Good afternoon and thank you for joining Airbnb's Earnings Conference Call for the First Quarter of 2021. As a reminder, this conference call is being recorded and will be available for replay from the Investor Relations section of Airbnb's website following this call. I will now hand the call over to Ian Lee, Airbnb's Head of Investor Relations. Please go ahead.

Good afternoon and welcome to Airbnb's First Quarter of 2021 Earnings Call. Thank you for joining us today. On the call today, we have Airbnb's Co-founder and CEO, Brian Chesky; and our Chief Financial Officer, Dave Stephenson. Earlier today, we issued a shareholder letter with our financial results and commentary for our first quarter of 2021. These items are also posted on the Investor Relations section of Airbnb's website. During the call, we'll make brief opening remarks and then spend the remainder of the time on Q&A. Before I turn it over to Brian, I'd like to remind everyone that we'll be making forward-looking statements on this call that involve a number of risks and uncertainties. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors. These factors are described under Forward-looking Statements in our shareholder letter and in our Form 10-K filed with the SEC on February 26, 2021. We urge you to consider these factors and remind you that we undertake no obligation to update the information contained on this call to reflect subsequent events or circumstances. You should be aware that these statements should be considered estimates only and are not a guarantee of future performance. Also, during this call, we will discuss some non-GAAP financial measures. We provided reconciliations to the most directly comparable GAAP financial measures in the shareholder letter posted to our Investor Relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. And with that, I'll pass the call to Brian.

All right. Thank you very much, Ian. And thank you, everyone, for joining us today. I want to start by acknowledging the state of the pandemic. COVID-19 cases continue to surge in parts of the world such as India. And our thoughts go out to our hosts, guests and employees in India during this difficult time. There is much more work to do to limit the spread of the pandemic, and many people are still hurting. And we know how lucky we are to be in the position we're in today. 2020 was a year that none of us will ever forget. It was also a year when travel fundamentally changed forever. Airbnb changed as well. We sharpened our focus on our core business of hosting. And we got back to our roots, back to what is truly special by Airbnb: the everyday people who host their homes and offer experiences. And we emerged as a stronger and more efficient company. Our business rebounded faster than anyone expected, and it showed that as the world changes, we are able to adapt. Now turning to our Q1 results. Our business dramatically improved with the rollout of vaccines and the easing of some travel restrictions. While conditions aren't yet normal, they are improving. People's desire to travel, combined with our tightly managed expenses, drove a return to our positive top line growth and materially improved adjusted EBITDA. In Q1, our revenue was $887 million. This was an increase of 5% year-over-year, and it exceeded Q1 2019 levels as well. But here is the most important fact: Our business improved without the recovery of two of our strongest historical segments: urban travel and cross-border travel. We expect the return of urban and cross-border travel to be significant tailwinds over the coming quarters. Now…

[Operator Instructions] Your first question comes from Justin Post with Bank of America.

I guess I really want to focus on behavior change, which could benefit the Company, first hosts and also guests. I think in the letter, it said post listings were stable with Q4, but it seems like you're really encouraged by what you're seeing. So maybe you could dive in there and tell us what is encouraging about what you're seeing with hosts and whether you see -- expect a lot of new listings to hit the market over the next year? And then similarly on the guests side, how do you think this pandemic is going to increase willingness to use alternative accommodations? Are you seeing some positive signs there?

Thank you very much, Justin. So why don't I start? And Dave, feel free to add in after I go. So let's start with hosts, and then we'll go to guests. So Justin, let's just start with we have 4 million hosts on Airbnb. And I think if you asked people a year ago, would we have had such a stable host community? They probably wouldn't have expected that. But what we have today are hosts that offer 5.6 million listing. And these 5.6 million listings more about 1 million more than we had this time in 2019 and what we've actually seen is a large growth in non-urban listing. So we actually have a 30% growth in non-urban and vacation rental listings as well. Now it's important to note that 90% of our hosts, our everyday people, they're individuals. And the reason why is as we've made hosting on Airbnb easier, more and more hosts are coming to Airbnb as well. Now specific to what we're doing, we launched our first global campaign in five years, Made possible by Hosts. As I said, we also have an accompanying host campaign. Both of these campaigns, we are seeing significantly larger traffic of prospective hosts to the platform. The next thing we're doing is we're making it even easier to become a host by reducing number of steps to become a host. And as we reduce the number of steps, conversion rate for hosts gets even easier. We now are allowing hosts to be paired with other super hosts to help them get started, and we have webinars as well. And then finally, we have new tools and services that's going to make it even easier for hosts to list and be successful. I'll just end this in by saying on…

And your next question comes from Mario Lu with Barclays.

