Airbnb CEO: The travel industry is more resilient than anyone thought
(CNN Business)In the first half of this year, with its business decimated by the pandemic, Airbnb cut a quarter of its workforce and reportedly slashed its valuation as part of a deal to secure more financing.
Now, following a remarkable comeback, the home-sharing company is set to make its long-awaited Wall Street debut just as the pandemic worsens and once again throws the state of the travel industry into question.
Airbnb is poised to begin trading on the Nasdaq on Thursday under the stock ticker “ABNB.” The company priced its initial public offering at $68 a share on Wednesday, valuing the company at $47 billion.
The IPO price was well above its previously proposed range of $44 to $50 a share, signaling strong investor demand in what’s shaping up to be a good week for technology companies going public. On Wednesday, delivery app DoorDash saw its shares surge 85% in its public market debut.
While DoorDash has benefited greatly from people staying at home, Airbnb stands to benefit from a successful vaccine rollout that helps end the pandemic and allows people to travel more.
Founded in 2008 as Airbed & Breakfast, Airbnb upended the hotel industry by popularizing the once unthinkable idea of renting out rooms in the homes of strangers. Its platform is used to find and book accommodations in 220 countries and regions around the world. Airbnb now offers full apartments, homes, and hotel rooms for rent as well as travel experiences.
One of the most valuable private startups in the world, Airbnb was valued at a high of $31 billion in a 2017 financing round, but was reportedly valued at $18 billion when it raised debt financing during the pandemic.
The pandemic rattled Airbnb’s business and many of the hosts who power it. The company was hit hardest in March and April when it had more cancellations than bookings. In early May, the company cut 25% of its workforce, or 1,900 employees.
Airbnb saw improvement in bookings the following months, driven by those using its platform for long-term stays as well as domestic and short-distance travel.
Then came another surge in coronavirus cases.
“During the fourth quarter of 2020, another wave of Covid-19 infections emerged. As a result, countries imposed strict lockdowns, in particular in Europe. Similar to the impact of the initial Covid-19 wave in March 2020, we are seeing a decrease in bookings in the most affected regions,” the company wrote in its prospectus.
Unlike many other highly-valued startups, Airbnb previously said it was profitable, excluding some expenses, in 2017 and 2018. But like other sharing economy startups, Airbnb has faced a number of regulatory battles over the years with local and state governments over how it operates in their jurisdictions. The issue remains an ongoing risk to its business.
In its filing, the company outlined that it is “subject to a wide variety of complex, evolving, and sometimes inconsistent and ambiguous laws and regulations that may adversely impact our operations and discourage hosts and guests from using our platform, and that could cause us to incur significant liabilities including fines and criminal penalties.”
Airbnb has also grappled with the misuse of Airbnb rental properties for house parties. In August, it announced a global ban on all parties and events at Airbnb listings, capping occupancy to 16 people. Over Halloween weekend, Airbnb prohibited one-night reservations of entire home listings in the United States and Canada in a move to stop parties that could contribute to the spread of coronavirus. It is deploying a variation of this for New Year’s Eve reservations in some regions.
During the pandemic, some cities temporarily cracked down on short-term rentals, and hosts were forced to pivot rentals to 30 days or longer.
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