Can Airbnb business model, home-sharing business, and short-term rental market survive Covid-19 crash ?
Travel restrictions, cancellations of big events, many countries under nationwide lockdown and other disruptions had a huge direct impact on the travel and tourism sector.
- As immediate consequence of this, Airbnb bookings in Europe have collapsed by 80%, between 40% & 50% in USA, since January. Airbnb cut 25% of workforce and downsizes hotel investments, now expects revenue this year to be less than half 2019 level.
- In the last quarter of 2019, even if the company's revenue increased 32%, Airbnb lost $276.4 million.
- Airbnb has taken a hit which is going to force a lot of Airbnb landlords, at least some of whom bought properties specifically to list them on Airbnb, to find alternative ways to pay off their loans, possibly by finding longer-term tenants then many ex-Airbnbs are returning to the long-term rental market.
- After the recovery people might be less inclined to book Airbnb due to perceived cleanliness issues. They simply can’t guarantee a deep clean on a host-to-host basis after every guest which should also be taken into consideration.
That while the American Hotel & Lodging Association launched last month “Stay Safe,” a new cleaning and workplace protocol for the hotel industry in light of coronavirus. “The initiative, backed by global hotel companies like Hilton, IHG, and Marriott, calls for enhanced cleaning standards in rooms and public areas. This comes as individual brands have launched their own heightened cleaning standard, like Hilton’s partnership with the maker of Lysol and the Mayo Clinic.”
- Airbnb is depending on recovery of tourism after Covid-19 crisis. One would assume that domestic travel will rebound first, but what will it look like ? When can we travel again ? What will it take to get air travel going again ? Travel restrictions have to be rolled back, especially internationally; Fleets need to come out of storage, and airplanes re-certified; Airline crew and airport workers have to be brought back in large numbers; Airports and airlines will need to adapt to new health measures. That picture is unlikely to change any time soon, don't expect immediate and 100% of business and tourism travel to bounce back this year.
On the other hand :
- The hit is highly localized. Indeed the great majority of vacation rental markets affected are largely limited to where the virus actually is.
- At the beguinning of 2020 Airbnb, valued at $35 million, had at least $2 billion of cash. On April 7 the company announced it had raised $1 billion from Silver Lake et Sixth Street Partners.
- The company said recently it would pay 25% of what the host would “normally receive through your cancellation policy.” (USA market only).
- Airbnb had successfully got from Congress to let its hosts apply for federal aid through small business relief programs and unemployment insurance, as part of the US economic stimulus package.
- During and right after the SARS (Nov 2002-Aug 2003) and MERS (2015) epidemics, many "experts" believed that people have changed their behavior considerably. But "history shows that when global disruptions happen, the travel industry has bounced back in the long run".
It should be interesting to see how Airbnb might be dealing with and after Covid-19. My opinion is that the company must evolve, perhaps reinvent itself to adapt to the real needs of today : A new business model where hygiene and health safety top the customer’s priority and requirement.
Travel restrictions, cancellations of big events, many countries under nationwide lockdown and other disruptions had a huge direct impact on the travel and tourism sector.
- As immediate consequence of this, Airbnb bookings in Europe have collapsed by 80%, between 40% & 50% in USA, since January. Airbnb cut 25% of workforce and downsizes hotel investments, now expects revenue this year to be less than half 2019 level.
- In the last quarter of 2019, even if the company's revenue increased 32%, Airbnb lost $276.4 million.
- Airbnb has taken a hit which is going to force a lot of Airbnb landlords, at least some of whom bought properties specifically to list them on Airbnb, to find alternative ways to pay off their loans, possibly by finding longer-term tenants then many ex-Airbnbs are returning to the long-term rental market.
- After the recovery people might be less inclined to book Airbnb due to perceived cleanliness issues. They simply can’t guarantee a deep clean on a host-to-host basis after every guest which should also be taken into consideration.
That while the American Hotel & Lodging Association launched last month “Stay Safe,” a new cleaning and workplace protocol for the hotel industry in light of coronavirus. “The initiative, backed by global hotel companies like Hilton, IHG, and Marriott, calls for enhanced cleaning standards in rooms and public areas. This comes as individual brands have launched their own heightened cleaning standard, like Hilton’s partnership with the maker of Lysol and the Mayo Clinic.”
- Airbnb is depending on recovery of tourism after Covid-19 crisis. One would assume that domestic travel will rebound first, but what will it look like ? When can we travel again ? What will it take to get air travel going again ? Travel restrictions have to be rolled back, especially internationally; Fleets need to come out of storage, and airplanes re-certified; Airline crew and airport workers have to be brought back in large numbers; Airports and airlines will need to adapt to new health measures. That picture is unlikely to change any time soon, don't expect immediate and 100% of business and tourism travel to bounce back this year.
On the other hand :
- The hit is highly localized. Indeed the great majority of vacation rental markets affected are largely limited to where the virus actually is.
- At the beguinning of 2020 Airbnb, valued at $35 million, had at least $2 billion of cash. On April 7 the company announced it had raised $1 billion from Silver Lake et Sixth Street Partners.
- The company said recently it would pay 25% of what the host would “normally receive through your cancellation policy.” (USA market only).
- Airbnb had successfully got from Congress to let its hosts apply for federal aid through small business relief programs and unemployment insurance, as part of the US economic stimulus package.
- During and right after the SARS (Nov 2002-Aug 2003) and MERS (2015) epidemics, many "experts" believed that people have changed their behavior considerably. But "history shows that when global disruptions happen, the travel industry has bounced back in the long run".
It should be interesting to see how Airbnb might be dealing with and after Covid-19. My opinion is that the company must evolve, perhaps reinvent itself to adapt to the real needs of today : A new business model where hygiene and health safety top the customer’s priority and requirement.
.
