COVID-19 Forces Airbnb to Cut 25 Percent of Workforce, Scale Back Business
'Airbnb's business has been hit hard, with revenue this year forecasted to be less than half of what we earned in 2019,' CEO Brian Chesky says of the pandemic.
Airbnb is laying off about 25 percent of its workforce, citing plummeting demand for tourism during the pandemic.
The lodging reservation site is shedding about 1,900 jobs and also scaling back the company's investments in transportation, hotels, and luxury residences, Airbnb CEO Brian Chesky announced on Tuesday.
"We are collectively living through the most harrowing crisis of our lifetime, and as it began to unfold, global travel came to a standstill," he wrote in a note to his employees. "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, Airbnb raised an additional $2 billion in funding during the pandemic and began cutting costs across its operations. However, the measures haven't been enough to keep the company financially afloat without reducing staff. According to Chesky, the main problem is Airbnb still can't predict when tourism demand will return. When it does, the travel industry will also look significantly different.
The changing market is forcing Airbnb to shift its business strategy, which was previously focused on expanding into booking hotel rooms, creating travel videos, and delving into transportation. Now the company is going back to its roots as a homestay and short-term rental provider. As Chesky puts it: "People will want options that are closer to home, safer, and more affordable. But people will also yearn for something that feels like it's been taken away from them — human connection.
"This means that we will need to reduce our investment in activities that do not directly support the core of our host community," he added. "We are pausing our efforts in Transportation and Airbnb Studios, and we have to scale back our investments in Hotels and Lux."
We'll have to wait and see if the strategy works. But many Airbnb homestay hosts have told media outlets the pandemic has driven guests away from booking their properties, leaving them with little funds to pay off their mortgages. Nevertheless, Chesky is betting the tourism industry will eventually recover.
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