The first one's on listings count. So you said you have similar levels to last quarter around 5.6 million. But with this hosting campaign that you guys are running, is there like a time line that we should expect to drive that number up? Or you mentioned in the past that 1/4 of guests eventually become hosts. When should we expect that number to increase?

Yes. Dave, why don't I give you this question? And it's a great question, Mario. And I'll also say that in Q1, 28% of our hosts were now prior guests as well. So that number is increasing. But Dave, I'll hand it over to you.

Yes, to be clear on the stat, it's that of guests, 25%, about 24% were former -- new hosts were former guests, so just to be clear with the percentage. It's early. We're seeing strong listing count, 5.6 million. It's been very stable. I think, actually, one of the things that's been very impressive during this time is that our host churn in Q1 '21 is actually lower than our host churn in the same period in 2019. And actually, our churn in 2020 was even lower than what it was in 2019. So I just think it all just shows kind of that resiliency and the stability of our supply. And we're just optimistic that as things continue to rebound, as we continue to educate people about the benefits of hosting and all of the tailwinds that Brian just outlined, we'll continue to see a strong host growth going forward.

Great, and then just one follow-up on domestic versus international. So I'm not sure if you can see this in your data yet, but just curious to hear if you're seeing some substitution in terms of domestic bookings versus international as the vaccine rates increase? And do you think the domestic rates will remain above 2019 levels even after borders open up?

Yes. Dave, do you want to take this one as well?

Yes. I mean just unsure exactly where everything will settle out for domestic versus international. Clearly, right now 80% of our nights in Q1 were domestic. So we've seen domestic travel being consistent, the strength all around the world. Historically, our strength has obviously been in urban areas cross-border. So prior to kind of pandemic, think about 50% of our nights were actually cross-border nights. And obviously with that not occurring, clearly there's going to be some substitution where people are going to stay domestically where they might have taken a cross-border trip. But again, our urban cross-border has been our strength. We know that many of these trips will be -- are incremental and such that when travel rebounds to a more typical state, we'll have growth in overall travel. Just hesitancy, right? People are hesitant to travel right now if they aren't vaccinated, or maybe they can't travel due to do some of the lockdowns in borders. So we know that many of the trips will be coming back and will be incremental to what we're seeing today.

And your next question comes from Colin Sebastian with Baird.

I have a couple of questions on investments and spending. I guess first off, what gives you the confidence that you can moderate sales and marketing spend in the second half without impacting bookings or listing levels? Is that still the plan? And then in terms of product development, obviously, Brian, you'll be making some announcements soon. But how are you thinking about the pace of R&D or product development spend, now that business appears to be returning to normal, or whatever normal means now? Is it perhaps time to look at reaccelerating hiring? Or what are your thoughts on that?

Yes. Thank you very much, Colin. Dave, why don't I take this at a high level, and you can obviously go into more detailed analysis? So Colin, a couple of things. Let me just first start and talk about our marketing strategy, and then I'll answer your very specific question about H2 marketing. First of all, we take a very different approach to sales and marketing, I think, than our competition. What we have is a full funnel integrated approach to marketing. And what we iterate is PR, brand marketing and performance marketing. And really PR, in addition to word of mouth, is the thing that really built our brand over the last 10 years. And because of that, Airbnb is a noun and a verb used all over the world. And this has led to 90% of our traffic being unpaid or direct even as recently as Q1. And even in this past quarter, with elevated marketing, we have similar traffic levels in 2019 but we spent 50% less on marketing. So we think that if you have a product that is unique and different, that the role of marketing isn't to buy customers, and the role of marketing is not sizzle. The role of marketing is education. And so what we have done is we're doing our first brand -- we did our first brand marketing campaign at a global level in five years. It was a campaign called Made possible by Hosts. And it's really just taking real photos from real guests on real trips to highlight what makes Airbnb different, which is hosts. We want our hosts to be as mainstream as the homes and spaces on Airbnb. Now while the results are still early, as I said, we have seen elevated traffic levels. And to…

Yes. I mean our product development spend will increase at a lower rate than revenue. We're not going to have to add back significant number of fixed resources in order to accommodate the business that's back to the size of 2019 and beyond. So we're just going to be very disciplined in any additions to our expenses. And then as Brian said, we're just seeing great success with our marketing strategy, which we actually started modifying prior to COVID, solidified during COVID and are continuing to see strength here in Q1. So marketing as a percentage of revenue will be higher early this first half of the year than it will be in the second half of the year, but we're very encouraged by the results.

