Airbnb, the San Francisco-based homestay and tourism service, has had its plans turned upside down along with the entire hospitality trade. There was a time when it looked like the company would go public this year, but as the coronavirus took its toll on the world, any plans to go public have evaporated as virtually all of the company’s business dried up, leading to massive lay-offs. So how does AirBnB plan to go forward?
The IPO That Never Was
The investment world has been anticipating AirBnB’s initial public offering for years. The company, established 12 years ago, has accrued 150 million global users in 65,000 cities. Its flagship service allows individuals to rent-out rooms in their homes, or their entire home, to temporary travelers. An undoubted disruptor in the hospitality market, AirBnB proved to be the millennial generation’s preference in a “sharing economy.”
Investors have acknowledged the importance of AirBnB to an evolving travel industry, where tourists who used to pay to stay in a traditional hotel are now seeking to lodge as the locals do. In 2017, the company was valued at $31 billion, and by the end of 2019, industry analysts estimated the company had grown its worth to $42 billion.
At least, that was the valuation at which the company planned to go public. But tourism and hospitality are now at a standstill, and market volatility is at an all-time high, the results of the unforeseen global pandemic. IPO plans have been shelved as even the most risk-neutral investors run for the hills for fear that AirBnB, and the vacation market at large, will not soon bounce back.
The loss of investors is nothing compared to the loss of employees. AirBnB has been forced to lay off 25% of its workforce – 1,900 staff members.
CEO Brian Chesky said in a statement that Airbnb’s revenue for 2020 will likely be half of what it was just last year. But the company is trying its best to ease termination anxiety by offering outgoing employees 14 weeks of base pay, plus one additional week for every year that employee worked for the company.
With travel restrictions remaining in place, and people growing bored at home, Airbnb sees its future in online experiences.
Even before the pandemic, the company was supplementing its flagship service with bookable experiences, excursions that travelers could enjoy in their host city. A flight class above Santa Monica, a Moroccan cooking class in Rabat or a tango lesson in Buenos Aires are among the interactive services that AirBnB has offered its users in the past.
Now, these experiences are going digital. Customers can try out Zoom workout classes taught by Olympians or virtual wine-tastings hosted by connoisseurs, among other interactive experiences. Though these activities are unlikely to match the colossal success of the company’s previous homestay service, Chesky is optimistic that once the pandemic is in the past, there will be an aggressive surge in world travel. When that time comes, and when the company regains its footing, it is likely to reconsider an IPO once again.