"You wouldn't have an empire without us," calls an Airbnb presenter in a video directed at the company's co-founder and CEO, Brian Chesky. "It is our home on your platform. It is our face with millions of entries. It is our soul that brings the magic … It is our place where you can earn money."
The Man in the video pulsates with rage over Airbnb's decision to allow guests to cancel travel refund bookings with full refund due to the Coronavirus outbreak after May 31. The anger is so great that many commentators dismissed it as a parody and the Guardian was unable to confirm its authenticity.
But Airbnb's army of 700,000 hosts is dismayed by the income they are losing due to the company's generosity towards guests, and Chesky apologized Week and said the company would spend $ 250 million (GBP 200 million) to cover 25% of the costs hosts paid for reservations between March 14 and May 31.
An additional $ 10 million fund will be provided to "super-hosts" with grants of up to $ 5,000 for "hosts that hurt the most". Airbnb founders receive no salary for six months and the salaries of top executives are halved.
"Although it didn't feel that way, we're partners," Chesky said in an email to the hosts. “If your business suffers, our business suffers. We know that many of you are having problems at the moment and that you need action from us to help, not just words. “
Airbnb built $ 3 billion of reported cash reserves from booking fees billed to both guests and hosts. Reuters reported revenue from fees of more than $ 4.8 billion last year. Hosts are charged 3% of each booking, while guests are charged up to 14.2%.
The hangover from the coronavirus pandemic is likely to last much longer than May 31, or if governments lift the restrictions on movement. Hosts are reporting empty booking calendars that span the summer, and research by AirDNA, the analytics website, shows that bookings in some cities have dropped by up to 96%.
For hosts who occasionally rent their real bed-style guest room & breakfast The lost Airbnb income from the Corona virus is a frustration.
But for those who have built mini-real estate portfolios (or in some cases not so mini-real estate portfolios) who rely on a constant stream of guests flocking to Airbnb apartments in the US in Bath, Barcelona or Berlin the prospect of weeks or months without guests means a financial disaster.
It is also a disaster for Chesky (38) and the large number of Airbnb employees holding stock options. The company was facing an IPO this year, which some investors hoped would value the 11-year-old technology giant at up to $ 42 billion – although the Wall Street Journal reported that the company was close to $ 320 million in its first year USD had lost nine months of last year.
In a video presentation on Thursday, Chesky told employees that the company had lowered its valuation from $ 31 billion to $ 26 billion when it last raised money from investors in September 2017, according to the Financial Times.
Airbnb employees have long urged executives to launch an initial public offering (IPO) as stock options granted to experienced employees will expire in November 2020. These stocks could be worthless if the platform is not traded on the public market
"They are crammed, the IPO simply cannot take place," said Richard Holway, chairman of the analyst firm TechMarketView. “Airbnb is in the worst of the worst situations. Unlike other technology companies like Uber, who can deliver instead of driving people, they can't diversify. There is nothing Airbnb can do to make money.
"Everything indicates that Airbnb income has just stopped around the world," he said. "It [coronavirus and lockdown] has exposed the Airbnb business model and will pull thousands and thousands of people with it." The people [hosts] accepted it as an absolute deal and are in a very, very difficult situation. “
In an attempt to generate income from their vacant lots, landlords have flooded the rental market with their Airbnb apartments. For example, Princes Street in Edinburgh has 209 Airbnb entries on a street with only 494 houses. Real estate portal Rightmove said that the number of new rentals in the week that the blockade began in the UK increased 45% in London, 55% in Brighton, 62% in Edinburgh and 78% in Bath. The situation is similar worldwide, with an increase of 61% in Dublin and 41% in Prague.
Holway said that many hosts rely on Airbnb revenue to pay mortgages on not just one property, but multiple properties, while others “rent apartments from commercial landlords and then try to make a profit by using them Renting short rentals to Airbnb – that won't happen now ”.
Sheffield-based entrepreneur Alex Milburn claims to have made "Airbnb sales of £ 1,000,000" in 12 months and is now marketing his "Rent to Rent" strategy in one-day seminars for £ 997 (excl. VAT). He promises that in YouTube videos he can teach others how to make six-figure sums "with very little or no money of their own".
An Airbnb host rented 881 properties in London in a single year and generated sales of £ 11.9m according to AirDNA. The nameless person is said to be the world's top-earning Airbnb rental company in 2017.