The tourism industry has been one of the hardest hit due to the coronavirus pandemic. No one is travelling for pleasure at the moment and movement for work is at an all-time low. That means the core Airbnb business has effectively been nullified, and they have to take decisive action to keep the company afloat.
In a memo from the CEO and co-founder, Brian Chesky, the company has said that it will retrench around 1,900 employees or about 25 percent of their global workforce. This is a drastic measure to cut costs when they are earning very little revenue.
Airbnb haven’t denoted which countries will be most heavily affected by the layoffs, but they did say it would affect their Transportation, Airbnb Studios, Hotels and Lux businesses.
The Silicon Valley company has quite a bit of runway in terms of cash flow and is in a relatively good position to weather the storm of COVID-19. They raised an additional $2 billion in debt once the pandemic hit, with some additional capital from various other sources. That being said, it is still understandable why they would need to cut its workforce. According to the CEO they are making these changes to be “a more focused business.”
Lockdowns around the world in being lifted slowly, but it will still be months (or longer) before travel behaviours are restored to normal. Airbnb is preparing for an extremely long road to recovery.
The staff that is being cut will receive 14 weeks of pay and an additional week’s pay for every year they were with Airbnb. In the USA they will also receive a full year’s worth of health insurance, where international employees will receive health insurance until the end of 2020. Employees who’ve worked for less than a year can buy their vested share options.
Silicon Valley darlings are just as susceptible to these trying times, and we’re sure some other large technology companies will need to take similar steps in the months to come.