Bathroom Stall Movies, and Airbnb’s Earnings on Deposits
I rushed into a rest area bathroom off the highway- I was running late.
When I entered, I noticed audio from a movie coming from one of the bathroom stalls. I know it was a movie- I could clearly hear the music and dialogue. At the same time, the movie fan in the stall was having a loud conversation with a guy at a urinal.
In Spanish.
It was confusing. Why didn’t the movie watcher mute the phone so he could talk to his friend?
I had other questions, too- but my mind was on getting back to the highway.
Life is busy and full of distractions, and we make lots of decisions without really thinking about the financial impact. One company that is benefiting from customer decisions in a big way is Airbnb- I’ll get to that in a minute.
Here’s a question that I don’t think about very often.
How many subscriptions do I pay on credit cards each month?
Killing me softly: subscription expenses
USA Today reports that: “… subscriptions are costing more than many consumers realize. The average monthly spending was $219, more than 2.5 times what consumers thought they were paying, according to a 2022 survey commissioned by market research firm C+R Research.”
It’s killing family budgets.
So who are we paying?
Food delivery companies, fitness memberships- and those pesky streaming service companies.
Here’s my list: 5 streaming services, gym memberships for my wife and I, Green Chef (prepared meals service), and Instacart.
The problem is that payments are tied to our credit cards. As a result, we probably don’t think much about the expense.
When was the last time you cancelled one of these services?
It’s on my list of 2024 New Year’s resolutions…
Which brings me to Airbnb.
Where is that vacation deposit money?
I like Airbnb, and I have several friends that make decent money renting vacation homes through the site. Here’s a quote from the 3rd quarter ’23 earnings report:
“Our adjusted net income increased primarily due to our revenue growth, expense discipline and interest income.”
Interest income? That’s interesting…. how much income?
Trading Economics found that: “Airbnb reported $192 million in interest income for its fiscal quarter ending in September of 2023.”
That’s up from $58 million in the 3rd quarter of ’22. Makes sense, because interest rates have increased in the last 12 months.
How does Airbnb earn interest?
On customer deposits.
Here’s some info from an Airbnb help center article:
“For reservations of 28 nights or more, you'll be charged for the first month upon confirmation. After that, you'll be charged the remainder in monthly installments.”
The Wall Street Journal provides more details on companies like Airbnb and Expedia:
“The travel sites typically collect money from guests the moment they book. But they only pass it on to hosts or hotels after the guest stay starts, which can be several months later.”
Add to that fees and other charges, and you can see how Airbnb earns interest on huge balances.
The Lesson
Airbnb is an example of a business that has multiple revenue sources- including some that are unexpected.
And…
Take a close look at the subscriptions you pay, and whether or not you’re getting your money’s worth.