COVID-19 pandemic halt traveling and allied activities around the world. Businesses aligned with the travel sector faced the worst. One such company is Airbnb with months of cancellations and declined future booking led to lay off 25 percent of its workforce
However, July has been a rare sign of hope for the company. The platform recorded one million-plus booking in a day first since March when the global lockdowns started. This recovery suggests the revival of the company’s business which fell flat during the lockdown period.
The short term rental service provided by Airbnb has recovered post lockdown. This helped the company to revive its sales. While the traditional hotel giants such as Marriott and Hilton are expected to release their Q2 earnings in a week. Experts say that the companies lost billions of dollar due to the pandemic.
Airbnb COVID effect
The 12-year old company that appeared unstoppable, faced a hard hit due to the pandemic decimated the travel industry. Closure of airports halted travel activities. Followed by tourists canceling vacations, professionals canceled their work trips and family roll back their trips.
In March 2017, the company valued at $31 billion which fell to $18 billion in April 2020. In 2020, the company forecasted its revenue to be less than half of what it was in 2019. The company halted its marketing activities in order to save $800 million (in March).
The company was expected to go public in 2020, but the pandemic postponed the dream. Many countries categorized short rental services under non-essential service, this made operations illegal.
As the guests continued to cancel their booking during the lockdown. Additionally, the company’s plan to allocate $250 million this year to offset losses of the hosts and uncertainty over the future of the company, people raised questions about whether Airbnb will survive or not.
On March 14, 2020, the company announced an extenuating circumstances policy that suspends cancellation polices by its hosts. According to the new policy, a guest booking made on or before March 14 with check-in dates between March 14 and April 14 can be canceled without any charge or penalty.
Later the pandemic forced the company to extend its policy to May 14 and further to June 15. The guests who canceled the booking received the money full cash refund to their accounts or as Airbnb credit. This left hosts in huge losses who already stuck in losses due to the pandemic. Many hosts are now doubtful to continue their hosting on the platform.
In July, the company recorded over 1 million guest bookings. Two-thirds of the booking came from urban areas while half of the guests booked at less than $100 a night. June bookings in New York and Los Angeles fell by 50 percent compared to 2019.
Booking in Panama City Beach, Florida increased by 117 percent while Kissimmee saw a slight rise in bookings in summer. “Our business has not recovered, but we are seeing encouraging signs,” said Airbnb said in a statement.