As the Vaccine Economy takes shape and some form of ‘new normal’ emerges, the impact on some digital disruptors is looking more positive than others. While Airbnb is soaring to new highs, Uber’s having issues.

Airbnb turned in its highest every quarterly revenue of $2.2 billion and an also all-time high net income of $834 million, four times higher than a year ago when lockdowns were still the norm around the world. But as restrictions have lifted, a pent-up desire to travel has returned in some form, although that’s not the whole story, according to CEO Brian Chesky - the future of work is also having an impact:

Something bigger than a travel rebound [is] happening. The world is undergoing a revolution in how we live and work. The pandemic has suddenly untethered tens of millions of people from the need to go into an office. Technologies like Zoom make it possible to work from home. Airbnb makes it possible to work from any home. And this new found flexibility is bringing about a revolution in how we travel, because for the first time ever, millions of people can now travel anytime, anywhere for any length and even live anywhere on Airbnb. And we believe that this trend towards more flexibility will only accelerate.

He cites the example of companies such as Procter & Gamble, Amazon, Ford and PricewaterhouseCoopers which have all announced increased flexibility for employees to work remotely. More will follow, he predicted, and there will be a number of trends that will emerge from this “travel revolution”:

First, people can travel anytime, because many people don’t have to be in the office at specific times, they have more flexibility and when they can travel. So families are increasingly travelling traveling outside the traditional week, weekend trip. And in fact, Mondays and Tuesdays are currently our highest growing days of the week to travel. This is really interesting.

The second trend we’re seeing is that people are traveling everywhere, literally everywhere. During the pandemic, over 100,000 cities have had at least one booking on Airbnb. And that includes 6,000 towns and cities that received their first booking ever on Airbnb.

The third trend we’re seeing is people aren’t just traveling in Airbnb, they’re now living on Airbnb. Long-term stays, up 28 days or more, remained our fastest-growing category by trip length. People are traveling Airbnb for extended vacations, relocation, temporary housing, student housing and many other reasons. Before the pandemic, short-term stays is really the primary business that we were in. What we actually saw was that long-term stays was our fastest-growing segment of business even before the pandemic.

As with the rise in e-commerce in key retail sectors, COVID hasn’t triggered these changes, but it has accelerated their realization. Chesky argues:

I think what the pandemic did is an accelerated inevitable trend. There was already this emerging category between classic traveling and really kind of permanent housing which was people seeking stays of weeks at a time or even months at a time. And I think what the pandemic has done has just accelerated this.

All told, there is a bright future ahead, he concludes:

I think that we’re going to be entering a new golden age of travel. I tend to think that the last 18 months, the world has been turned on its head. And I think that many people yearned for what was taken away from them…I think one of the things that’s been taken away from a lot of people, that they want back is the ability to travel and the ability to travel freely and the ability to travel freely or cross borders.

Delivering the future 

But the travel bounce back isn’t resonating at Uber quite so much. On the face of it, things look promising enough - for its Q3, revenues of $4.8 billion were up 72% compared to the year-ago quarter (when pretty much no-one was going anywhere anyway), but net losses were $2.4 billion.

While working from home means that most of the urban, city center traffic that used to be seen is still missing, CEO Dara Khosrowshahi insists that there are positives emerging:

In terms of use cases, weekend is actually now greater than what it was pre-pandemic. And airports, obviously, because the travel there is coming back fast…We’ve seen 10 consecutive weeks of active driver growth in the US, resulting in a far better rider experience.

Against a backdrop of labor shortages and The Great Resignation, Uber is well-placed as a gig economy firm, he adds:

The number of active drivers is up more than 65% since January, and more than 20% since June. As a result, the incidence of surge pricing has fallen by nearly half and wait times are now below the magic 5 minute mark on average. We did this while meaningfully reducing incentive levels and at the same time driver earnings remained near all-time highs due to increased utilization.

All-in-all, our monthly active driver and courier base in the US has grown by nearly 640,000 since January. Against a backdrop of historic labor shortages and an abundance of choice for workers is a strong endorsement of Uber's value and the value of independent, flexible work. In a world where flexibility has increasingly become non-negotiable for workers across the economy, we believe Uber will be an even more attractive option going forward.

He adds:

We've now shifted to hyper-targeted driver growth campaigns geared towards particular markets, all the way down to specific neighborhoods and times of day. We're also focused on tech improvements that increase sign-up rates, combining our onboarding process across mobility and delivery. So individuals can sign up for both simultaneously, and can start delivering while they're waiting to be approved to drive. This is a unique advantage available only to Uber, which has resulted in a 20% to 40% increase in courier and driver activation rates. We expect to roll out this feature as widely as possible in the coming months.

In some non-US markets like the UK and Brazil, the driver base is back to roughly the same size as it was pre-COVID. But it still hasn't kept up with very strong demand which has grown past 2019 levels. That said, we're comfortable that the bulk of our recruitment spending is behind us. And that by taking learnings from the US and applying them abroad, we can be much more efficient and effective in our approach.

Delivery is another sweet spot, with Khosrowshahi explaining:

We've also continued to grow the number of couriers on Eats in the US with active couriers up 80% since January and 25% since June. In other words, not only are we approaching our supply and demand balance for mobility in the US, we've done so while nearly doubling our delivery courier base from its low in Q1.

There’s still particular opportunity to be found in the grocery space, a boom growth sector during the pandemic’s height, he says:

Online grocery delivery clearly has been a very, very growth area and industry. And certainly with a pandemic took a very, very big jump. But when you look at online grocery penetration, it's still less than 5% of the overall grocery market versus food which often is more than 10% penetrated, so the penetration of grocery is very, very low as it relates to food.

We have a big incumbent in the US is a tough competitor and we are adding content in the US at a really strong pace in terms of partnerships. But outside of the US, there certainly isn't an incumbent out there. We think that we have a very, very good chance of being non-food leader outside of the US and in the US, because of the power of the platform, we can over a long period of time flip over especially our members from delivering from eating with us, from moving with us and then getting grocery delivered with us as well.

So we think it's a huge opportunity. Grocery markets are multibillion/trillion dollar TAMs [Total Addressable Market] and because of our brand, because of our ubiquitous presence around the globe, and our membership product, we think we can penetrate into this opportunity with much, much less capital than anyone else.

My take

Disruptors disrupted. COVID took its toll on so many business sectors around the world. The transition to a Vaccine Economy will have its winners and its losers. As 2021 draws to a close, some of the ‘new normal’ is taking shape, but everything remains up for grabs in 2022 and beyond.