Airbnb, a San Francisco-based homestay and tourism service, has reversed its plans with its hospitality business.
Airbnb goes from IPO rumours to layoffs: Airbnb, a San Francisco-based homestay and tourism service, has reversed its plans with its hospitality business.
There was a time when the company seemed to go public this year, but as the coronavirus hit the world, all plans for the company to evaporate as the company’s businesses dried up, leading to massive layoffs.
So how does Airbnb plan to go forward?
An IPO that never existed
The investment world has been anticipating AirBnB’s initial public offering for many years. Founded 12 years ago, the company has 150 million global users in 65,000 cities.
Its primary service allows individuals to rent rooms to temporary travellers in their homes or their entire home. Undoubtedly in the hospitality market, Airbnb proved to be the preferred choice of thousands of generations in a “shared economy”.
Investors have acknowledged the importance of the Airbnb to the growing travel industry, where tourists who paid to stay in a traditional hotel are now seeking to stay as locals.
In 2017, the company was valued at $31 billion, and industry analysts estimate that by the end of 2019, the company would be worth $42 billion.
At least, the company planned to go public. But tourism and hospitality are now standing, and market volatility is at an all-time high, the result of an unexpected global epidemic.
IPO plans have been halted as even the most risk-neutral investors are running to the mountains for fear that the Airbnb and the holiday market will not return.
Great layoffs for Airbnb
There is no loss of investors compared to the loss of employees. Airbnb has been forced to lay off 25% of its workforce – 1,900 employees.
CEO Brian Cesky said in a statement that Airbnb’s revenues for 2020 will be more than half of last year. But the company is trying to alleviate dismissal concerns by giving outgoing employees a 14-week base salary and an extra week each year at the employee’s company.
With travel restrictions remaining, and people getting bored at home, Airbnb sees its future in online experiences.
Before the epidemic, the company provided its primary service with booking experiences, in addition to cruises that travellers could enjoy in their host city.
One flight class above Santa Monica, a Moroccan cooking class in Rabat, or a tango lesson in Buenos Aires is one of the interactive services Airbnb has provided its users in the past.
Now, these experiences are heading to digital. Customers can try other interactive experiences, such as zoom workout classes taught by Olympians or virtual wine-tasting offered by lecturers.
While these measures are not in line with the massive success of the company’s previous homestay service, Cesky is hopeful that an epidemic in the past will result in an aggressive surge in world travel.
When that time comes, when the company steps back, it is likely to revisit an IPO.