And your next question comes from Naved Khan with Truist Securities.

Brian, maybe give us your thoughts about the reopening of urban travel in terms of timing. How are you thinking about it? Is that something that you think might happen in the back half of this year? Or do you think that's further out?

Yes. Thank you very much, Naved, for the question. Well, let me preface my answer with two comments. Number one, I'll be -- I'll try to be careful with predictions, because anyone that was compelled to making predictions last year was humbled. But something I'll say is no matter what happens with travel, I think one of the things we showed last year is that our model is inherently adaptable. And so we are adaptable to any travel changes. With that being said, I do think we have quite a bit of data. And so with the data we have and we're seeing, I think I can give you some indications, although it's going to be a little hard to pinpoint. We are seeing that as restrictions lift and cross-border begins, more people travel the cities. We're also seeing that the nature of travel to cities is changing. For example, more and more people are booking longer-term stays in cities. So the length of stay is going up. And one of the things we know is that the longer you stay somewhere, the more you're inclined to stay in a home. So I think that as restrictions lift in countries, as vaccinations rise, we think this is a significant tailwind to both urban travel and cross-border travel. So we're very, very bullish. It's a little hard to pinpoint, but I think the comments from the head of CDC today, the lifting of restrictions across Europe, these are all really, really good signs. There's no reason this wouldn't be a huge tailwind to urban travel and cross-border.

Yes, our urban travel growth rate has increased every month this year and continues to do so through April and early May. So we're just seeing continued positive momentum.

That's very helpful. And maybe a quick follow-up, if I may. So Brian, you talked about business travel maybe becoming a little different where people might just travel to headquarters and maybe rent maybe an Airbnb.

Yes.

Is there a -- do you see a good opportunity to maybe take share in that segment versus previously just targeting business travelers going into cities?

Yes. I mean in New York City, in Los Angeles, a number of these cities, we almost have as many nights booked for stays longer than 28 days as we do stays under 28 days. In New York City, actually, the majority is over 28 days now. So I think that there's a huge opportunity. If you think about where business travel is going in the future, it seems completely intuitive to me that as companies offer more flexibility, more people are going to live around the world, but they're not all going to want to live remote. They're going to have to come back to visit. And so I think you're going to start to see longer stays. I think in addition to longer stays, you may also see business travelers traveling together. So let's say three different employees work in three different cities, and they have to come back to headquarters. They may not all get three different hotel rooms at Airbnb. They might get one house. They can split the cost. They can eat around the dinner -- the breakfast table in the morning. So I think the things that benefit Airbnb at business travel is group travel and longer-stay travel. Those two things, I think, are disproportionately beneficial to doing home, and these are general tailwind for business travel. Now I want to be clear. I mean people will, of course, travel for business again. I just think the bar to get on a plane to go to a meeting will be higher than before.

And your next question comes from James Lee with Mizuho.

A couple of questions regarding the supply side. And can you guys talk about maybe supply and demand balance by region a little bit here? Where do you see surpluses? Where do you see deficits? And are you also looking to increase your supply by tapping into professional hosts. I know 90% are individual, or even hotel supply? And also secondly, what are the key frictions that you're seeing right now for your hosts signing up and that you're looking to address with these new tools you're about to introduce?

Yes. Dave, do you want to take supply and demand? I can probably take the increase in pro hosts and key friction?

