Everything you need to know about Airbnb’s 2020 IPO plans
Reasons to IPO
But there are lots of reasons to go public, includingpressure from employees(shares held by early employees will expire this year). But another big motivation is the fact that Airbnb has rebounded better than its competitors from coronavirus. Booking rates wereabove expectationsfrom June 2020 onwards and the Airbnb model could take advantage of changing host and tourist behavior during the pandemic.
The company’s overheads are far less than the hotel sector due to its limited fixed costs. It also took advantage of the rise in domestic staycations inrural locationsacross the globe, and the increased demand for countryside retreats where people could safely socially distance. Unlike hotels, short-term rentals tend to facilitate longer stays and can offerfull-service amenities, living space, and gardens.Research showsthat the more spacious environments of short-term lets have been popular with holidaymakers and people wanting to work from home elsewhere.
Despite broad marketing cuts to reduce losses, Airbnb hasstrong brand recognitionthrough past campaigns like “Don’t go there. Live there” that tapped into people’s desire to not just visit a place but have a more authentic experience of it. This helped it become the go-to platform for short-term rentals during the pandemic.
Hosts in rural areas alsoresponded to the demandby listing. Meanwhile, urban hosts responded by switching their properties toprivate rental, or dramatically reducing prices.
While the broader tourism and hospitality sector is weak, perhaps Airbnb sees this stage of the pandemic as its time to shine and push ahead with its IPO. Plus, stock markets in the US are on arecord high, fuelled by stimulus from Washington.
Questions remain
Questions remain for Airbnb, however. In particular, when will travel behavior revert to business as usual, if ever? This will determine whethercurrent bookings growthwill lead to profitability.
Then there are the safety issues that have dogged the company for years and played a big role in Airbnb’sloss of profitability in 2019. It spent US$150 million on safety initiatives, including verifying the accuracy of listings, creating a 24/7 safety hotline, and eventied employee bonuses to safety.
There is also the threat of more tax and regulation in major markets, which could emerge as authorities seek new revenue to pay for the effect of coronavirus on their economies. The basis of the favorable market conditions is also open to question, as there is concern that the current strength of the stock markets isn’t based on strong economic fundamentals and is a bubblethat’s waiting to burst.
Success in the tourism industry is never a given. Airbnb will be all too aware of this, having totallydisrupted the hotel industry. Airbnb has more than 7 million listings – dwarfing the largest hotel chain, Wyndham Worldwide, whichhas 8,000 hotels. But rather than seeing this as a burden, Airbnb is capitalizing on it.
But for all itsmarket positioningas a different kind of travel provider – one that offers unique, authentic, and personalized experiences – Airbnb still sits firmly with the tourism sector. Like its competitors, its success still depends on post-pandemic travel rebound.
This article is republished fromThe ConversationbyMichael O’Regan, Senior Lecturer in Events and Leisure,Bournemouth Universityunder a Creative Commons license. Read theoriginal article.
Story byThe Conversation
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