Airbnb says it is laying off 25% of its workforce as it confronts a steep decline in global travel due to the new coronavirus pandemic.
It’s a tough time for the San Francisco-based company which just a few months ago was valued at $31 billion and had plans for an initial public offering (IPO).
In a letter to employees, Co-Founder and CEO Brian Chesky said Airbnb is letting 1,900 of its 7,500 workers go and cutting businesses that don’t directly support home-sharing. Efforts to be paused include Transportation and Airbnb Studios, as well as scaling back on Hotel and Lux investments.
“We are collectively living through the most harrowing crisis of our lifetime, and as it began to unfold, global travel came to a standstill,” Chesky said.
He revealed that Airbnb’s business has been hit hard, with revenue this year forecasted to be less than half of what was earned in 2019.
As a privately owned company, Airbnb doesn’t release financial figures. But AirDNA, a company that monitors bookings and rental fees for Airbnb hosts and others, said new U.S. bookings fell by 53% between Feb. 3 and April 13.
According to Chesky, Airbnb expects travel will return, though with a different look.
“Travelers will want options that are closer to home and more affordable,” he said.
It’s for this reason that fundamental changes have been made so as to reduce the size of Airbnb workforce around a more focused business strategy, said Chesky.
The move isn’t entirely unexpected. Last month, two private equity firms — Silver Lake and Sixth Street Partners — invested $1 billion in debt and equity in Airbnb. The deal may have included a commitment to reduce costs.
Chesky said departing employees will receive at least 14 weeks of their base pay. For U.S. based employees, these will continue to receive health care coverage for a year; while those in other countries will keep their health care coverage through the end of this year.
He also said that in the past eight weeks, he had learned that a crisis brings you clarity about what is truly important.
“Though we have been through a whirlwind, some things are more clear to me than ever before,” he added.
He further revealed that at the start of Airbnb, the company’s original tagline was, “Travel like a human.” The human part was always more important than the travel part.
“What we are about is belonging, and at the center of belonging is love.”
Chesky urges those staying at Airbnb to always honor those who are leaving, because their contributions matter, and that they will always be part of company’s story.