US: Airbnb is preparing to pause its entire marketing expenditure for the duration of the COVID-19 pandemic, in a move that would reportedly share the home-sharing platform a sum of $800 million a year.
As the company’s losses continue to soar, Airbnb is having to find alternative ways to plug the financial gaps at a time when it previously expected to be launching the process of going public. Those plans look likely to be shelved f0r the time being and possibly even into 2021.
A lucrative partnership announced at the back end of 2019 with the International Olympic and Paralympic Committees has also been postponed until next year due to coronavirus, leading to marketing spending costs being slashed.
It is believed that no decision has yet been made over potential layoffs, although when posed the question in a company video conference call last week with employees, CEO Brian Chesky admitted that “nothing was off the table”. Airbnb has an estimated 7000 employees based around the world.
Meanwhile, Reuters have also reported that Airbnb’s founders will forego their salary for the next six months and senior executives will take a 50 per cent pay cut to help the firm overcome the surging pandemic.
As well as marketing costs, hirings of new recruits will be halted in anticipation of a prolonged economic downturn. The company will only recruit in a number of key positions that will allow Airbnb to take stock of its balance sheet and financial position.
Airbnb is not alone in feeling the full effects of the hit on the global travel and tourism sector, as booking platforms grapple with a raft of cancellations in light of the coronavirus outbreak.
In the immediate aftermath of the surge in virus cases beyond Asia, Airbnb implemented a refund policy for booking cancellations that included China, Italy and South Korea initially. That was met with derision, though, by guests who said they would be denied refunds when having their own travel plans affected by the virus outbreak.
This prompted Airbnb to extend its full refund policy so it would apply to every country in the world in which Airbnbs operate, and hosts and guests who had stopped reservations would no longer have to face a cancellation fee or charge. It took into account any reservations made on or before 14 March with a check-in date by 14 April.
While updating its “extenuating circumstances” policy, Airbnb risked the wrath of its full-time hosts [who had quit jobs elsewhere to become permanent hosts on the platform], who said that they had not been consulted about the changes prior to the announcement.
One host, Alba Jones, who has properties in the East Bay and in Mexico among other locations, told Business Insider: “They [Airbnb] just cut our hands off. We had no say in the matter.”
Last week, however, it announced the expansion of its medical housing programme to become a global initiative that would provide accommodation to health professionals and first responders fighting on the frontline against Covid-19. Under the terms of the scheme, Airbnb will waive all fees during this time through the initiative and the same is true for hosts opting into the programme to support the workers.
In a statement provided to Campaign Asia-Pacific, Airbnb said: “Airbnb is resilient and built to withstand tough times and we’re doing all we can to strengthen our community and our company.”