Airbnb has revived rumours of an IPO after an reorganisation which saw the departure of Greg Greeley, the president of homes.
The platform pointed to a resurgence, announcing that, for the first time since March, guests had booked one million nights on one day, on 8 July.
CEO Brian Chesky said that he had not ruled out an IPO this year, dependent on market conditions.
Greeley, who joined the company in 2018, was reported to have been replaced by Disney executive Catherine Powell, who will become head of hosting. Prior to joining Airbnb, Greeley spent over 18 years at Amazon, where he managed Amazon’s Global Prime programme, which he helped invent and launch in 2005.
The news came as the group reported rising bookings heading into the summer break. The platform said that most guests were not travelling far: approximately half of the nights booked were for travel to destinations within 300 miles. Over two-thirds were for travel to destinations within 500 miles, both distances typically manageable by car. But they were looking to get away from urban areas, with two-thirds of the nights booked at destinations outside of cities.
They were also looking to do so affordably, with slightly more than half of the nights booked on 8 July for listings costing no more than $100 per night. Pent-up demand may be playing a role. A significant proportion of nights booked were for travel beginning within 30 days: i.e., trips that would start on or before 7 August.
Over 60% of the nights booked were for travel by people traveling solo or with one other person. But there were over 17,000 nights booked by guests who were traveling in a group of 10 or more.
The company said: “Our business has not recovered, but we are seeing encouraging signs.”
Airbnb had planned to IPO earlier this year, with a direct listing mooted, which would have allowed its investors to exit, but without raising additional cash. Chesky commented before the current outbreak that the company did not need to raise money.
The IPO was thought to have been derailed by market volatility and concerns around other unicorns, notably WeWork. Instead, it announced that Silver Lake and Sixth Street Partners were to invest $1bn in Airbnb in a combination of debt and equity securities.
The following week it announced a $1bn syndicated term loan from institutional investors.
Chesky said that the money meant rather than, rather that “merely hunkering down”, the company would “continue moving forward”.
It was thought that private equity firms Silver Lake, Apollo Global Management, Sixth Street Partners, Oaktree Capital Management and Owl Rock participated, with the loan priced at an interest rate of 750 basis points over the Libor benchmark.
Chesky said: “All of the actions we have taken assure that Airbnb will emerge from the storm of the pandemic even stronger, regardless of how long the storm lasts.”
Chesky announced that the company would be shifting its business model to long-term stays. He said: “From students needing housing during school, to people on extended work assignments, Airbnb is a place where many have found longer-term housing. In the future, dreams of living in another community will become a growing reality - in homes that come with the benefits of Airbnb.”
Silver Lake and Sixth Street Partners funds’ investment included $5m which Airbnb will contribute to its Superhost Relief Fund, which will provide grants worth a combined total of $15m to Superhosts who rent out their own home and need help paying their rent or mortgage, as well as long-tenured Experience hosts trying to make ends meet.
Airbnb flipped on its initial refund policy having first offered full refunds on bookings, before amending it, allocating $250m to pay hosts 25% of their cancellation fees in the case of some bookings.
Insight: Will they won’t they? Well that depends on the state of the stock market and that lies significantly out of the hands of Chesky, relying heavily on the movements of the pandemic and the outcome of the US election. That it is being whispered about suggests that, having bought in life-saving cash, the company is now looking for funding which is, let’s say, slightly less draining than what it has in place.
If the pandemic’s trajectory continues as it has done, the platform will build on what has become a strong position. There was much speculation at the start of the pandemic as to whether home sharing would win or lose - euw! Other people’s dirty homes! - and it looks as though the conclusion is win. The group has a cleaning protocol - of course - but the joy of a homestay is that there’s no need to make a leap of faith as to whether it’s being put in place. You can go in and do it yourself. And then you’re free to kick back by the pool, drawbridge up, safe in your castle.
So far, so fun. And up to the point of widespread distribution of a vaccine, no need for a shift in strategy. Which is a shame, because the group had talked of just such a thing, into long term stays and we would have been intrigued to see how this played out. Rather like Airbnb, the extended stay sector has been one to prosper during the pandemic. We look forward to them clashing on the other side.