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- The challenge Airbnb CEO Brian Chesky faced this spring due to the coronavirus crisis was even worse than already understood — business dropped 80% in eight weeks, he told Business Insider.
- The crisis forced him to make “10 years worth of decisions in 10 weeks” that impacted his company’s future and that of the property managers that use depend on its service.
- The experience “toughened us up … And I think we’re ready for whatever kind of challenge and opportunities come our way,” Chesky told Business Insider in an interview.
- The company decided to go forward with its long-planned public offering after seeing the “resiliency” of its marketplace, he said.
- Business has rebounded, but it’s been uneven; international and business travel remain weak, while leisure and domestic travel in certain markets such as the US are strong, he said.
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Compared with what he had to contend with this spring, Airbnb CEO Brian Chesky thinks running a public company will be — well, maybe not a walk in the park, but a whole lot easier.
With the onset of the coronavirus pandemic, Chesky’s online travel company, which recently took steps to go public, immediately saw its business get crushed as countries around the world began to limit the movement of their citizens. In a matter of weeks, he was forced to make numerous decisions that had a real bearing on the future of his company and the livelihood of the hundreds of thousands of property managers that depend on it.
Although he turned to other executives and leaders for advice, the challenge he faced — particularly in terms of the speed at which Airbnb’s business fell off a cliff — was novel and harrowing.
The executives he turned to “told me … nothing you’re going to experience as a public-company CEO will rival running a travel company that lost 80% of its revenue in eight weeks and had to manage the crisis over Zoom,” Chesky told Business Insider in an interview on Thursday. “That is a fairly unprecedented challenge. So, I think that kind of toughened us up … And I think we’re ready for whatever kind of challenge and opportunities come our way.”
Airbnb, which Chesky cofounded in 2008, could make its public market debut in the coming months, following its announcement in August that it had confidentially filed the paperwork for a public stock offering. While Chesky would not comment on details of the planned offering, citing the pre-IPO “quiet period,” he shared important updates on the state of Airbnb’s home-sharing business amid the ongoing pandemic.
Chesky hasn’t previously spoken about just how sharp of a revenue drop Airbnb faced during the height of the crisis. In May, he forecast that Airbnb’s revenue for 2020 would be less than half what it was last year. And Bloomberg reported last month that the company’s revenue was down 67% in the second quarter.
Chesky had to make “10 years worth of decisions”
Airbnb’s revenue plunged as countries around the world shut down their economies this spring to try to prevent the spread of COVID-19. Not only did the company see a drop in new bookings, but Chesky allowed customers to cancel existing reservations due to the epidemic, in many cases overriding property managers’ policies.
That was one of many critical decisions he made during the crisis. Airbnb also laid off hundreds of contractors and 25% of its full-time employees, halted its marketing spending, and raised $2 billion in high-interest debt.
“I feel like I made 10 years worth of decisions in 10 weeks,” Chesky said. “I’m not sure I did, but I’d never in my life made more serious decisions than I did during a 10 or 12-week period.”
The most important decision he made was to refocus the company on its core business of short-term rentals for everyday consumers. Prior to the pandemic, the company was working on a feature that would allow customers to search for and book flights through Airbnb. It also had gotten into hotel reservations. And it had developed a special service for travelers looking for premium accommodations.
“We said … we need to kind of get back to the basics,” he said. “I think that focus,” he continued, “has really helped the company recover.”
This summer vacation season was unlike any Airbnb had seen before, Chesky said. People were avoiding both international travel and the big cities that were popular in the past and going instead to more rural communities near their homes, he said. Those trends are continuing into the fall. Many customers are looking for accommodations were they can set up a home at least temporarily, places that have kitchens, allow pets, and have pools.
But there are other novel trends cropping up. People are moving into Airbnb homes to be closer to their extended families. Some students are renting properties to form “pods” where they live and study together, he said. And some families are “roadschooling;” with many school districts offering remote learning, families are traveling to remote destinations and having their kids connect from there, Chesky said.
“The pandemic is kind of changing how people want to work, travel and live,” he said.
Airbnb’s rebound has been geographically uneven
Airbnb’s business — and the broader short-term rental market — has been on the rebound since early May. By the end of that month vacation rental bookings — the core piece of the market — had bounced back 127% since the nadir they hit in early April. Meanwhile, Airbnb reported that it saw 1 million nights worth of booking on July 8, which was the first time it hit that threshold since early March.
The recovery has been uneven, Chesky said. Little business travel is taking place. But leisure travel has surged. International travel remains down. And business remains weak in areas including South and Latin America and Asia. But business in Brazil is recovering and travel within countries such as the US, UK, and France is “really strong.”
“Even though fewer people are crossing borders in and out of these countries, they have such a strong domestic business that they’re booming the overall business,” he said. “The US,” he continued, “is very surprising in its strength.”
Airbnb has benefitted from a change in demand: Fewer people overall are traveling, but more people are booking places for longer durations ranging from one week to two months, he said.
With the pandemic limiting entertainment and dining options, as well as other draws of urban life, a lot of city-dwellers have temporarily relocated to remote locales where hotels are not always available. Even when there are hotels, people heading to those destinations often want a more home-like place to stay, with kitchens and other amenities, Chesky said.
“We’re picking up a lot of ground with all these new use cases,” he said. “I would say that’s all unexpected.”
Airbnb entered 2020 planning to go public later this year. It put those plans on hold when the pandemic hit. But it resumed its preparations after seeing its business bounce back, Chesky said. The company confidentially filed its offering paperwork, known as an S-1, last month.
“We’ve been surprised in a good way by the resiliency of the community, and so we dusted off the S-1, and we filed it,” he said. “What I basically said,” he continued, “is when the market’s ready, Airbnb will be ready. And I think we’re going to learn a lot about how ready the market is for Airbnb.”
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- Read more about Airbnb:
- Airbnb’s growth momentum was destroyed by the coronavirus crisis. These 2 charts show just how bad it was — and how quickly it could bounce back.
- Airbnb, last valued at $18 billion, has confidentially filed for an IPO
- Airbnb’s revenue reportedly plunged 67% in the second quarter as COVID-19 wreaks havoc on its business
- Airbnb reportedly plans to confidentially file for an IPO later this month
Axel Springer, Insider Inc.’s parent company, is an investor in Airbnb.
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