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April 9, 2020updated 14 Apr 2020 10:30am

Airbnb Online Experiences: A bid for survival amid coronavirus devastation

By Lucy Ingham

The coronavirus pandemic has caused chaos for many companies, including Airbnb, which in just a few short months has gone from a beloved tech unicorn to being vilified by its own landlords. But now it is attempting to climb out of the hole it has found itself in with Airbnb Online Experiences.

From the moment the outbreak began to spread beyond China, it was clear that the coronavirus was particularly bad news for the holiday-let platform, but its decision to enable guests to cancel trips beginning before 31 May with a full refund prompted outrage from its 700,000 hosts.

This forced CEO Brian Chesky to apologise to Airbnb hosts and announce a $250m fund to cover the cost of cancellation funds, paying 25% of what would normally be received as per individual cancellation policies, and a $10m Superhost Relief Fund to provide grants to hosts struggling to cover their mortgage or rent.

“While I believe we did the right thing in prioritising health and safety, I’m sorry that we communicated this decision to guests without consulting you – like partners should,” said Chesky in a message posted to the Airbnb site.

“We have heard from you and we know we could have been better partners.”

Airbnb and the coronavirus: “A devastating couple of months”

This may help to ameliorate the bad blood between Airbnb and its hosts, but the fact remains that the company has faced what Chesky described as “a devastating couple of months”, and continues to see a dark path ahead.

“The pandemic has hit Airbnb dramatically, with reports of its valuation dropping by almost half, to $18bn, in a year they were supposed to go public, on top of previous losses,” explains Rheanna Norris, associate analyst for Travel and Tourism at GlobalData.

“Travel restrictions have made bookings plummet, with calls for major cuts – including their $800m marketing budget for this year.”

Struck by a drop in bookings that goes far beyond a decimation, Airbnb has been forced to restock its coffers, in the form of additional $1bn funding in the form of debt and equity securities investments from investment giants Silver Lake and Sixth Street Partners.

This was announced on Monday in a company press release drenched in defiant language that ultimately failed to mask the severe situation Airbnb finds itself in. The company reminded readers that it “started in the midst of the Great Recession in 2008”, while Chesky described a plan for refocusing that reflected an “emerging interest in travel that’s closer to home”.

This, he said, would focus around “three core products”. The first, hosts, was a clear effort to continue winning back the support of its vital partners, but the company also announced that it would focus on longer term stays, such as housing for students and those on work assignments. A dramatic shift that in other circumstances would make headlines among the tech and startup media.

The third, however, was Airbnb Experiences, and today the company provided a view into how it plans to leverage this into a survival plan amid the coronavirus pandemic.

Airbnb Online Experiences: Supporting hosts or keeping consumer interest?

Announced today, Airbnb Online Experiences takes the Experiences arm of the business and turns it into a primary offering during the coronavirus outbreak.

While Airbnb’s standard Experiences, which include options such as cooking lessons, walking tours and exercise classes, were positioned as an add-on to trips, and a way for hosts, local businesses and Airbnb itself to make extra money, Airbnb Online Experiences are designed to be stand-alone.

Accessed via a video call, Airbnb Online Experiences provide similar offerings to their real-world counterparts, but without requiring the guest to leave their living room.

Options include relatively conventional exercise classes, alongside foodie experiences and more off-beat lessons, such as close-up magic. There are also a number of high-profile names involved, including Olympic medalists Alistair Brownlee and Lauren Gibbs.

“Human connection is at the core of what we do,” said Catherine Powell, head of Airbnb Experiences.

“With so many people needing to stay indoors to protect their health, we want to provide an opportunity for our hosts to connect with our global community of guests in the only way possible right now, online.”

Central to the product, Airbnb says, is that it offers people a new way to “earn income during the Covid-19 crisis”, a clear nod to the financial issues many of its hosts now are facing.

It is also a smart way to keep users engaged with the brand at a time when the idea of a holiday seems a long way off.

“Launching online experiences is an innovative idea, also adopted by many destination market organisations. Online Experiences allow Airbnb to maintain their brand image whilst restrictions are in place,” says GlobalData’s Norris.

“Maintenance of their brand is imperative to ensure a sufficient bounce-back of business after the height of the pandemic has passed, allowing Airbnb to be at the forefront for travelers next getaway. This ensures a secure financial forecast for the future.

“Offering trade during Covid-19 also allows an opportunity for Airbnb hosts to continue to earn an income during this uncertain time, improving their reputation and relationship with landlords in the long-run.”

However, having been slow to launch such online services compared to the army of small businesses now providing online exercise classes, lessons and beyond, Airbnb is entering a very crowded market – and one where it is the giant attempting to take on beloved local companies with strong customer relationships.

Furthermore, even if Airbnb managed to make Airbnb Online Experiences a smash hit, it is unlikely to grow beyond its conventional Experiences brand, meaning that it will not come anywhere close to plugging the hole the lockdowns have left in the company’s bank balance.

For Airbnb, the best the company can hope for right now is to maintain customer interest and keep hosts happy, so that it can slowly return to business-as-usual once the lockdowns end. And even then, managing to do that will be a significant win.

Read more: WhatsApp limits message forwarding to curb spread of Covid-19 rumours

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