Airbnb, Inc. (ABNB) is positioning for a reacceleration in growth through its business optimization strategy. After a sharp slowdown from pandemic-era highs, with year-on-year revenue growth slowing to 10.2% in 2025, one of the world’s largest travel booking platforms is now focused on improving efficiency and profitability. I remain bullish, as this strategy, combined with an attractive forward P/E of roughly 30x, suggests the current valuation does not fully reflect the potential for renewed growth.
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Reserve Now, Pay Later Will Boost Growth
One of the main reasons behind my bullish stance is that Airbnb’s Reserve Now, Pay Later (RNPL) feature is helping the company gain booking momentum. According to company filings, more than 70% of eligible bookings in Q4 2025 are believed to have adopted it. Commenting on the contribution of newly-launched business optimization strategies to margins and growth, the management highlighted that RNPL and similar fee simplifications drove roughly 200 basis points of growth in nights booked in Q4 and over 300 basis points of growth in gross booking value (GBV).
Looking ahead, there are several reasons to believe that Q4 2025 marks the start of a multi-year phase in which the RNPL feature will boost Airbnb’s financial performance. First, Airbnb noted that travelers who used the RNPL feature preferred larger accommodation options. This will have a positive impact on average daily rates in the long run. Even in Q4, this interesting customer behavior had a positive impact on average daily rates (ADRs).
Second, the RNPL feature has already had a positive impact on booking lead times, with travelers booking their stays further in advance. This is also a major positive development for Airbnb, as it helps the company compete aggressively with rivals trying to win customers within the same target market.
Third, the launch of the RNPL feature eliminates one of the biggest hurdles for group travelers. According to Focaldata, 42% of U.S. travelers missed out on group travel or faced delays due to the time required to coordinate payment with their fellow travelers. The RNPL feature eliminates this hassle altogether, allowing travelers to book well in advance without paying for a property, leaving them ample time to handle payment later.
Fee Simplification and Updated Cancellation Policy Remove Friction
Airbnb’s rollout of the new, simplified fee structure in late 2025 is another reason why I am bullish on the company. Rather than taking a cut from both hosts and guests, Airbnb now charges a flat fee of around 15.5% to hosts, while guests see no platform fees added at checkout. The earlier model, where potential guests saw massive fees added to their booking on the checkout page, used to result in frequent cart abandonments. Management noted that the company saw an improvement in conversions in Q4, which was partly attributed to the new, simplified fee structure.
The new fee structure should enable the company to improve its take rates over the long run without hiking consumer-facing fees. In a nutshell, the company is transitioning to a new phase in which fee hikes will focus on the supply side. This marks a major business transformation that enables Airbnb to offer a more streamlined, guest-friendly experience, helping it thwart intensifying competition.
Moreover, Airbnb has updated its cancellation policy to offer even more flexibility to guests, which I believe is the right move to build on its competitive advantages. The newly launched limited policy allows guests to cancel a booking free of charge up to 14 days before their expected check-in date. This improved flexibility of booking a stay with Airbnb should boost nights booked in the long term.
Is Airbnb a Buy, According to Wall Street Analysts?
Last week, RBC Capital Markets analysts praised Airbnb’s RNPL product, citing that early data indicate the feature is running ahead of the management’s expectations. Given that a global rollout of the feature is expected this year, Airbnb seems well-positioned to apply its findings in the local market to lure international users to book higher-value accommodation options with the flexibility offered by RNPL.
Based on the ratings of 28 Wall Street analysts, the average Airbnb price target is $147.13, which implies upside of 12% from the current market price.
At a forward P/E multiple of roughly 30x, I believe Airbnb is reasonably valued, as I expect the company to see an acceleration in growth in the next few years. Although macro conditions remain challenging today, the company has made several strategic changes to its business model to position it for massive growth once industry conditions improve. I believe the market is yet to catch up to this new reality.
Takeaway
Airbnb’s new business optimization strategy, led by the launch of the Reserve Now, Pay Later feature, has positioned the company to accelerate growth in the next few years. With a global launch planned for RNPL, Airbnb is trying to lure travelers to book high-ticket accommodation options while offering more flexible cancellation options to stand out from the competition. I am bullish on Airbnb’s prospects, as I believe the company is reasonably valued amid this ongoing business transformation.