At the beginning of the COVID-19 pandemic(Q2, 2020), Airbnb CEO Brian Chesky in an interview said that Airbnb reported a loss of more than 80% of their business. The travel wreckage that was caused by the pandemic, made home rentals a safe haven for the travel-starved. Airbnb had the advantage of not maintaining any of its properties. Therefore, having no fixed costs. Gross bookings had fallen by half in 2020 in Airbnb’s top 20 cities compared to 2019. Although the CEO and other executives quickly realized that changes to the business had to be made. “Travel as we knew it is over”, they observed early on. They also added to it saying that it is over and it’s never coming back the way it was. Keeping that in mind they quickly refocused on the core of their business- home rentals. From March to April 2020 they had more cancellations than bookings. After various efforts, they noticed a 1% increase in gross bookings in July. Over time the business started to improve.
According to The Wall Street Journal, its valuation fell from a high of 31 billion dollars to 18 billion dollars. The company had to lay off nearly 2000 employees, 25% of its workforce in May 2020. There was additionally a steep reduction in discretionary and capital expenditures, slashing of executive salaries and also a suspension of all facilities build-outs. The company had to suspend a lot of new ventures they had planned, provide a directory and insurance for the laid off employees, and handle the workload without the employees that were let go. On top of all the losses and cancellations, Airbnb took care of its hosts as well, who are also considered as a part of the Airbnb team as employees are. Airbnb pledged $250 million to help reimburse hosts for canceled stays and launched a $10 million fund for hosts’ grants to cover their other several expenses. An Airbnb policy said it will pay 25% of what the host would have received for the guest cancellation policy.
Things started to look up, from Mumbai to Madrid after all the quarantining, lockdowns, curfews people wanted a change of scene for both work and play. In many Airbnb listings, “laptop friendly” had been a top feature being displayed now. With the rut that people were in, work from home later turned into work from any home. Demand from rural, local listings had increased significantly. Talking about home stays and short term rentals in India, it was never a traveller’s preferred choice. As Indians, we like luxury when we travel. But with the constantly changing regulations, travel was still marred. Moreover, most travellers would prefer a small property with smaller common areas and minimum staff coming in, for better hygiene and safety. There are fewer common areas in small properties which pose less risk and exposure. In most cases, that would mean all guests in the property would be your own people. Ergo, well constructed premium villas at a drive down distance performed excellently. Then came the time when people preferred Airbnbs over restaurants and cafes. People hosting a small gathering, people living with their in-laws and hoping to meet friends, would rather book an Airbnb than invite them to their own houses.
Hygiene became a top priority for all travellers. An option started to appear for some Airbnb listings where the property would be vacant for 24-72 hours as a COVID-19 safety measure. They had launched their hygiene standards following the Centers for Disease Control and Prevention’s (CDC) guidelines including wearing masks and gloves when cleaning and dusting. With most Airbnb listings situated in remote areas, it made them a social distancing friendly place which was a big plus the hotels and resorts did not have. A property being social-distancing friendly provides travellers a level of comfort in the midst of a pandemic caused by a virus which spreads through direct, indirect and closed contact. A pandemic friendly approach made Airbnbs, home sharing a winner on privacy as well, as compared to that of hotels.
After all the safety efforts, executive salary cuts, firing employees, maintaining ideal hygiene standards and suspension of all marketing efforts, Airbnb reported a profit of $219 million in the last quarter of the year. The war between them and the five star hotels was a tough one. Considering that you can work from anywhere, any home then why would you not choose to work from a suite?
Then comes the IPO of the home rental company. The company’s shares were sold in the primary market at $68, but they were set to begin trading at the bourses for a whopping $145 per share. The opening price of the shares left the CEO Brian Chesky momentarily speechless on live television. The shares had sat 113% higher than their IPO price. Airbnb had a stunning IPO with a market valuation of over $100 billion. Making it the biggest IPO of the year.
Airbnb seemed to be the go-to for the remotely working community. Similarly, an acquaintance had travelled to Goa for a span of 4 weeks, booking a different property via airbnb every week which proves the theory of working from any home. Taking work from home to her advantage she could give her laptop a new backdrop and take the much needed getaway which she needed. I believe that Airbnb in similar nature helped a lot of travellers plan and successfully execute long trips, since hotels would not have been as pocket friendly. When it comes to customer satisfaction, Airbnb does not hold back, be it coronavirus safety guidelines, providing experiences or affordable stays, Airbnb will be there.