Airbnb has announced that it will be letting go of 1,900 of its employees, around one-quarter of its total workforce in the wake of the COVID pandemic wreaking havoc on the travel and short-term accommodation industry.
Airbnb was last valued at $31 billion, and up until just a few days ago, had 7,500 staff members. In terms of its user base of hosts, 650,000 in total have seen their income hit dramatically. NPR writes that “nearly half of Airbnb hosts lean on their rentals to pay their monthly rents and mortgages, with some saying a $250 million host relief fund and other measures the company has taken to assist hosts aren’t enough.”
Data from STR, a hospitality industry tracker, hotel bookings have dropped an astounding 74%, with potential customers concerned about the spread of germs that has prompted a number of hotel chains to promote their cleaning initiatives.
“You go from having multi-year plans to figuring out how you’re going to get to next Thursday because you can’t even predict what the world is going to look like in two months.” Airbnb co-founder and CEO, Brian Chesky.
In an email to employees that has been published on its website, Airbnb’s co-founder and CEO, Brian Chesky described the current state of business as one of the “most harrowing crisis of our lifetime,” adding that “today, I must confirm that we are reducing the size of the Airbnb workforce.”
“Airbnb’s business has been hit hard, with revenue this year forecasted to be less than half of what we earned in 2019. In response, we raised $2 billion in capital and dramatically cut costs that touched nearly every corner of Airbnb,” Chesky explained.
“While these actions were necessary, it became clear that we would have to go further when we faced two hard truths: we don’t know exactly when travel will return, [and] when travel does return, it will look different.”
Experts have noted that the full extent of damage to the technology sector is yet to be revealed, but judging by data from Layoffs.fyi there have been more than 38,000 layoffs at 369 Silicon Valley start-ups. The extent of the damage has been mapped out below.
Chesky told NPR last week that the virus was causing significant damage to his platform, stating that “you go from living year to year to month to month to week to week to day to day… you go from having multi-year plans to figuring out how you’re going to get to next Thursday because you can’t even predict what the world is going to look like in two months.”
Chesky said that there’s no doubt the travel industry will look extremely different in the post-COVID recovery period, and reiterated the need for Airbnb to pivot with this transformation. “People will want options that are closer to home, safer, and more affordable,” he said. “But people will also yearn for something that feels like it’s been taken away from them - human connection.”
The embattled CEO reiterated the company’s guiding principles to approaching reductions in the company, stating that mapping all the reductions in Airbnb’s future business strategy, helping those who are impacted, committing to diversity, optimising communication and being fully transparent are atop the list.
“This means that we will need to reduce our investment in activities that do not directly support the core of our host community. We are pausing our efforts in Transportation and Airbnb Studios, and we have to scale back our investments in Hotels and Lux,” he confirmed.
The sudden and profound drop in its platform raises concerns about whether or not Airbnb will meet its forecasted IPO later this year. Chesky said that in spite of recent events, he’s “very confident” that Airbnb will still go public later this year, adding that “I’m going to do everything in my power to work on this.”