates about AI search’s imminent launch, but we don’t preannounce other elements until they are ready. All right. Well, thanks, everyone, again for the questions and for joining us today. I think what you've heard about today is the commitment we have to growing our business in a sustainable manner. Over the long term, it will help us create a global community built on trust. We're not just a vacation rental platform; we want to be a community that enables travel anywhere. Every product we offer and each improvement we implement moves us closer to this vision. I'm grateful for the team and proud of their hard work, as well as what we’ve all accomplished together. Thank you to all of you, our investors, and our partners, for helping shape the future of Airbnb.

Operator, Operator

This concludes today's conference call. Thank you for joining. You may now disconnect.