Airbnb’s Comeback and a Decision to Go Public

COVID-19 has drastically changed how people travel, shattering past travel trends and conceptions and leaving the travel industry scrambling to adjust. Yet, amidst the global shutdowns and travel restrictions, Airbnb has made a surprising comeback and announced its plans to go public last month.

Just a few months ago, however, things seemed bleak. In mid-March, Airbnb and other related industries experienced severe losses in revenue as travel came to a halt and people swarmed to cancel bookings. According to AirDNA LLC data, Airbnb lost nearly $1.5 billion in bookings. In May, Airbnb predicted its revenue for 2020 would be less than half of what it was the previous year, and the company laid off about a quarter of its workforce. Over the same time, according to the Wall Street Journal, Airbnb’s valuation fell from $31 billion to a recent $18 billion.

Yet, since the spring, things have been looking up for Airbnb. According to Edison Trends, Airbnb’s spending since early May has been consistently higher than that of Marriott, Hilton and InterContinental Hotels Group. While Airbnb has gained back and added an additional 41% over the week of March 2nd, each of the hotels only gained about 38% of what they had lost. Airbnb stated that on July 8, there were more than 1 million nights of future stays that guests booked around the world, which was the first time such a level was hit since March 3. But while people seem to be traveling again, they have adapted particular preferences that are notably different from before COVID.

The current appeal of homestay over hotel nights often relates to the travel location. People seem to prefer more remote and less populated destinations as they take advantage of remote work and go on Staycations. Airbnb reported that over 60% of the bookings made on July 8th were located outside of cities. The future of Airbnb’s business, however, remains unclear, as people will physically return to work and school after travel restrictions ease. Airbnb’s preparation to go public is similarly shrouded in uncertainty, and is contingent on how the future of travel pans out. The impact of COVID is hard to predict and the outlook remains ambiguous and volatile.

Lyft and Uber have shown the potential failure to create profits after their IPOs, and WeWork has demonstrated that immense losses can incur when a business attempts to go public. Yet, in 2020, although many businesses are having difficulties, there have been more than $60 billion in U.S.-listed IPOs and IPO activity has not slowed down. According to the Wall Street Journal, IPOs for this year are already posting the biggest gains during trading debuts since 2000. Perhaps, then, this might be the right time for Airbnb to take the risk.