Is Airbnb Undervalued or Overvalued in the Evolving Hotels, Restaurants & Leisure Sector?

The travel and hospitality sector is undergoing a seismic shift, driven by digital transformation, shifting consumer preferences, and macroeconomic dynamics. At the center of this evolution is Airbnb, a platform that has redefined short-term rentals and challenged traditional players like Expedia, Royal Caribbean, and Trip.com. As of November 2025, Airbnb's valuation metrics-particularly its high price-to-sales (P/S) ratio juxtaposed with relatively low price-to-earnings (P/E) and price-to-book (P/B) ratios-have sparked debate among investors. This analysis evaluates whether Airbnb is undervalued or overvalued by dissecting its financial performance, competitive positioning, and sector-specific dynamics.

Valuation Metrics: A Tale of Contradictions

Airbnb's valuation appears paradoxical at first glance. Its P/S ratio of 6.11 is significantly higher than Expedia's 2.38 and Royal Caribbean's 3.8, suggesting investors are willing to pay more for each dollar of Airbnb's revenue. This premium reflects the platform's scalable business model, which generates high gross booking value (GBV) and margins. In Q3 2025, Airbnb reported a 14% year-over-year increase in GBV to $22.9 billion, while its full-year margin forecast was upgraded to 35%, underscoring its operational efficiency.

However, Airbnb's P/E ratio of 32.25 and P/B ratio of 8.51 are lower than those of peers like Expedia (P/B: 11.2) and Royal Caribbean (P/B: 6.93). This discrepancy arises from Airbnb's asset-light structure, which minimizes book value, and its rapid revenue growth, which outpaces earnings growth. For instance, while Airbnb's 2024 revenue grew 12.1% to $11.1 billion, its earnings per share (EPS) fell slightly short of expectations in Q3 2025, creating a temporary disconnect between revenue and profit metrics.

Competitive Positioning: Platform vs. Traditional Operators

Airbnb's dominance in the short-term rental market is underpinned by its superior gross profitability and network effects. Its 2024 GBV of $81.8 billion dwarfs Expedia's Q3 2025 gross bookings of $30.73 billion, even as Expedia benefits from a 26% year-over-year surge in B2B segment bookings. This highlights Airbnb's broader reach in consumer-driven travel, whereas Expedia's strength lies in corporate and offline agent markets.

Royal Caribbean, meanwhile, faces a different challenge: its P/S ratio of 3.8 reflects the capital-intensive nature of cruise operations, which require significant fixed costs. While the company raised 2025 adjusted EPS guidance to $15.58–$15.63, its 3.8% increase in gross margin yields pales in comparison to Airbnb's scalable, low-cost model. Trip.com, with a P/S ratio of 5.85, appears undervalued relative to its peers but lags in revenue growth, a weakness attributed to its reliance on China's domestic travel market.

Strategic Implications for Investors

The key to Airbnb's valuation lies in its ability to balance growth and profitability. Its high P/S ratio is justified by 10% revenue growth in Q3 2025 and a 10.6% year-on-year increase in GBV metrics that signal long-term resilience. Unlike traditional hospitality companies, Airbnb's platform model allows it to expand without proportional increases in fixed costs, creating a margin buffer during economic downturns.

However, investors must also consider sector-specific risks. For example, regulatory pressures on short-term rentals and macroeconomic headwinds could temper growth. Yet, Airbnb's upgraded margin forecast and strong load factors (a 112% load factor for Royal Caribbean) suggest robust demand, indicating that the sector remains resilient.

Conclusion: A Platform with Premium Justification

Airbnb's valuation metrics reflect a company in transition-balancing rapid revenue growth with margin expansion. While its P/E and P/B ratios may appear low compared to peers, these metrics are skewed by its asset-light structure and high GBV. Investors seeking exposure to the future of travel should view Airbnb's high P/S ratio not as overvaluation but as a premium for its scalable, high-margin platform. In a sector where traditional operators like Royal Caribbean and Expedia face structural challenges, Airbnb's competitive positioning offers a compelling case for long-term value creation.