Sounds good, yes. I mean on supply and demand, really, what we're seeing, because cross-border and urban travel has not yet fully rebounded, the places that we're seeing surpluses or deficits in demand or a surplus of supply would be more urban markets. And where we can see some tightening of it, especially U.S. non-urban for the peak in the summer is clearly going to be the most constrained of our markets. So we're actively working against each of those areas. But on each side, on the supply side, making sure that we are doing our best to recruit hosts and bring on as more supply as possible for peak periods in constrained markets. And then we're also using -- go back to our marketing expenses before, where we use search engine marketing is in targeted approach, especially in markets where we have maybe surplus supply and not maybe enough demand, and so being kind of pointed at that. So we look at every individual market as different, and we will use different levers to try to manage that balance over time.

Yes. And James, why don't I jump in and say this. One of the things that Dave just said, I want to put out underline under, highlights. Before the pandemic, most people came to Airbnb and they knew exactly where they were going and they knew when they were going. So we asked the question in the search bar, "Where are you going?" And we asked, "When are you going?" You put in date. The holy grail for matching supply and demand is to be able to also control where you can point demand. But we can't point demand to where we have supply if guests aren't flexible, if they're predisposed to where they want to travel. Now that guests are telling us that they're much more flexible about where they travel, we can point demand to where we have supply. This is probably one of the most important things we have. And it explains why when 90 million searches were used with the Flexible Dates feature, conversion rates went up. So that is just another thing I want to underline. Now regarding your next two questions, let's talk about pro hosts and hotels. Obviously, Airbnb created a new category in travel because we created tools that allowed everyday people and individuals become hosts. And yes, out of 4 million hosts, 3.5 million are individuals. That being said, we welcome all hospitality providers on Airbnb. And we have hundreds of thousands of professional hosts and professional hospitality providers. The way we think about it is when a guest comes to Airbnb, they're looking for a place to stay. And so we don't want them to leave without having found something they want. Typically, they come to look for individual hosts, that's what we're known for. But we want to make…

If I can ask a follow-up question also on the hosts side, too, are you seeing increased competition for acquiring hosts and maybe potentially pressure on your take rate?

Dave, do you want to take this one?

Sure. Right now what we're seeing is -- remember, it comes back to what our hosts are. We have 4 million hosts around the world. The vast majority of those are individual -- so 3.5 million of those are individual hosts. And I think that's very different than what we see kind of competitive platforms are doing. And so what we end up seeing with the 4 million hosts that we have is -- give me the last part of the question, sorry, I lost my train of thought.

Yes, increased competition for hosts and maybe potentially pressure on take rates?

Yes, no, pressure on the take rates. Right now, we're not seeing the pressure in take rates. We think that we have a really great value to the take rates that we give. We charge rates that give good value to both our guests and our hosts. And what we see on the take rate side is making sure that when we give value back to our hosts, that then we were able to take kind of appropriate revenue from that. So we're not really seeing any pressure at that driving for increasing or decreasing the number of hosts that we have on Airbnb.

[Operator Instructions] And your next question comes from Brian Nowak with Morgan Stanley.

I have two. The first one on the -- is on the 2020 new users that you added. It was a great year to sort of add a lot of new users to the platform. I'd be curious to hear about what you're seeing from those new users from a retention or booking perspective now as you're into 2021, and how that compares to what you've seen in the user cohorts in the past? Then the second one, to go a little bit more into the monetization of the take rate, can you just talk to us about any of the tests or experiments you've been doing around insurance or ancillary service sales or tiered take rates or sponsored listings, and ways we can think about that take rate potentially adjusting over time for more services to your hosts or guests?

Yes. thank you very much, Brian. Dave, why don't I take the second question on monetization and take rates? Why don't you take the question on new users, what are we seeing for new users from retention and booking?

Yes. So what we're seeing for new users, it's early, but all of the early data for the new users that we've acquired here during 2020 is that the retention is very consistent with what we had for users in 2019 and before. So I think one of the benefits that we've seen in 2020 is just we've actually did lower to barrier for entry for new guests to kind of come to Airbnb and try us out for the first time. You don't have to hop on a plane. You don't have to go across the border. As we said, over 50% of our nights historically have been cross-border. You don't have to do that to try Airbnb. Now you can kind of drive just a couple of hours down the road and go check us out. And what we're seeing from the early results is that the retention rates are very consistent with what we've seen in the past.

