How Airbnb & Expedia Turn Customer Cash Into Profit

BY  ON FEBRUARY 14, 2023

A recent report by the Wall Street Journal says travel booking companies such as Airbnb and Expedia have become “unlikely beneficiaries” of the Federal Reserve’s fight against inflation. Huh? Apparently, Airbnb & Expedia have been investing billions of dollars of their customers’ money for their own profit and, thanks to rising interest rates, the returns on these investments are higher than ever. Click here to read more.

Here’s how it works;  travel sites generally collect money from guests the moment that they book. However, they only pass the funds on to the hosts (or hotels) after the guest stay starts, which could be several months later.  The WSJ says Airbnb collected $58.5 million in interest income on its own cash as well as its customers’ cash in Q3, 2022, according to its earnings report.   Indeed…

Few other industries outside of finance have control over such vast sums of customer funds, according to Brad Erickson, an analyst at RBC Capital Markets who covers U.S. internet companies. “Most businesses don’t get to hang on to $7.5 billion of other people’s money,” he said.

Click here to read the full story at the Wall Street Journal. (NO subscription requred).

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  • Hamza Ashfaq
    published this page in Updates 2023-02-18 07:55:23 -0700