Hotels & Accommodations
Airbnb embraces a paradox: CEO Brian Chesky says hotels are the future
Airbnb, the house-sharing pioneer long synonymous with offering travelers alternatives to traditional hotels, is now making hotels a cornerstone of its growth strategy. The company’s second-quarter 2025 earnings release and subsequent analyst call delivered both impressive financials and a candid roadmap for transformation, confirming that embracing hotels is no longer taboo for Silicon Valley’s home-sharing unicorn.
Airbnb blew past Wall Street expectations, reporting Q2 revenue of $3.1 billion—up 13% year-over-year—and adjusted earnings of $1.03 per share. Net income reached $642 million, and the company booked 134 million “nights and experiences,” a 7% annual increase. The accelerated demand extended globally, with Latin America and Asia Pacific leading growth, even as North America growth softened.
Investors seemed more attuned to Airbnb’s cautious guidance for the second half of 2025 as execs expect slower revenue and softer margins due to tough year-over-year comparisons and stepped-up investments in technology and regulatory compliance. Chesky called out increased competition from hotels and mounting regulatory pressure on short-term rentals as ongoing headwinds, forecasting Q3 revenue between $4.02 billion and $4.1 billion while confirming heavy investments in new initiatives might compress margins in the near term.
Investors responded by sending Airbnb’s stock down over 6% following the call, with the stock down more than 7% since earnings as of press time.
And about those hotels: Chesky said Airbnb will be competing more directly head-to-head with that segment of the travel sector.
“We’re going to be going significantly more aggressively into hotels,” Chesky said toward the end of the call. He added that Airbnb has spoken with hotels around the world, especially independent, boutique and bed-and-breakfast locations. “We’ve spent a lot of time looking at hotels as a business. We think it’s really compelling, and we think that there’s going to be a lot more to do with hotels on Airbnb.”
Airbnb’s hotel phase
Crucially, Airbnb’s call centered around its expansion “beyond the core”—including hotels. Chesky referred to it as an “and, not a or” strategy: Airbnb will maintain its iconic homes product while ramping up hotel supply, especially internationally where it’s still seeing opportunity for growth. “A huge percent of hotels in Europe are independents,” Chesky said.
Why the shift? Airbnb’s data suggests many travelers browse home listings but don’t always book, citing lack of availability or preference for hotel amenities. By integrating hotels, Airbnb fills network gaps—especially in cities and peak periods, when home options are limited.
The company’s HotelTonight application was offered by Chesky as an example of a successful acquisition. “We’ve historically primarily focused on building organically, but we absolutely are open to acquisitions, and we are going to be looking at it. And I think that we are now in a better place to consider acquisitions now that … we have this new expanded strategy where we’re focused not just on all aspects of traveling, but also living.”
It’s an open debate for some communities on Reddit whether a hotel or an Airbnb is the better choice. One thread, r/TravelHacks, features a discussion of whether there’s even a difference at this point. A commenter wrote the general consensus seemed to be that Airbnbs are better for large groups and hotels for solo trips, albeit dependent on the location. Surely, this is a gap that Chesky and Airbnb would like to see close.
Tech-powered hospitality and lifestyle expansion
Hotels are only part of Airbnb’s ambitious remake. Chesky also described efforts under way to turn Airbnb into what he described as an “AI-first application.” The company is betting on its AI-powered customer service agent to drive efficiency and personalization.
He said this agent, leveraging 13 specialized models trained on tens of thousands of customer interactions, has already managed to reduce the necessity for human intervention by 15%.
Chesky told analysts he believes “AI apps” will quickly become dominant—and Airbnb, as a “non-AI-native application,” needs to transform in that direction.
“We’re starting with customer service. We’re bringing into travel planning,” he said.
Then he described that what could look like.
“It will not only tell you how to cancel your reservation, it will know which reservation you want to cancel,” Chesky said. “It can cancel it for you and it can be agentic, as in it can start to search and help you plan and book your next trip.”
The CEO outlined future plans for deeper AI integration ranging from expanding language support to building toward a platform that can serve as an “everything app” for travel and experiences.
Chesky concluded the call by reinforcing Airbnb’s commitment to innovation and stressing what the company will not become: a commodity. “I don’t think we’re going to be the kind of thing where you just have an agent or operator book your Airbnb for you because we’re not a commodity. But I do think it could potentially be a very interesting lead generation for Airbnb.”
Earlier in the call, Chesky said Airbnb is probably the biggest travel brand in the U.S. and that the company’s current moves are about growing beyond that.
“What we’re trying to do is build a platform, a platform that has homes, services, experiences, hotels, of course, and much more. And we’re going to try to be expanding this platform and continue to [launch] new businesses over and over again.”