And then Brian, to your question about monetization and take rate, we absolutely see lots of opportunities to increase our monetization and take rate for both guests and hosts. For example, one of the things we've said is that many of these tools and services we've offered in the last five years, they're incremental, we haven't charged for. For example, unlike our competitors, we offer free protection of $1 million against theft, property damage and personal liability in countries all over the world. And as we added these services, we do not charge incrementally for these. Our general principle is we always want to give away more value than we're taking, but we do think there's opportunities for us to do -- to offer some more tools and services to increase take rate. Now that being said, focus is critical. And we are focused on the most perishable opportunity. The most perishable opportunity right now is to capture as much travel demand as possible and be ready before anyone else is for this travel rebound. So we are making sure that we have enough hosts for this travel season. We simplified the guests experience, and we're providing world-class support. So that's where we're focused on this year. But make no mistake, we have many opportunities in the years ahead.

Our next question comes from Mark Mahaney with ISI.

Okay, I'll stick with one question. Just on the supply side, will you address the issue of whether increasing local restrictions is a factor that's limiting your supply in -- especially in some of the larger cities? And I realize that travel hasn't really recovered there fully. But just address the issue of whether how much of a constraint new local regulations on rentals, et cetera, is on your ability to expand supply?

Yes, I can take this at a high level. Dave, again, feel free to jump in as well. Mark, thanks for the question. What we saw with COVID was actually a positive reset in our relationship with cities all over the world. Now first, let me just start by saying we now collect/remit taxes in 30,000 jurisdictions. We collected and remitted to date $2.6 billion of transient occupancy taxes. What happened with COVID is two things: Number one, travel went from being concentrated in very few top cities to distributing everywhere, thousand cities around the world. Though we do see an urban recovery, we don't see that trend completely reversing. Because I think in a sense, you could say the genie's out of the bottle, a number of people have realized that there's all these really cool small towns, rural communities and small cities, many of which don't even have hotels. And so they're really important destinations. The other thing that we've noticed, though, is that a lot of cities have been hit really hard by the devastating economic effects of the pandemic. So you'll see major cities have had major tourism shortfalls, major tax shortfalls. And because of this, what we're actually seen is a lot of cities reaching out to us. In fact, we struck over 100 partnerships over the course of just the pandemic with destination marketing organizations, which as you know are basically tourism bureaus and tourism arms. From Scotland to Portland, we've been doing partnerships with cities all over the world. And to scale our partnerships to thousands of cities, we launched last year the City Portal as well. So this is what we're seeing. I don't know, Dave, if you want to add anything to that.

I think that's key. We also added this new capability last year of the City Portal, which is another tool to enable cities to understand what goes on with our business in each of their communities. And we think that's been another positive tool for cities to feel like they can work with Airbnb to help their economies rebound.

And your next question comes from Jed Kelly with Oppenheimer.

I guess, Brian, going back to business travel, I guess it's kind of like a two-part question. I guess number one would be, where are you in terms of talking to companies, talking to businesses sort of making the ability to work from anywhere through Airbnb and benefit? And then as, like, a follow-up, you mentioned work from anywhere. Your company is, of course, based in San Francisco. So how do you see basically potentially using the work-from-anywhere trend to sort of save costs to make your business more efficient if you can have more employees working outside the Bay Area?

Yes, these are two really good questions. Let me start with the first one. So as you point out and as I said, one of the kind of -- one of the trends that has been pretty remarkable over the last year is as more people have more flexibility, they can work from home. And that means they can work from any home, often on Airbnb. And so one of the things we're doing is we're continually trying to make it even easier for guests to be able to search anywhere around the world. And on May 24, we're going to show you some new tools and new ways to make the experience of searching on Airbnb, especially allowing you to search with more flexibility, even easier. Again, the type of flexibility we're looking at is people staying longer, booking any time and be able to go anywhere, not just to the same top destination. So we are going to continue to look at innovation in this area. And I think the other thing I'll just point out is, again, in 2019, only 14% of our nights booked were longer than 28 days. That's now 24%. And so we think this is a huge growth area for us. We think basically, 1/4 of our business is not even travel anymore. There's a lot of innovation opportunities for us. We're a design-led company at our heart. And I think they're going to offer a lot of really interesting opportunities. Now specific to our San Francisco employee base, let me talk a little bit about what I told our employees a couple of weeks ago. I told them there's two guiding principles. Number one, we want to model the live anywhere lifestyle. So by modeling the live-anywhere lifestyle, we're going to allow more flexibility for our employees. So I told our employees, they don't have to come back to the office until next September. We're going to allow a lot of flexibility. And even when we do ask people to come back, they're going to have a lot more flexibly before. People aren't going to be expected to come back to the office five days week every week. We think that is really not how most workplaces in the 21st century are going to operate. That being said, as an incredibly light company, we also do think that in-person collaboration is important. So we want to find some balance between modeling the live-anywhere lifestyle and allowing for in-person creative collaboration. And that's what we're designing. We want to get it right. We don't want to rush into this. So that's what we're going to be working on over the course of next year.

