Airbnb is laying off around a quarter of its employees today, or about 1,900 people. The company has been struggling over the last couple months as stay-home orders led to mass cancellations of bookings and as future bookings look likely to return very slowly as the United States and other countries carefully lift restrictions. Airbnb currently has 7,500 employees.
The virus has led to a steep drop in revenue for Airbnb. Airbnb CEO Brian Chesky says 2020 revenue will be half of what the company brought in during 2019. “Airbnb’s business has been hit hard,” he writes in a note emailed to employees. The Information, which first reported the layoffs, says the cuts are supposed to save the company between $400 million to $500 million per year. An Airbnb spokesperson directed us to Chesky’s note when asked for comment.
Airbnb announced a more flexible cancellation policy for bookings through May 31st due to the pandemic. While that was a huge help for customers who wouldn’t be going on their trips, the cancellations hit hosts hard, since an expected income stream disappeared. That revenue loss badly hit Airbnb, too, since it primarily makes money through fees on every stay booked through its site.
In recent weeks, Chesky has been cutting hundreds of millions of dollars in spending and preparing for a hopeful resurgence once people are ready to travel again. Until then, the company is letting go of flashier projects — like TV and transportation plans— to deal with the dramatic loss of revenue the pandemic has brought. To get through this moment, Chesky says the company needs to make “fundamental changes” that are “not temporary or short-lived.”
He expects an eventual turnaround, though, writing that “we know Airbnb’s business will fully recover.”