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
The company’s global pipeline exceeded 93,000 rooms, including nearly 77,000 in the U.S. Its global system size grew 2.1 percent, including 3 percent growth in the upscale, extended-stay and midscale segments, Choice said in a statement.
“Choice Hotels delivered another quarter of record financial performance despite a softer domestic RevPAR environment, underscoring the successful execution and diversification of our growth strategy,” said Patrick Pacious, president and CEO. “We are especially pleased with our strong international performance, where we have achieved significant growth and accelerated global expansion through a recent strategic acquisition, the signing of key partnerships, and entry into new markets. With more diversified growth avenues, enhanced product quality and value proposition driving stronger customer engagement and a leading position in the cycle-resilient extended-stay segment, we remain well-positioned to deliver long-term returns for all our stakeholders.”
Domestic RevPAR declined 2.9 percent, reflecting macroeconomic conditions and a difficult comparison with 2024 due to the timing of Easter and eclipse-related travel, the statement said. Excluding those effects, RevPAR fell approximately 1.6 percent. Meanwhile, the domestic extended-stay portfolio outperformed the broader lodging industry by 40 basis points in RevPAR, while the economy transient portfolio exceeded its chain scale by 320 basis points.
Adjusted EBITDA rose 2 percent to $165 million, or $167 million excluding a $2 million operating guarantee related to the Radisson Hotels Americas acquisition. Adjusted diluted EPS increased 4 percent to $1.92, the statement said.
Expansion and development
The domestic extended-stay portfolio grew 10.5 percent year over year, with a pipeline of nearly 43,000 rooms as of June 30, Choice said. The combined domestic upscale, extended-stay and midscale portfolio grew 2.3 percent. WoodSpring Suites expanded 9.7 percent to nearly 33,000 rooms and ranked first in guest satisfaction among economy extended-stay brands in the J.D. Power 2025 study. The domestic economy transient pipeline increased 8 percent to more than 1,700 rooms.
Choice acquired the remaining 50 percent interest in Choice Hotels Canada for approximately $112 million in July, funded through cash and credit. The deal expanded its Canadian brand portfolio from eight to 22 and added 327 properties and more than 26,000 rooms. The business is expected to contribute approximately $18 million in EBITDA in 2025.
International activity included a renewed master franchise agreement with Atlantica Hospitality International in Brazil for more than 10,000 rooms; a direct franchise deal with Zenitude Hotel-Residences in France, which nearly tripled room count and two agreements with SSAW Hotels & Resorts in China. These include a 9,500-room distribution deal for 2025 and a master franchise agreement projected to add 10,000 rooms over five years.
Global net rooms for upscale brands increased 14.7 percent year over year, the statement said. The pipeline for these brands rose 7 percent since March 31 to nearly 29,000 rooms.
2025 outlook
Choice revised its RevPAR outlook to reflect more moderate domestic expectations due to macroeconomic conditions, the statement said. The adjusted EBITDA forecast includes a $6 million contribution from the Choice Hotels Canada acquisition for the remainder of 2025. It also reflects the $2 million Radisson-related operating guarantee payment incurred in the second quarter.
Net income guidance was lowered to a range of $261 million to $276 million, down from $275 million to $290 million. Adjusted net income remains at $324 million to $339 million.
Domestic RevPAR growth was revised to between negative 3 percent and flat, compared to the earlier range of negative 1 percent to positive 1 percent. The global net system rooms growth projection remains at approximately 1 percent.
In May, Choice reported 2.3 percent year-over-year growth in domestic RevPAR for the first quarter.
The US vacation rental market is pulling ahead of the traditional hotel sector.
While much of the travel sector contended with shorter booking windows and uneven demand in Q2, vacation rentals have proved resilient, a new report suggests.
According to the Q2 2025 Vacation Rental Market Index by Key Data, STRs outperformed hotels in every region across the US, with an average RevPAR (revenue per available rental) advantage of 9 percentage points1.
Key Data is a major provider of real-time market intelligence and benchmarking for the global short-term rental industry.
The data covers 13 million listings, and signals the STR sector is evolving.
Still, its performance isn’t evenly distributed. While many operators are thriving, others are feeling the strain.
Key Data’s analysis reveals a widening divide between high-performing and under-pressure regions, and between operators actively adapting to change and those falling behind.
Several regions posted impressive year-over-year growth in RevPAR, including:
Mid-Atlantic: +11% RevPAR YoY, driven by a +10% increase in occupancy
New England: +10% RevPAR, bolstered by seasonal demand and premium pricing
Rocky Mountains: +9% RevPAR, sustained by consistent traveler interest
Hawaiian Islands: +6% RevPAR, maintaining strong rate integrity in a competitive climate
In contrast, the Southwest saw the steepest drop, with RevPAR falling -4% YoY and new supply hindering rate growth.
