Airbnb cuts 1,900 jobs citing revenue decline
Airbnb Inc, a company based in San Francisco that connects travelers with places to stay, has announced 1,900 job cuts as the COVID-19 pandemic has hit the travel industry. This move will reduce Airbnb’s salaried workforce by 25%. With millions of tourists canceling plans for vacations, work trips, and family visits, Airbnb cited revenue declines.
Airbnb CEO & Co-founder Brian Chesky said, “The Company will lay off 1,900 employees, or 25.3% of its 7,500 workers. The layoffs will affect the company’s internal product groups like Transport and AirBnB Studios.” However, the company has not given a clear picture of the breakup of per-country totals over layoffs.
Chesky further remarked, “Airbnb’s business has been hit hard, with revenue this year forecasted to be less than half of our earnings in the year 2019”. With a large number of tourists canceling their plans for vacations, work trips, and family visits Airbnb is facing huge losses this year. As per financial reports, Airbnb saw around USD 4.8 billion in revenue in the year 2019.
With pandemic hitting the entire world the company stated that the employees who have been laid off in the US will get about 14 weeks of their base pay plus one additional week for every year at Airbnb. The company further plans to abandon its one-year equity cliff, so that employees who have been laid off from their 12-month tenure can buy their alternative options. Airbnb further plans to provide 12 months of health insurance and healthcare coverage by 2020.
At the end of March 2020, when lockdowns started all over the world the company was forced to suspend its marketing activities all the workers were informed that Airbnb founders will not receive any salary for the next six months whereas the top executives will take a 50 percent of cut on their salaries to save USD 800 million in this year.
Initially, the company had said that two equity firms will invest about USD 1 billion in Airbnb, to provide extra funds as the world has stopped and travels have come to a standstill due to the pandemic. As per the company, this fund will be helpful to attract owners who list their properties for rent on the Airbnb platform. It is also being presumed that the part of its new capital will fund the company to help it reach 2021 in good shape.
To keep its market healthy enough to survive this sudden pandemic no activity time, Airbnb is allowing users to cancel some reservations without any penalty.
The company had initially promised a 2020 IPO. Many expected the company to pursue a direct listing rather than a traditional IPO as it had a strong footing while moving into 2020. While those are far behind, the company says that it expects that its enterprise will recuperate in time.