Airbnb expects to turn profitable in 2017; Uber on the other hand is losing billions

Airbnb, world’s largest home and apartment-rental company, expects to turn operationally profitable (i.e. before EBITDA) in 2017. The company’s revenues increased by 80% y-o-y in 2016, and it showed positive earnings for the first time ever during second half of 2016. The company still has nearly all of the $3.1 billion in funding it’s raised and is looking at investments and acquisitions. It recently invested in reservation startup Resy. It’s now in talks to spend about $50 million in cash and stock to buy the payments startup Tilt, which makes a smartphone app that allows multiple people to split bills.

The company has enjoyed a considerably fair margins in the rental industry. It get 6%-12% commission from the guest fee, along with some revenues coming from the hotels. It is not financially responsible for the maintenance of the properties, thus insulating itself from host of infrastructure costs.

On the other hand, Uber, a ride sharing startup, which also started around the same time when Airbnb came up, has had a rough ride till now. The company is expected to show losses of more than $3 billion globally due to cut throat competition both in domestic market and globally. While Lyft is giving Uber a hard time in US, the Chinese arm of Uber squandered billions to acquire a market share in the country, however, in the end, collaboration with Didi seemed a financially prudent move on Uber’s side.