“You wouldn’t have an empire without us”, a Airbnb the host shouts into the camera in a video speaking to the company’s billionaire co-founder and CEO, Brian Chesky. “These are our homes on your platform. It’s our face on millions of ads. It’s our soul that brings the magic… It’s our place that brings you money.
The man in the video is throbbing with anger over Airbnb’s decision to allow customers to cancel travel bookings beginning before May 31 with full refunds due to the coronavirus outbreak. The anger is so high that many commentators dismissed it as a parody, and the Guardian was unable to confirm its authenticity.
But Airbnb’s army of 700,000 hosts are distraught over the revenue they are losing due to the company’s generosity to customers. Chesky this week apologized and said the company would spend $250m (£200m) covering 25% of what hosts would have been paid under their cancellation policies for bookings between March 14 and May 31.
An additional $10 million relief fund is being made available to “super hosts” offering grants of up to $5,000 to “hosts suffering the most”. Airbnb founders will also take no salary for six months, and top executives will see their salaries cut in half.
“Although it might not seem like it, we’re partners,” Chesky said. said in an email to the hosts. “When your business suffers, our business suffers. We know that many of you are struggling right now, and what you need are actions from us to help you, not just words.
Airbnb has accumulated reported cash reserves of $3 billion from booking fees charged to guests and hosts. It earned more than $4.8 billion in fee income last year, according to Reuters. Hosts are charged 3% of each reservation, while guests are charged up to 14.2%.
The hangover from the coronavirus pandemic will likely last much longer than May 31 or whenever governments lift restrictions on movement. Hosts are reporting empty booking calendars stretching throughout the summer, and research from analytics website AirDNA shows bookings in some cities have dropped 96%.
For hosts who occasionally rent out their spare room in true bed & breakfast style, the loss of Airbnb revenue due to the coronavirus is frustrating.
But, for those who have built up mini (or in some cases not so mini) property portfolios that depend on a steady stream of guests passing through Airbnb apartments in Bath, Barcelona or Berlin, the prospect of weeks or months without guests fate financial disaster.
It’s also a disaster for Chesky, 38, and the large number of Airbnb employees who hold stock options. The company was lining up for an IPO this year, which some investors hoped would value the 11-year-old tech giant up to $42 billion – even though the Wall Street Journal reported the company had lost nearly $320 million in just the first nine months of last year.
In a video presentation Thursday, Chesky told staff the company had cut its valuation to $26 billion from $31 billion when it last raised funds from investors in September 2017. according to the Financial Times.
Airbnb employees have long been pushing executives to launch an initial public offering (IPO) as stock options granted to senior staff begin expiring in November 2020. Those shares could be worthless if the platform doesn’t not trade on the public market.
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“They’re stuffed, the IPO just can’t happen,” said Richard Holway, president of analyst firm TechMarketView. “Airbnb is in the worst of the worst situations. Unlike other tech companies, like Uber, which can deliver instead of drive people, it can’t branch out. There’s nothing Airbnb can do to make money.
“Everything indicates that Airbnb’s revenue around the world has just stopped,” he said. “He [coronavirus and lockdown] exposed the Airbnb business model, and it’s going to take thousands and thousands of people with it. People [hosts] went there as an absolute company and they are in a very, very difficult situation.
To try to make an income from their empty properties, landlords have flooded the rental market with their Airbnb apartments. On Princes Street in Edinburgh, for example, there are 209 Airbnb listings on a road of just 494 homes. Goods The Rightmove portal said the number of new rentals coming onto the market in the week the UK lockdown began increased by 45% in London, 55% in Brighton, 62% in Edinburgh and 78% in Bath. It’s the same story all over the world with an increase of 61% in Dublin and 41% in Prague.
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Holway said many hosts depend on Airbnb income to pay mortgages on not one but multiple properties, while others “rent apartments from commercial landlords and then seek to make a profit by renting them out to others.” short term on Airbnb – it’s not going to happen now”. .
Sheffield-based entrepreneur Alex Milburn claims he made ‘£1,000,000 in Airbnb sales in 12 months’ and is now marketing his ‘rent to rent’ strategy in full day seminars cost £997 (plus VAT). He promises, in YouTube videos, that he can teach others how to make six-figure sums “with very little or none of your own money.”
An Airbnb host rented out 881 properties in London in a single year, generating £11.9million in revenue, according to AirDNA. The anonymous person was reportedly the highest-earning Airbnb owner in the world in 2017.
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