The global Covid-19 pandemic has adversely affected businesses and companies like Airbnb are expecting their revenue to drop around 50% this year.
The company’s CEO, Brian Chesky, has sent out a letter to employees letting them know that they will be laying off 25% of their workforce.
Airbnb has 7,500 employees worldwide, so they will be laying off around 1,900 of these. This is being done in an attempt to cut their costs.
While we know Airbnb’s business will fully recover, the changes it will undergo are not temporary or short-lived. Because of this, we need to make more fundamental changes to Airbnb by reducing the size of our workforce around a more focused business strategy.
Out of our 7,500 Airbnb employees, nearly 1,900 teammates will have to leave Airbnb, comprising around 25% of our company. Since we cannot afford to do everything that we used to, these cuts had to be mapped to a more focused business.
You can see the full letter that was sent out to Airbnb staff over at the company’s website at the link below.
The Impact of Covid-19 on Airbnb’s Business Model
The Covid-19 pandemic has not only affected Airbnb’s revenue but has also forced the company to rethink its entire business model. With travel restrictions and lockdowns in place globally, the demand for short-term rentals has plummeted. This has led to a significant decrease in bookings, which in turn has severely impacted Airbnb’s cash flow. The company, which was once valued at $31 billion, has seen its valuation drop as investors become wary of the travel industry’s future.
In response to these challenges, Airbnb has had to pivot its strategy. The company is now focusing more on long-term stays and local experiences. This shift is aimed at catering to people who are looking for a change of scenery while working from home or those who need temporary housing due to various circumstances. By diversifying its offerings, Airbnb hopes to create new revenue streams and mitigate the impact of the pandemic on its core business.
Support for Laid-Off Employees
Recognizing the significant impact of the layoffs on its employees, Airbnb has put in place several measures to support those who are being let go. The company is offering a generous severance package, which includes 14 weeks of base pay plus an additional week for every year of service. Additionally, Airbnb is providing 12 months of health insurance through COBRA in the United States and health insurance coverage through the end of 2020 for international employees.
Moreover, Airbnb is setting up an alumni talent directory to help laid-off employees find new job opportunities. This directory will be accessible to potential employers and will feature profiles of the affected employees, showcasing their skills and experience. The company is also offering career services, including resume workshops, interview coaching, and job search assistance, to help ease the transition for those who are leaving.
The company has also committed to supporting its hosts, who are a crucial part of its ecosystem. Airbnb has established a $250 million fund to help hosts cover the cost of cancellations due to Covid-19. Additionally, the company has launched a $10 million Superhost Relief Fund to provide grants to hosts who are facing financial hardship.
In conclusion, while the Covid-19 pandemic has posed unprecedented challenges for Airbnb, the company is taking proactive steps to navigate this crisis. By focusing on a more streamlined business strategy, supporting its employees and hosts, and diversifying its offerings, Airbnb aims to emerge stronger and more resilient in the post-pandemic world.
Source, Techmeme
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