Airbnb is a company based in San Francisco, California. The idea conceived after its founders put an air mattress in their living room, effectively turning their apartment into a bed and breakfast, in order to offset the high cost of rent in San Francisco. The company focuses on providing lodging and homestays catering to tourists and people looking for short-term living arrangements. The company does not own any of the real estate it offers for rent, rather it acts as a broker, renting out houses of different hosts in return of the commission.
With the onset of the Corona Virus, several companies have suffered a huge setback. This includes the travel and hospitality industry including the well-known company. Airbnb which is an online marketplace offering lodging. With measures taken to make sure that people stay at home. The pandemic has had a largely negative impact on Airbnb as tourism rates have taken a huge dip, causing a fall in one of the most important sources of revenue for the company. Even though most of the headlines surrounding the company are talking about how Covid-19 has lead the company into a rising debt. Airbnb has also been busy redesigning its product offerings.
Providing homes to healthcare workers and expanding into new horizons:
Airbnb has now shifted its focus to online experiences and opportunities for hosts to offer housing to healthcare staff and first responders. According to their chief design officer, Alex Schleifer, the entire process of redesigning took approximately three weeks including employees to work for ops, products, localization, design, policy and engineering. The company undertook the process of obtaining large amounts of real estate to offer readily available places to front line workers whenever required. The company now offers more than 100,000 homes to these workers in this time of distress, the houses are offered by the hosts either in the form of donations or at highly reduced prices. Another new initiative taken up by the company is centered around offering online learning experiences. Focusing on their aim of hosting, the company has now also inculcated online classes held by hosts on a variety of activities such as cooking and cocktail mixing. Successfully keeping the website active during this stagnant time.
The unavoidable money-crunch the company is bound to face:
Even after all the measures taken by the company to keep its services active, the pandemic has caused it to suffer massively. The state and central government having enacted various restrictions when it comes to booking short – term rentals have caused hosts to suffer majorly. Especially small business owners that rely on short term bookings for extra earnings.
At the beginning of the year the company had planned to enter the public market. The company had lined up bankers to lead the offering which would test if the company was ready to live up to its $31 billion private market valuation. But due to the outbreak, Airbnb is now at a debt of $2 billion as reported by The Wall Street Journal.
Impact on the company’s employees:
The company itself has suffered a major setback. Like having informed its employees of a hiring freeze, and its decision to suspend marketing. Also cutting off executives’ salary along with the warning of not expecting to receive any bonuses in 2020.
Measures taken to provide relief to employees after layoff:
Airbnb has also decided to launch a public-facing website to help its leaving employees to find new jobs by uploading their resumes and work samples which will be accessible to potential employers. Recruiters that will remain a part of the company will help other employees to find jobs. The company has also teamed up with the application – RiseSmart, a company that specializes in career transition and job placement services. Which will provide their services to ex-employees for a period of four months.
Some good news midst the darkness:
As China begins its path towards recovery after Covid-19, things are also looking up for China’s Airbnb. Ninety-nine percent of the existent short-term rental hosts are ready to get back into the market. While only one percent are not interested in indulging in rentals after the outbreak. Out of the hosts with positive sentiments, seventy-two percent are willing to maintain and even increase their Airbnb hosting activity. In China, Airbnb is the leading platform for weekly and monthly rentals. A survey done by the company reveals that more than one-third of all weekly rental users and nearly one-third of monthly rental users have searched for lodging on Airbnb. This factor itself will be a major reason behind Airbnb’s revival in the country. With the only major question being the level of cleanliness and safety provided by the company as brought forward by consumers. To tackle this issue, Airbnb has come up with, “Rest Assured Stays” program that highlights listings with a high level of cleanliness and sanitization standards. This program will also offer guidelines for home cleaning and sanitation for hosts. So as to reassure consumers that their health and safety will be well taken care of.
Revival in rural areas:
Once the Covid crisis stabilizes and the lockdowns are lifted, Airbnb is bound to see more bookings in rural areas rather than in cities and famous tourist spots. The reason being even after conditions have become better, people will be skeptical to visit other cities and crowded places. Although, some may decide to make a trip to rural areas near their city for a break. On the other hand, bookings in major cities will probably take time till 2021 to revive.
Hotels serving as tough competition:
When travel between cities does resume, experts think that there may be a swing back towards traditional hotels. This is due to Airbnb’s reliability when it comes to cleanliness. Although the company may make promises to provide high standards of safety and cleanliness, this factor largely depends on the hosts of the various estates.
The final big question – Can Airbnb survive this pandemic?
In the immediate future, things seem to be looking down for the company. The company has taken several measures and is doing whatever is possible to keep losses at minimum. But it also has its shares of worries including spoilt relations with existent hosts. Which was caused due to the company’s decision of undertaking blanket cancellation upto 31st May to prevent consumers from feeling pressured to make use of their bookings despite the dangerous situations. To repair their relationship with the hosts, Airbnb has set up a $250 million fund to compensate hosts for up to 25% of their lost income. Also with an additional $10 million bailout fund for super-hosts. This measure will help the company to maintain good relations with hosts which will be important when tourism revives, although when this revival will take place and at what magnitude still remains a mystery.