And your next question comes from Justin Patterson with KeyBanc.

Brian, just expanding on the prior question, it does sound like this platform experience update is really designed around inspiration and discovery. Without spoiling your announcement on the 24th, I'm curious about how you think about the opportunity to broaden the funnel on Airbnb, provide inspiration for travelers as they think about places they can stay and things to do such that Airbnb really starts to drive natural inspiration for the much broader spectrum of the customer base than before.

Thank you, Justin. It was a little bit hard for me to hear you, but I think the question was what are we doing to drive more inspiration and discovery on Airbnb, inspiring where you can go and what you can do, correct? I just want to make sure I -- I couldn't the end of that last question. Okay. I'll answer that. So yes, so inspiration is something that we're really focused on. Actually if you go to airbnb.com right now, if you type Airbnb.com, you're going to notice on our top of our homepage, there's a big piece of art and it says, "the greatest outdoors." So we just launched wish lists that are curated by Airbnb. And if you click on Get Inspired, you're going to see a number of wish lists. So this is just the beginning of a number of things we're doing to try to inspire more travel. On the home page below that, you're going to see that we're now merchandising places you can go nearby. So between wish lists, nearby travel and then some of the updates we have on May 24, I think that's going to continue to drive more and more inspiration. On May 24, though, we are going to showcase some new exciting features that I think are going to inspire people around flexibility. Because one of the things we've seen is if you are more flexible about where you travel and when you travel, then what that kind of means for some people is the home becomes the destination, suddenly where you go is less important than the type of home you say in. And so this is how we're thinking about it, and hopefully, if you can tune in, we can show you some of the things we're working on.

And your next question comes from Lloyd Walmsley with Deutsche Bank.

Two questions, if I can. First, can you talk about how you think about occupancy rates or kind of room nights per active listing over the medium term? It seems like it's been pretty stable over the past few years. But wondering if this notion of, like, blending of travel and living is kind of increasing shoulder season demand in a way where you can grow room nights in excess of listings, or getting more out of your existing listings? And then the second one, the average booking value per night looked really high in 1Q. If you peel back the onion and look within the same region, the same-property type, are you seeing pricing up? Or is most of this just mix shift? And how do you think about this as maybe as travel normalizes a bit? How would that impact ADRs going forward?

Great, Lloyd. So I'll take the first question on occupancy rate. Dave, you can take the second one. The answer to your question is yes. Occupancy rates, we think, average on global level will go up as we get better at matching supply and demand. The basic name of the game is in classic travel a lot of people try to go to the same place on the same date. That's why kind of when you show up to Paris in the summer, and there's a whole bunch of people in line at a landmark is because they're going to the same place at the same time. So to increase occupancy rates, there's one or two things we can do. We can add more hosts to the same places that everyone is going to, or we can point demand to other places. And as length of stay increases, as people shift from going to 20 or 30 cities to thousands of communities, and as people become more flexible when they travel, we can then show them deals. We can show them, for example, I know you want to go to -- we'll make up the place, France, in July. But if you went in September, you could get -- you could save a lot of money because there's fewer people there. Or we can point you instead of in Paris, we can point you to Brittany or some other community. So there's a lot of opportunities for us, I think, to point demand to where we have available supply, which will allow us to steadily increase occupancy. What it means is we don't need to increase supply linearly with increasing revenue. We can get more productivity out of the supply that we have. And Dave, I don't know if you want to take ADR.

Yes. And our ADRs in Q1 were up 35% year-over-year. That was after being up 13% year-over-year in Q4. The significant majority driver of the ADR increase is driven by mix. The rebound has been earlier in the U.S., which has a higher average daily rate. It's been in non-urban whole home and even larger homes, and each one of those is just, on average, a higher ADR. So the majority of the ADR that we're seeing is from mix. When you actually look at some highly constrained markets in a highly constrained time period, we're seeing some pricing pressure within there that will drive ADR rates up. So the vast majority of it is just driven by mix.

