In 2020, Airbnb was planning its IPO, something that would take the company to a whole other level of maturity. But then came COVID-19, and all the plans changed. The company managed to attracted investors, made a large loan, and is trying to reinvent itself, all in the middle of the crisis. Airbnb’s online experiences, for instance, are likely to become a permanent product of the company.
In the second half of this month, Airbnb secured a new $1 billion loan just days after closing a $1 billion debt and equity deal with Silver Lake and Sixth Street Partners. The terms of the deal were not disclosed. The Wall Street Journal reported that a source familiar with the operation said the five-year loan comes with a 7.5 percent interest rate.
According to the company, the new loan “will ensure Airbnb can continue to invest in its company and community of hosts and guests in over 220 countries and regions around the world.”
Some days later, the company decided to lay off contractors as contingent workers and postponed summer internships.
Before the fundraising round, the company had more than $2 billion in the bank and an expected valuation for its IPO of $26 billion. According to Reuters, the deal with Silver Lake and Sixth Street “included warrants for the two private equity firms that can be exercised at an $18 billion valuation.”
During all these negotiations, Airbnb launched some initiatives, in an attempt not only to try new things but to keep its community of hosts and users active. One of them was online experiences. To TechCrunch, Airbnb’s chief design officer, Alex Schleifer, said that this new product came out in a matter of weeks, using staff from all kinds of teams.
“We discussed a lot of ideas, but the way we were working and connecting as a team [remotely] and living online with family made this idea more concrete for us. So we contacted hosts, did trial runs with these hosts with mic set-ups [and everything else required], and launched with 50 people. Now, we have nearly 100 hosts offering experiences online and thousands more who’ve offered to host experiences,” Schleifer told TechCrunch. According to him, some of the experiences are already sold out.
For Schleifer, online experiences have a chance to become an actual operation for Airbnb. “It’s only a few weeks old, but even for a product in its first version, we were really enjoying this. It has beaten expectations, and I do think it will be a huge business for us as we get out of the pandemic because it allows hosts to host both online and real-world experiences,” said the company’s CDO.
According to Bloomberg Businessweek, thought, Airbnb’s future depends on a post-pandemic travel boom to recover. The media outlet stresses that, at this point, no one knows when exactly people will decide that it’s safe to go on vacation again. On the other hand, it seems that short-term stays in Airbnb units look a lot safer than spending some days in a big hotel.
In total, according to projections shared with prospective investors, Airbnb’s revenue could drop by 50% this year, said Bloomberg.