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(Bloomberg) — Airbnb Inc.’s long awaited filing for an initial public offering makes the devastation wrought by Covid-19 abundantly clear, and shows how its business now hangs on domestic travel.

© Photographer: Thomas Trutschel/Photothek The elasticity of Airbnb’s supply and its ability to quickly pivot to domestic travel has allowed it to fare better than its rivals.

Since the coronavirus pandemic swept across the globe in March, closing borders and grounding flights, the travel sector’s woes have been on full display.

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Public companies such as Marriott International Inc., Booking Holdings Inc. and American Airlines Group Inc. grimly tallied tumbling revenue, mounting losses and mass furloughs and layoffs. Airbnb — as a private company — had largely stayed mum on the pandemic’s effect on its business. Until now.

Airbnb in its IPO prospectus filed Monday with the U.S. Securities and Exchange Commission highlighted its reliance on its guests continuing to travel — just not as far as they did before the pandemic.

“Against an otherwise highly negative travel backdrop, there are several areas of our business that have shown resilience, notably, domestic travel, short-distance travel, travel outside of our top 20 cities, and long-term stays,” the company said in the filing. “While we believe that travel will change as a result of Covid-19, the adaptability of our business suggests that we are well-positioned to serve this dynamic market as it continues to evolve and recover.”

For More: Airbnb Files for IPO Disclosing Pandemic’s Effect on Rentals

While Airbnb’s bookings nosedived in April, people quickly grew antsy under shelter-in-place rules and took advantage of remote-work policies by fleeing to vacation rentals within driving distance of their hometowns.

Road Trip

With the pandemic intensifying in the U.S. and Europe and a vaccine still months away from wide distribution, few travelers are likely to need their passports anytime soon. Yet, Airbnb believes it can rely on their wanderlust — a road trip is a road trip even if it’s just up the highway.

Short-distance stays, what Airbnb describes as a stay within 50 miles of where a guest lives, have shown extreme resilience, according to its filing. Bookings within a 500-mile radius of a guest’s home have started to recover, too, it said.

Globally, domestic nights and experiences — bookings for tourism activities — made up 77% of Airbnb’s overall bookings in September, compared with 52% in January.

“Domestic travel quickly rebounded on Airbnb around the world as millions of guests took trips closer to home,” it said. “Stays of longer than a few days started increasing as work-from-home became work-from-any-home on Airbnb.”

The elasticity of Airbnb’s supply and its ability to quickly pivot to domestic travel has allowed it to fare better than its rivals.

After a rough second quarter, a surge in people taking near-term vacations elevated the third quarter to Airbnb’s most profitable ever on the basis of earnings before interest, taxes, depreciation and amortization.

Faring Better

On a revenue basis, Airbnb was down 18% from the same period a year earlier, reporting $1.3 billion for the third-quarter, according to the filing. Booking Holdings reported a revenue drop of 48% in the third quarter while Expedia Group Inc.’s revenue plunged 58%.

Airbnb also has fared better than the hotel industry as travelers have shown a preference for homes in secluded areas over hotels bound by strict social-distancing rules. Three out of four guests in a March survey conducted by the company said they would be more comfortable staying with their families in an Airbnb listing than in a hotel with other people, according to the filing.

Bloomberg Intelligence analyst Mandeep Singh said Airbnb’s bookings recovered much faster than its peers because “customers favored alternative accommodation for domestic travel.”

Still, “Covid-19” is mentioned 215 times in Airbnb’s 350-page filing. The company said it isn’t possible to predict the pandemic’s future impact on its business and any projections for growth — including an eventual path to profitability — depend on the spread of the virus being curbed.

As the company moves toward its virtual roadshows, investors will want to know whether domestic travel is sustainable. If people are traveling domestically in large numbers today, does that mean they will continue to do so if the pandemic worsens, and how will that change once a vaccine is available?

For this quarter at least, Airbnb said it expects its financial results to worsen as Covid cases rise.

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©2020 Bloomberg L.P.

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