Airbnb, the US platform born in 2007, offers homestays and operates over more than 65,000 cities in 191 countries around the world. Airbnb sees its stock market exit endangered by the spread of COVID-19.
This is because the outbreak of coronavirus is damaging the economy of several countries, which has consequently affected some companies including Airbnb. This company has seen its income affected as the tourism sector began to be disrupted in the last weeks of February, with the European continent suffering the most. For all these reasons, we can say that it is in a difficult situation.
Airbnb, one of the most valuable unquoted “start ups” in the world with 150 million users, just a few months ago communicated that its priority for the year 2020 was to go public for which it has been working hard. Its goal was to start the process around March or April.
Despite being a private company, it does not have to give data on its financial situation. We know that in 2018 this company obtained 40% more profits than the previous year, obtaining in the first 9 months profits of 200 million dollars. However, even though the company had a solid financial situation, it is now evaluating the risks of entering the markets after a year without giving profits. In fact, in the first 9 months of the year 2019 it lost around 322 million dollars, so we see that this company was already going through some difficulties.
However, the travel industry is being hit hard by the emergence of this virus, as both companies and individuals around the world are cancelling their trips, which could make Airbnb’s goal unattainable. In fact, the Airbnb spokesperson said, “The coronavirus outbreak is causing travel restrictions and other disorders that have a direct impact on the travel and tourism industry.” Tourism is undoubtedly being affected as borders have been closed in several places in addition to a large reduction in both leisure and business travel.
Other measures that have affected this business include the fact that Donald Trump, prevented European tourists from entering the country for at least a month. In addition, the US market will also have a slowdown due to the cancellation of events such as concerts or the NBA season, and other restrictions that have had to be taken due to the appearance of the coronavirus. In addition, we can include as another of the impacts that the virus has had on Airbnb, the endangering of their sponsorship in the Olympics, as it is not known whether or not the big sporting event will be cancelled.
Also, it is worth noting that Spain, one of the most affected countries by the coronavirus, was the third country in which Airbnb had a greater economic impact, obtaining from this place 10 million travellers. Also, it is important to point out that this virus has caused the suspension of the reservations in some countries like China. In fact, Beijing, a city a few miles away from the outbreak, had a 96% drop in reserves. Although other cities were also affected such as the capital of South Korea, Seoul, or some Italian cities like Rome or Milan. Many of the cities most affected by the COVID-19 are among the places with the highest number of reservations on this platform, such as Tokyo or Rome.
The company has taken exceptional actions given the situation, so it has created a program called Reservas Más Flexibles (More Flexible Reservations), in order to give facilities to customers allowing some refunds to customers and giving the amount of 10 million dollars to help rental operators in China. In addition, service fees on trips already purchased from now until June, which are not included in the company’s policy of mitigating circumstances, will still be reimbursable with travel coupons for future travel. Also, it allows guests and hosts to cancel all reservations to and from countries that are at high risk. The company also announced that 60% of its reservations had policies that allowed for half or full refunds.
Despite all the above, after asking the Airbnb spokesman whether they were continuing with their intentions to go public, Papas said that the company’s intentions had not changed, although it was necessary to be cautious and not to be hasty. So, its public floatation could be delayed until 2021, breaking with the plan.
However, Airbnb is not the only entity that is facing this situation, but more large companies are considering going public after the appearance of the coronavirus. The volatility of the stock market and the adversities that companies are facing due to this new situation may make it truly unlikely that any company will go public soon.
Some people stress that it is too early to say that Airbnb will not go public in 2020, but it is not too early to say that it will not be in this first half of the year when this will happen.
Still, Chesky, the company’s co-founder, without losing hope wrote “Airbnb was born during a global crisis” referring to the 2008 financial crisis and not mentioning the company’s IPO plans, he said. “If it didn’t stop us then, it’s not going to stop us now”.
Source: Tech Crunch