And the other thing I want to say, again, is -- yes, another thing I'll just say is as demand increases on Airbnb, that can also correspondingly increase supply. So again, one of the things we published in our S-1 was 23% of our new available hosts in 2019 were guests. That increased to 28% in our new available hosts that started out as guests in Airbnb in 2020. So we also think there's a really interesting flywheel where we can point demand where we have supply. We have a muscle to continue to add hosts, and but we can also convert guests to hosts. And as that number keeps increasing, that's another big lever for us.

And your next question comes from Brent Thill with Jefferies.

Dave, I don't know any color you can add around the final unlock that comes over the next week of close to 500 million shares. I know not all of those are eligible. But is there any way you could just frame that? There's been some fear of this unlock, and what it means. Can you just -- any color around that you could give would be helpful.

Yes. Dave, you want to take that?

Sure. So clearly, our unlock comes on Monday. And the key thing that we're doing to try to make sure that we're ready for that unlock, is to do what we've been doing, which is deliver outstanding results, deliver outsized kind of gross booking value revenue and driving for profitability. So there's not a lot more color I can give you on the unlock on Monday beyond that.

And your next question comes from Brian Fitzgerald with Wells Fargo.

We wanted to ask if you could tell us what you're seeing with respect to experiences, supply dynamics there, online versus offline, linkages to travel conversion rates there, anything with experiences?

Yes. Thank you very much for the question. So here's what I'd say about experiences. When we came back in the beginning of 2020, I really thought experiences would be a breakout year last year. It turns out a pandemic was a very difficult year for experiences. We had to put products on hold. We remain very, very bullish about experiences over the long term. One of the reasons we remain bullish is because the percent of guests leaving a five-start review with experiences is higher and remains higher than percent of guests who leave a five-star review for homes. But the pandemic was a difficult time for experiences. So we launched online experiences, which is the way to have an experience without leaving your living room. And I am thinking that in the coming years, experiences will be successful because there's fewer alternatives. There's fewer mass tour operators, bars, lounges and restaurants that are going to be operating at full capacity. So we do think there's a window, and we're playing the long game on this one.

[Operator Instructions] And your next question comes from Stephen Ju with Credit Suisse.

Okay. So Brian, I asked the same question to one of your competitors last week. So I'd be interested in your opinion what is probably more of a macro consideration. So the consumer savings rate, at least in the United States, is probably at the highest level it's been since World War II. It will take some time for all of this to widen down to, I guess, normalized levels, which brings up the scenario of consumer spend probably accelerating for the next several years. And hopefully, one of the likely destinations for all of these dollars is going to be in travel. So I know it's early days of the recovery, but what are you seeing in terms of, I guess, greater willingness to maybe, say, upgrade to the more expensive Airbnb, or just in general stepping up in the frequency as we recover here?

Very good question, Stephen. Let me tell you what we're seeing so far. One of the things is we did travel surveys in the beginning of the year. And we surveyed people in the United States. We also surveyed people around the world. And in our surveys, what we found is that the out-of-home activity people missed the most, more than restaurants, more than bars, more than sporting events, more than concerts, was travel. The kind of travel people missed was not business travel. It was not mass travel, going to crowded destinations. It was really just spending time with people that they've not been able to see during the pandemic. I think that we generally just yearn for what was taken away from us. And travel and spending time with people was something that was taken away from us. Now with regard to your question about are we seeing people upgrading? We have seen, as we mentioned, a material increase in the average daily rate in the United States. And this does give us a sense of consumer willingness to spend. Maybe another way of saying it is maybe before the pandemic, people were booking studio apartments in cities. Now what we're seeing is a pretty big expansion of people booking entire homes, typically even more bedrooms, the number of guests per reservation has increased considerably. And so correspondingly, people are spending more money. I think that trend, of course, will get normalized over some period of time when other geographies recover and urban recovers. But I do think that we are going to see sustained confidence, there's no question.

And your next question comes from Deepak Mathivanan with Wolfe Research.

