Airbnb looks for investment

(The petition was filed with the Division of Administrative Hearings, and maintains that the Department’s agreements with Airbnb and HomeAway should have been subjected to a public rule making process.)

Airbnb is reported to have been talking with potential investors about an additional funding round.

The company had been expected to make its debut on the public markets this year, a move which looked increasingly unlikely as hospitality stocks continued to fall.

Speculation had suggested that Airbnb may delay its IPO as a result of the COVID-19 outbreak, after it was reported to have made a loss in the first nine months of last year, as costs rose.

Airbnb posted a net loss of $322m for the nine months to September 2019, compared to a $200m  profit for the same period a year earlier, according to a report seen by the Wall Street Journal. The group had previously reported “substantially” more than $1bn in revenue in the second quarter.

Last week saw the company pause its Experiences offering until at least April 3, based, it said, on the guidance of governments and health experts regarding social distancing. The company said: “We are seeking to take actions to prioritise the safety of our hosts, guests, employees, and the communities in which we operate.

“At their core, Airbnb Experiences are about human connection, which is why it’s become so hard to promote Experiences in a way that’s sensitive to both the needs of hosts and guests, as well as to the communities in which we live. We believe that taking this action in the short-term is doing our part to slow the spread of the disease, and in the long-term preserve Experiences as a safe way to connect with the world. We deeply appreciate the thousands of hosts around the world that have sought to provide cancellations to guests and who power Airbnb Experiences. As we move forward, we are actively exploring new ways to support our hosts.”

Anyone due to participate in an Airbnb Experience on or before April 3 would receive a full refund, with Airbnb reassuring that it would not be keeping fees associated with these reservations.

The company has yet to update on its trading. It has, however, implemented its mitigating circumstances policy “to offer impacted hosts and guests the option of cancelling eligible reservations without charge. This policy is being updated regularly and observes guidance and recommendations from the World Health Organisation and governmental and health authorities”.

The full-refund extenuating circumstances policy also applies to anyone, worldwide, who needs to comply with “disease control restrictions implemented by relevant governmental or health authorities” as well as people “diagnosed or suspected of being infected with COVID-19 by a medical or health authority”.

Airbnb said: “The Coronavirus outbreak is causing travel restrictions and other disruptions that have a direct impact on the travel and tourism sector and beyond. Although nobody can know the extent of the impact that the Coronavirus outbreak may have, we believe that history shows that when global disruptions happen, the travel industry has bounced back in the long run. Most importantly, our focus right now is on how we can best support our stakeholders as they are impacted by this global health challenge, including hosts, guests, employees and the communities in which we operate.”

 

Insight: Should Airbnb not go public this year it will be an utterly devastating loss to us observers of its antics, desperate as we were to get a look under the hood and find out exactly what it was made of. It would have us believe that it was all Noreen from Texas, renting out her sofa so that she can pay for extra piano lessons for her grandson Cletus.

Data compiled by jurisdictions around the world - and experience - tells us that our cheap city-centre stays are being provided by those with investment properties. BNP Paribas even offered a product which would allow large-scale residential investors to participate in the sharing economy.

Anecdotal evidence is all very well, but what we were dreaming of was a view on how much of the platform’s portfolio was professional and how much could be classed as amateur. It now looks as though that is likely to be lost for us, as would-be investors in the hospitality sector look for something keeping its doors open. Or something which will be standing after the virus has passed. At the moment, people’s houses win out on this front. And the people within them will be looking for extra income, so are likely to be listing with enthusiasm.

As for those professional investors? Rental protection may well draw them into the long-term residential market and see them pull back from short-term rentals. Despite this, the platform looks stronger than many traditional hotels (at least until government support kicks in) and investors look willing to make that punt. Just not in public.