With most of the countries being in lockdown, COVID-19 is continuing to adversely impact the travel and tourism sector. Subsequently, startups in the domain have found it tough to carry on at the same pace, since there is no business to be had for now. As a result, many have started downsizing staff and operations, and AirBnb has just joined that list.
According to an announcement made by company CEO Brian Chesky, the decision is going to affect approximately 1,900 employees of the total 7, 500 workforce and the laid-off employees in the Unites States will get 14 weeks of base pay plus one additional week for every year at the company. Airbnb will also provide 12 months of healthcare for laid off American employees, and will set May 11 as the last date for the impacted employees in U.S. and Canada.
In a message for the employees, Chesky mentioned the losses to the company, “We are collectively living through the most harrowing crisis of our lifetime, and as it began to unfold, global travel came to a standstill.” Adding, he wrote “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 also conveyed that Airbnb will halt projects related to hotels, a transportation division and luxury stays. “Travel in this new world will look different, and we need to evolve Airbnb accordingly. People will want options that are closer to home, safer, and more affordable. 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”.
In a similar notice release in late March, Airbnb informed that the CEO would not take his salary and executives would bear 50% reduction in remuneration for the next 6 months, and no 2020 bonus would be given to the employees. The company also mentioned hiring freeze for all roles with an exception of very critical ones.
There have been similar layoffs in travel and toursim related upstarts globally. India’s Softbank-backed Oyo too announced similar lay-offs. The company was already facing headwinds prior to coronavirus-induced business break, and the pandemic only further dented its growth prospects. The company laid off thousands of employees, and has almost completely laid off its US staff amid a stalled business environment.
Eyeing its entry in pubic markets, AirBnb had been expecting major investments this year. More recently, the company raised well over $2 billion in multiple equity and debt rounds, in a bid to recapitalise its coffers and ensure a smooth planned IPO.