Airbnb weighs up distressed asset acquisitions
US: After news emerged last week that Airbnb had received “significant” interest from private investors ahead of going public, sources have also revealed that the company may look to purchase struggling short-term rental providers who have been hit hard by the coronavirus pandemic.
Airbnb’s board convened last week to discuss a wide range of options, with initial plans to go ahead with an initial public offering [IPO] or direct listing looking increasingly likely to be postponed until next year and normality returns in some capacity.
The dozen investors in question spoke to publications such as the Wall Street Journal, Reuters and Bloomberg on the condition of anonymity with early negotiations at a sensitive stage. These include venture capitalists, private equity firms and sovereign wealth funds.
Airbnb’s latest valuation made prior to the global outbreak of COVID-19 of $31 billion is also unlikely to hold firm due to the current state of the market.
One possible acquisition candidate may be San Francisco-based hospitality startup Sonder, which, as well as listing units on Airbnb’s platform, operates a growing number of hotels and aparthotel hybrids.
Bloomberg reported that Sonder’s bookings are projected to drop by up to 90 per cent as a result of the pandemic, however its sources denied that the company had already engaged in talks with the global platform.
Airbnb is not alone in having to reevaluate its plans for the year, as reflected across the whole global and business landscape. Booking Holdings and Expedia Group have withdrawn financial forecasts, citing the worsening effects of the virus.
Its problems, however, date back to well before the virus outbreak, as a Wall Street Journal report published last month showed that Airbnb had lost $322 million over the first nine months of 2019, up by $16 million on the previous year. The company will lose further revenue through its updated refund policy, where customers can retrieve money from all reservations until at least 14 April.
Twenty31 consultancy travel industry strategist Greg Klassen told Bloomberg: “There is no way any company in the tourism industry is going public this year, absolutely no way. You need multiple quarters of profitability and to look like you’re in full control with nothing but blue sky ahead to help with valuations – and none of those things are true today.”
In unprecedented times such as these, the full impact of the coronavirus is almost impossible to judge although it could feasibly stretch into 2021, especially with going public still firmly on the company’s agenda.
For more information, visit the Airbnb website here.
