It is May 9, 2023, and the Board of Directors of Airbnb Incorporated has employed you as a consultant to assess and improve the company’s overall situation in the second quarter of 2023 and recommend a set of specific, measurable, and rapid actions for the company to take to (a) prepare for a possible slowdown in global sales in the second half of 2023, (b) accelerate the penetration of Airbnb into the global marketplace, and (c) return the company’s stock price to healthy, sustainable growth. Please prepare a report to Airbnb’s board of directors that proposes a list of action recommendations that the company needs to follow into order to address all three of these areas in fiscal 2023. 

Speaking to analysts in May 2023, Airbnb founder and Chief Executive Officer Brian Chesky had the following to say about the company’s first quarter of fiscal 2023 performance: 

We had a strong start to 2023. We had over 120 million Nights and Experiences

Booked in Q1. This was a record high booking level for us. Our revenue increased 24% year-over-year. Net income was $117 million, making this our most profitable Q1 on a GAAP basis. And free cash flow for the quarter was $1.6 billion. In fact, on a trailing 12-month basis, our free cash flow was $3.8 billion. This represented a trailing 12-month free cash flow margin of 44%. Because of our strong balance sheet, we were able to repurchase $2 billion of our stock in the last 9 months. And today, we're pleased to announce that our Board just approved a new repurchase authorization for up to $2.5 billion of our Class A common stock.

While first quarter results were impressive, both analysts and investors reacted poorly to the forward guidance reported by the company. There were a number of factors to blame. Bookings on Airbnb in the second quarter were forecasted to slow from their previous blistering rate. Average daily rates, the overall metric of rental affordability, were high, particularly in the United States. There were clear signs that younger Airbnb consumers were increasingly unable to pay elevated rates for Airbnb rentals. Cost consciousness was prevalent. Airbnb had strong market share in the United States, but international markets were underserved and required attention. Further, there was ongoing concern that the U.S. and global economies were at risk of an imminent slowdown, particularly given the inflationary environment for consumer goods.

As a result, the board of directors requests a specific, measurable recommendation in each of the three following areas: 

1. A recommendation regarding preparation for a possible slowdown in the global economy in the second half of 2023, 
2. A recommendation to accelerate the penetration of Airbnb into the global marketplace, focusing on a specific market or markets, and 
3. A recommendation to return Airbnb’s stock price to robust growth in line with its long-term price appreciation. 
4. 
   
5. Your report should be prepared as a three-page Executive Summary of Recommendations. Your recommendations should be specific and be clearly supported by your analysis of the company’s strategic and financial situation.

Answer rating: 100% (QA)

Executive Summary Recommendations The board of directors at Airbnb Inc needs to establish a tiered pricing approach to enhance affordability and improve bookings High rental rates are affecting the co... View the full answer