The travel industry is the most brutally hit victim of the Coronavirus pandemic. Flights are grounded, people are sheltering in place , and even as the lockdowns begin to ease around the world, the travel industry is upended for the foreseeable future.
AirBnb, the $52 billion company at the helm of the international travel gig economy, has taken one of the hardest hits. The company has just announced it is laying off 1900 people — nearly 25% of its entire workforce — around the globe. While the aftershocks of the pandemic may just be starting to get felt around companies around the world, AirBnb was one of the first few to be affected. As early as Feb, Airbnb’s bookings plunged in key cities, including Beijing, Seoul, Rome, and Milan, according to AirDNA data. But as the future of the travel industry looks grim — at least for another year — even well-funded companies like Airbnb are looking to go into severe damage-control mode with massive layoffs, paycuts and restructuring.
An email attributed to AirBnb CEO Brian Chesky himself was sent at large today. “COVID-19 has fundamentally changed the travel industry, and today we shared the difficult news that we’re reducing the size of the Airbnb workforce. This week we’re focused on taking care of our employees, and we’d like to ask for your understanding and patience as we spend time supporting them.”, the email began, followed by pointers into what customers could expect from support and community teams of the company in the coming weeks.
The email links to a note by the CEO that the company shared on its website and lists out the plan of the layoff in detail.
“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, we raised $2 billion USD in capital and dramatically cut costs that touched nearly every corner of Airbnb.
While these actions were necessary, it became clear that we would have to go further when we faced two hard truths:
- We don’t know exactly when travel will return.
- When travel does return, it will look different.”, the note said.
Airbnb’s revenue will be half of what it was in the previous year, and even though the company’s growing, its losses stood at $302 million last year. As a company that had grand IPO dreams, Airbnb needs desperate cost-cutting measures. A large scale layoff program isn’t just needed, but inevitable.
The company on its part has fleshed out a generous and comprehensive compensation and support plan for the laid-off employees. Other than a minimum 14 weeks of pay, plus a tenure based bonus, the company will offer equity to every employee irrespective of tenure. The affected employees will get 12-months of additional insurance cover, and support to get placed at other companies.
The company is also looking into re-structuring the organization, and phasing out some of its non-core offerings.
“we will need to reduce our investment in activities that do not directly support the core of our host community. We are pausing our efforts in Transportation and Airbnb Studios, and we have to scale back our investments in Hotels and Lux.”
The Airbnb mass lay-offs are not the first, and won’t be the last visible aftermath of the CoVid19. Uber’s in talks to lay off 20% of its workforce. United Airlines has furloughed 30% of its employees, and hordes of others are looking set to follow suit. Airbnb hosts too are feeling the pinch with cancelled reservations and no bookings on the anvil for what looks like the rest of the year.
In a townhall last year, Chesky had repeatedly told employees he wanted to turn Airbnb into a multifaceted, $100 billion company that does more good for the world than the average corporation. But the coronavirus pandemic might have just put those grand ambitions on hold and forced the company into survival mode for now.