The report suggests that even the strongest markets aren’t immune to emerging pressures.
Forward occupancy for September is down 11% year over year, it finds, and booking windows have shortened across key summer months.
While RevPAR remains strong in several regions, the landscape is becoming more fragmented.
Melanie Brown, VP of Data Insights at Key Data, said: “Performance is no longer just about location or seasonality. We’re seeing the STR sector evolve. Operators who succeed in this next phase won’t be the biggest, they’ll be the most responsive.”
The ability to track booking behavior, adjust pricing dynamically, and execute quickly is now what separates growth from stagnation.”
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Hotels & Accommodations
Lemon Tree’s Keswani to transition from dual role at top in succession planning
Lemon Tree Hotels Ltd’s chairman and managing director Patanjali G. Keswani will become executive chairman of both LTH and its subsidiary Fleur Hotels as part of a leadership change effective 1 October.
Lemon Tree informed the BSE on Friday that the management change was part of its long-term succession plan aimed at strengthening leadership.
The company announced the appointment of Neelendra Singh, former managing director of Adidas India, as the managing director of Lemon Tree Hotels, effective 1 October.
Saurabh Shatdal, managing director at real estate consultancy Cushman & Wakefield, will take over as managing director and chief executive of Fleur Hotels, which is expected to be listed on the public markets by the end of next year.
Chief financial officer Kapil Sharma will join Lemon Tree’s board as executive director while continuing in his role as the hotel operator’s finance head.
Lemon Tree Hotels, founded by Keswani, opened its first hotel in 2004 and has a portfolio of more than 230 hotels. It also has 110 hotels in the pipeline both in India and internationally.
The hotel group, which owns, leases, operates, and franchises hotels across segments, has seven brands including Aurika Hotels and Resorts, Lemon Tree Premier, Lemon Tree Hotels, Fleur Hotels, Red Fox Hotels, and the Keys brand.
Keswani, 66, speaking with Mint in May, said Lemon Tree Hotels expected strong revenue growth this fiscal year, driven by a rebound in business travel, higher room rates, and expansion across hotel segments.
Lemon Tree was prioritising the public market listing of Fleur Hotels by December 2026 to go debt-free, he said, adding that post the listing the subsidiary is expected to generate more than ₹700 crore in annual earnings before interest, taxes, depreciation, and amortization.
The company also aims to capture the under-penetrated market of sub-40-room properties in smaller cities. This is part of a broader strategy to tap India’s growing demand for branded accommodation, which is projected to rise from 200,000 rooms currently to 300,000 by 2029-30.
Despite a brief dip in demand during the April-June first quarter due to the Pahalgam terror attack and a resurgence of covid, Keswani said he expected mid-teen revenue growth for FY26 supported by rising domestic travel and Lemon Tree’s growing footprint.
A seasonal boost
Prashant Biyani, vice president for institutional equity research at Elara Capital, said the management changes at Lemon Tree bring greater clarity for the hotel company beyond Keswani.
“Having separate managing directors for each entity will help ensure healthy growth for both,” he said, adding that investors would be keen to see a clear growth strategy for Fleur Hotels ahead of its market listing in 12-15 months.
Despite softer demand for the hotel sector in the first quarter, Biyani expects occupancy to grow 1-1.5 percentage points from a year earlier in the ongoing second quarter.
Hotels are expected to charge 10-12% more for rooms on average, which combined with the increased occupancy is expected to boost the industry’s overall revenue per available hotel room by 12-14% in FY26, according to Elara Capital.
In the June quarter, Lemon Tree’s revenue from operations surged to ₹315.77 crore from ₹268.01 crore in the same year-earlier quarter. Net profit jumped to ₹48.10 crore from ₹20.11 crore a year ago.
Travel to northern cities such as Chandigarh, Amritsar, Srinagar, and Jodhpur was impacted by rising border tensions in early May, while the Air India plane crash in June triggered widespread flight cancellations.
This led to lower hotel bookings in cities such as Goa, Jaipur, Mumbai, Delhi, and Bengaluru that are heavily dependent on air connectivity.
Despite these setbacks, Elara remains optimistic about the hotel industry’s prospects in the second quarter owing to seasonal demand, long weekends, corporate events in Mumbai, and Kerala’s Onam festival.
Among listed hotel players, Lemon Tree Hotels will be a tactical stock pick for the second quarter, Biyani said.
Lemon Tree Hotels ended Friday’s trading on NSE 0.76% lower at ₹142.99 per share, while the Nifty 50 fell 0.95%.
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