Just a couple of quick ones. So first, can you talk about the implications of booking window trends on second quarter and second half? There's a lot of summer bookings happening right now already in markets like Europe and even in North America. Is that earlier than usual? Or does that mean that the recovery is being pulled forward by some capacity? Just wondering if you can now provide some insights on that, and then second question, not sure if this was asked already. How are you thinking about the ROI on the targeted digital marketing programs in the hosts? Are these on performance channels? Any color that you can add there would be great.

Yes. Dave, why don't you take these two questions.

Sure. So regarding the booking window, we're seeing the booking window, obviously, in 2020 shrank dramatically, right? People were hesitant to travel. They only started booking when they had high confidence that they were going to travel. What we've seen here early in Q1 of '21 is the booking windows have expanded. And in March, we actually saw booking windows consistent with those from March of 2019. And so the windows are expanding. I think that what you're seeing is still even more confidence in the U.S. So that the willingness of travel and the booking window in the U.S. has expanded further than it has in Europe. But we're starting to see some greater acceleration of our European business. We're seeing the European nights increasing the rate of year-over-year growth every month of the year since the beginning of the year, including through April and May. And we're seeing that as things like the lockdowns in France are removed. And after the U.K. Prime Minister announced plans to exit lockdown in February, we started seeing more acceleration in Europe. So the booking window trends are positive and give us encouragement for what we're going to see in the back half of the year. But we'll just have to see what the lockdowns and other kind of travel restrictions look like for Europe for the back half. And then regarding the ROI and targeted digital marketing for hosts, this is one of the levers that we have. When we do target digital marketing for hosts, it would be in specific areas that we know are more supply-constrained and where we want to focus on it. We established a return on that investment for value of the hosts that we acquire through that channel. And it is one channel, but it's not the only one, and it's not the primary one. Again, the most important thing is to kind of step back and educate people about the benefits of hosting, and then make it easier for them to host once they start considering it.

And your next question comes from Kevin Kopelman with Cowen.

A quick one, could you give us an update on cancellation rate trends this year compared to 2019 with I think the average listing being a little bit more flexible than it was in the past?

You're welcome. Dave, do you want to take this one for Kevin?

Sure. So the cancellation rates obviously were substantially elevated in 2020 versus 2019. They've begun to moderate so that they are sequentially below where they were at in 2020, but they're still moderately elevated versus the 2019 rate. So we're seeing a bit more returns than normal but it's not quite to historical level rates.

And your next question comes from Tom White with D.A. Davidson.

Just one from me to follow up on ADRs and specifically your expectations for the second half. I know there's some color in the letter, but can you maybe unpack your thoughts on kind of all the different moving pieces there between the recovery and some of the kind of structurally lower ADR markets, recovery in urban and cross-border. Just curious to hear your thoughts on how it all kind of nets out, you think, in the back half?

Thanks, Tom. Dave, I'll give you this one.

Sure. Yes, I think that the best thing to do is actually kind of look at some of the guidance figures that we gave in the earnings call itself where we're basically expecting -- because it's harder to have visibility in the back half of the year. We're highly confident in the rebound that it's going to be coming. All the early indications are that it's there. But it's hard to kind of precisely pin down what Q3 and Q4 are going to do. So what we did do is give some perspective on what we expect out of Q2. And that is that our gross booking value in Q2 of this year will be higher than in Q2 of 2019, and that our revenue rate in Q2 will be similar to that of 2019, and that our EBITDA will be -- our adjusted EBITDA will be breakeven to slightly positive in Q2 of this year. So I think those are kind of the key things. Because as you said, as rebound comes back, the pace at which it comes back in the geographies that come back will affect the mix on those ADRs. And we do expect the ADRs to moderate, but it's hard to perfectly pinpoint down the specific of that mix.

I will now turn the call back over to the management team for closing remarks.

All right. Well, thank you, everyone, for joining us today. I just want to recap. We are really proud of our strong Q1 results. We believe they're a testament to our focus and the adaptability of our model. And we've shown over the past year that as the world changes, Airbnb can adapt. I think we're now well positioned for the travel rebound ahead. As travel returns, Airbnb will be ready, and our hosts will be ready as well. So I hope you'll join us on May 24, where we'll share insights on how travel is fundamentally changing and announce the most comprehensive update to Airbnb service in 12 years. Thank you, and we'll see you then.

This concludes today's conference call. You may now disconnect.