Airbnb’s announcement that travel will become much more local will be a welcome relief for many in larger EU cities who have long been fighting the company’s impact on the property market. The news that bookings are on the up is also good news for the company–still planning an IPO–and its many hosts, who have had a bumpy start to the year.
Airbnb had a bumpy three months
Airbnb didn’t fare well during the start of the pandemic. It made 25% of its workforce redundant and as reported by CNBC, it had to raise $2 billion in a combination of equity and debt to shore up its balance sheet.
It was praised for introducing a cleaning protocol for its hosts and for introducing a scheme whereby hosts could house key healthcare workers for free or at a reduced rate, and announcing free refunds to guests who couldn’t use their bookings due to travel restrictions.
However, following a stream of criticism from hosts who were fast losing penalty payments as guests began to cancel, Airbnb brought in a $250 million global fund to help hosts. It also established a $10 million Superhosts fund (for hosts who consistently get great ratings) so they could apply for grants to help pay their rent. With eyes undoubtedly on its future IPO, the latter was funded by $1 million from Airbnb staff donations and $3 million each from the three Airbnb founders.
On March 12, the Financial Times reported that Airbnb bookings were down 40% in major European cities and China combined, because of the SARS-CoV-2 pandemic.
Airbnb is making a comeback
At the beginning of May, Airbnb rebounded strongly across the U.S. where bookings in Texas jumped 10%, Georgia rose 8.3% and Arizona was up 7.8%. Joseph DiTomaso, CEO of AllTheRooms Analytics (which tracks occupancy rates at over 12 million properties across 200,000 regions on Airbnb and Vacation Rental By Owner), said that, “occupancy rates in the U.S. are still down 38.3% compared to 2019, but the year-over-year gap is closing”.
In June, according to CNN, Airbnb reported that it had more bookings in the U.S. between May 17 and June 3 (including Memorial Day weekend) than during the same time period a year earlier.
The signals were clear: Americans were ready to travel after weeks of lockdown, but only in the U.S.
Portugal, South Korea and Germany have also seen the same rebound levels.
Airbnb says travel is forever changed and more local
Airbnb CEO Brian Chesky told CNBC that, “it doesn’t mean travel is over, just the travel we knew is over, and it’s never coming back.” He believes that travel will be less concentrated on major tourist destinations and more evenly distributed across individual countries.
Chesky reported that U.S. customers were now preferring to holiday in drivable domestic destinations within 200 miles of their home.
He told Fortune’s Leadership Next podcast, “peopl don’t want to get on planes, they don’t want to cross borders, they don’t want to travel on business, they don’t really want to go to cities…What they want to do is get in a car and travel”
Customers have also been booking for longer periods, on average one week or longer, because they are able to work remotely.
If so, this might alleviate tensions with major EU cities
In the past two years, tensions between Airbnb and major EU tourist destinations have been high. City mayors in Barcelona and Paris have been fighting Airbnb’s hold on the market as property owners increasingly used Airbnb (because they can earn more), rather than offering their property to local renters.
If Airbnb is right in its assessment of the travel market going forward, and people travel less overseas to traditional major destinations, it follows that many of these fiercely fought battles might diminish in size and importance.
Airbnb has been working hard towards its IPO
During the past two years, Airbnb has worked hard to improve the service and value of its company. After suffering from bad press after out of control parties and scams, it has improved its reputation with several schemes including working with EU governments to improve taxation of hosts, working with anti-trafficking charities and providing tens of thousands of carbon monoxide alarms to its hosts.
Airbnb had always intended to make a public share offering before the end of 2020 and while the company still hasn’t ruled this out, it looks less likely.
Chesky founded Aribnb with Joe Gebbia and Nathan Blecharczyk in 2008.