Facing a steep drop in revenue, Airbnb laid off nearly 25 percent of its workforce on Tuesday.
In a memo to staff, CEO Brian Chesky described coronavirus as “the most harrowing crisis of our time” and said the short-term rental company laid off 1,900 employees out of around 7,500.
Coming on the heels of a $2 billion financial lifeline, the cuts reflect the bleak outlook for hospitality companies as travelers stay home. Chesky said Airbnb expects its 2020 revenue will be less than half of what it was in 2019. Last year, Airbnb reportedly generated $4.8 billion in revenue.
“Teams across all of Airbnb will be impacted,” he wrote in the memo. The layoffs were first reported by The Information.
Pre-pandemic, Airbnb had hoped to go public this year. With those plans on hold for the foreseeable future, Airbnb dramatically cut costs and raised back-to-back $1 billion funding rounds in recent weeks. “While these actions were necessary, it became clear that we would have to go further when we faced two hard truths,” Chesky wrote. “We don’t know exactly when travel will return [and] when travel does return, it will look different.”
“While we know Airbnb’s business will fully recover,” he added, “the changes it will undergo are not temporary or short-lived.”
In addition to layoffs, Airbnb said it would pare back its business strategy to focus on its core operation. It will scale back projects related to luxury properties, hotels, TV production and transportation.
The company did not provide updated figures on lost bookings. But as of mid-March, Airbnb hosts lost $1.5 billion in bookings, according to research firm AirDNA. Despite a $17 million fund formed by Airbnb to help hosts, some have said it’s not enough. Many hosts now find themselves in precarious financial situations, including the prospect of foreclosure.
Airbnb itself has seen its valuation plunge. Its recent equity round valued the company at $18 billion, down from $31 billion in 2017.
Major hotel chains, including Marriott and Wyndham, have laid off and furloughed thousands of workers, as have companies like Expedia and TripAdvisor. In addition to stay-home policies enacted in most states, some local governments have banned short-term rentals to stop the spread of Covid-19.
According to Chesky’s note, employees will get 14 weeks of pay (plus an extra week for each year at the company) plus 12 months of health coverage. Airbnb also dropped its one-year equity cliff so employees can buy vested options.