As the coronavirus pandemic continues to ravage every industry, Airbnb is the latest company to take a major hit as it prepares to layoff nearly 1,900 employees or about 25% of the entire company.
Airbnb's CEO, Brian Chesky, revealed the news on Tuesday and said the company will be reducing the size of its workforce – a move to offset declining revenues.
“We are collectively living through the most harrowing crisis of our lifetime, and as it began to unfold, global travel came to a standstill,” Chesky told employees in a note. “Airbnb’s business has been hit hard, with revenue this year forecasted to be less than half of what we earned in 2019.”
In response, Chesky said the company has raised $2 billion in capital and "dramatically cut costs that touched nearly every corner of Airbnb." However, the company learned that they would have to take their actions even further due to the uncertainty of when travel will resume and what the industry will look post COVID.
"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," said Chesky.
READ: Ontario Temporarily Bans Airbnb and Short-Term Rentals
Prior to the layoffs, the San Francisco-based tech giant had 7,500 employees and, in addition to laying off 25% of the workforce, Chesky said the company will also be halting all projects related to hotels, a transportation division, and luxury stays.
“Travel in this new world will look different, and we need to evolve Airbnb accordingly,” he said.
Moving forward, employees outside of the US, including those in Canada, will receive at least 14 weeks of pay, plus tenure increases consistent with their country-specific practices. May 11 will be the last workday for impacted Airbnb employees in both the US and Canada, Chesky said.
“I have a deep feeling of love for all of you,” Chesky said. “Our mission is not merely about travel. When we started Airbnb, our original tagline was, ‘Travel like a human.’ The human part was always more important than the travel part. What we are about is belonging, and at the center of belonging is love.”
This move comes on the heels of short-term rental owners still trying to list their properties in the GTA, which may contribute to the downturn of the rental market, despite the provincial government putting a temporary ban on short-term rentals, which includes online booking companies like Airbnb, during the coronavirus pandemic. However, a recent report from CIBC suggests that there are a number of factors that support a future rental reduction or slow down in growth, including the conversion of short-term rentals into long-term units, reduced demand, and weaker investment activity.
You can find Chesky's full note here.
