Airbnb (ABNB) dazzled Wall Street with better-than-expected fourth quarter earnings results and forward guidance on February 14.

"We believe ADR [average daily rate] was the key upside surprise relative to investor expectations," Jefferies analyst John Colantuoni wrote about the company's Q1 guidance in a research note, "which should help support more optimism around further upside on pricing and margin in the remaining three quarters [of 2023]."

Investors cheered the company's quarter by sending shares up 13% on February 15, the stock's biggest one-day increase since Airbnb's December 2020 IPO.

On February 16, the stock logged its highest close since May 2022. Even after giving back some post-earnings gains, Airbnb stock is up about 45% from a record low reached at the end of 2022.

But the sentiment shift came as something of a surprise to hosts and managers using the home-booking platform who say they are finding it harder and harder to book guests.

Ric Kenworthy, who manages 96 short-rental property listings through a company, Old Town Rental, in Arizona, was scrambling to fill unbooked units ahead of last month's Super Bowl in Glendale.

"We ended up at, let's just assume midday Saturday before the Super Bowl, close to 90% booked for all of our properties," Kenworthy told Yahoo Finance, later adding: "Some key markets are experiencing quite a bit of saturation."

Kenworthy said he ended up cutting his listing prices by 50%: The going-rate for one of his rental properties went for $450-$600 a night that weekend after he'd been anticipating a rate closer to $1,000 a night given the demand generally created by an event like the Super Bowl.

"In 2022, we saw new heights in demand on the Airbnb platform and the result is continued growth in typical Host income, which was over $14,000 in the US," Sam Randall, a representative for Airbnb, told Yahoo Finance in a statement. "We continue to invest in the success of our Host community and in the coming months will release new pricing tools to help them set competitive prices."

Travel bounces back

While some Airbnb hosts may not be feeling the full benefits, there is little doubt travel demand is back in full swing.

Despite sticky inflation, consumers are booking trips: Data from a Bank of America Institute survey shows money spent on airline travel per household jumped 3.5% in January while international spending also increased compared to two years ago.

"I think the psychological impact of being locked down for some portion of the pandemic has only accelerated the trend that had already started," Marriott International (MAR) CEO Anthony Capuano told Yahoo Finance Live after the company's fourth-quarter earnings results showed the average room rates up 13% and revenue earned per average room jumping 29% year over year.

Airbnb posted revenue of $1.9 billion in the fourth quarter, better than analyst expectations for revenues of $1.86 billion. The company's earnings per share also topped estimates, coming in at $0.48 cents against $0.08 forecasted.

On the company's earnings call, CEO Brian Chesky told analysts Airbnb experienced "tremendous growth" in units listed online, ending 2022 with 6.6 million active listings. That was 16% higher compared to the previous year.

Chesky attributed the increase in supply to two factors: demand and systematic improvements to their platform. As people flocked back to traveling, nights and experiences booked increased 20% in the fourth quarter, with active bookers in the fourth quarter reaching a record for the company.

"[Annual] revenue of $8.4 billion grew 40% year-over-year," Chesky said on the earnings call. "And when you exclude foreign exchange, our revenue increased by 46% year-over-year."

The average daily rate for an Airbnb accommodation grew 36% compared to 2019 levels, according to CFO David Stephenson. He noted that it's generally "more expensive" to stay at an Airbnb than other accommodations and projected rates would come down "modestly" through the end of this year.

"We're not seeing any major shifts in overall kind of utilization rate that give us any concern," Stephenson said. "We feel like we continue to keep, in aggregate, this nice balance of growing supply and growing demand, and we want to keep that relative balance."

Airbnb also stressed that the company is focused on three strategic priorities: raising awareness of hosting, upgrading core services, and scaling services beyond its core offerings.

In late 2022, Airbnb added short-term sublet listings in an effort to grow its footprint among the multifamily market. The company asserted landlords and property managers using the sublet service could earn about 20% of the booking revenue.

Airbnb also rolled out new categories, including one called "OMG," which captures the most unique and exclusive accommodations. And after a Wall Street Journal report highlighted how some travelers were frustrated with host-mandated chore lists and the app's pricing format leading to sneaky costs, Airbnb launched a feature to show users price totals that include cleaning, service, and other fees.

What if supply outpaces demand?

Looking ahead, some wonder about the sustainability of Airbnb's boom.

“Can the top line demand persist? And then given their growth and supply, can the average rates [hold]?,” Nick Jones, research analyst at JMP Securities, told Yahoo Finance. "If the demand wanes, that's going to increase available supply at any given day, which then... should result in lower prices, which then would impact their profitability."

Even if demand plateaus, the situation could change: January data from AirDNA suggested that rapid listing growth "outpaced rising demand" in 2022.

"U.S. short-term rentals earned over $62 billion ($141 billion globally) throughout the year (up 25.1% YoY), with almost 200 million nights stayed and over two million listings receiving at least one booking," AirDNA stated. "Overall occupancy ended the year at 58.7%, a significant drop from the 61.3% in 2021."

In any case, as travel evolves after the pandemic bust and boom, some Airbnb hosts see a shift in consumer behavior.

Michelle Burson, owner of a 4,000 square-foot Airbnb in Brookings, Oregon, is experiencing less foot traffic for her rental unit.

"Our bookings [have] declined last year compared to the previous year," Burson said. In Burson's view, "one of the reasons was people were taking their traditional vacations…going to Hawaii, Europe, rather than driving, [or taking] road trips."

And Masha Löfstedt, who owns three rental properties in Oregon, struggled to get her property booked ahead of the holiday season.

"One of our houses that rents out all the time, nobody's booked for this weekend. That's like the first time in years," Löfstedt told Yahoo Finance in late 2022.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv

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