An Airbnb IPO opportunity

By: J. David Chapman/December 17, 2020

My company has been in the short-term-rental (STR) business for over 20 years – long before VRBO and Airbnb existed. We migrated our portfolio to these national/international platforms several years ago and have become fans of the concept.

STRs have drawbacks. The most significant is that it can remove some “affordable housing” from certain areas of town. Typically, we take run-down, under-rented, sometimes boarded-up homes and remodel them for our STR portfolio. This will, by nature of the capital invested, make the rent significantly higher and because they are reserved for shorter-term rental customers, removes them from the longer-term rental pool. The good news for the community is that the guests renting the shorter-term rentals have significantly more disposable income and research shows they spend a greater amount in the local community. Obviously, I believe the positive impact to our community outweighs the drawbacks and we continue to serve this important constituency of people.

As I write this, Airbnb is going public – meaning it is offering shares of stock in the company to be publicly traded. As an Airbnb host, we were given the opportunity to pre-purchase stock prior to the company going public. At 6 p.m. the night before the offering, we were given the news that the stock was available to purchase at $68 per share and we could purchase up to 100 shares. We committed to purchasing the maximum and paid $6,800 to become shareholders prior to the public offering the following day.

I teach, and believe, that investors should stick to their knitting – meaning only invest in what you know and understand. I’m a real estate guy and normally don’t invest in the stock market; however, this seems to fit that criteria for us. Plus, I believe this is a real company with a terrific business model that will only see accelerated profits once the pandemic subsides.

I have met Airbnb hosts locally as well as around the world. They are some of the most community-minded citizens I have ever met. Many become experts on the local economy and partner with small business in promoting those businesses, understanding that their occupancy is dependent upon the local amenities available to guests. Airbnb is dependent upon its hosts to be successful. It was rewarding to see that it recognized that and gave hosts the opportunity at ownership in the company.

J. David Chapman is an associate professor of finance and real estate at the University of Central Oklahoma (jchapman7@uco.edu).