Airbnb Lays Off Nearly 1,900 Employees and Narrows Its Focus to Hosts

On 5 May 2020, Airbnb co-founder and chief executive Brian Chesky told employees that nearly 1,900 of the company's 7,500 staff, around 25% of the workforce, would lose their jobs. Airbnb published his note on its newsroom the same day.

Chesky wrote that Airbnb's revenue for 2020 was forecast to be less than half of what it earned in 2019. The company had already raised $2 billion in capital and cut costs in nearly every part of the business, he said, and it had to go further.

For people who rent out homes on the platform, one passage mattered more than the job count. Chesky said Airbnb would spend less on any activity that did not directly support its hosts, and he named the projects that would be paused or shrunk.

What Airbnb cut

The note listed four lines of business. Work on Transportation and on Airbnb Studios was paused. Investment in Hotels and in the luxury tier, which the note called Lux, was scaled back. Fortune described the studio as a unit meant to produce original entertainment related to travel, and the luxury product as a high-end rental service.

Chesky wrote that the choice of those projects was no reflection on the people who worked on them, and that not everyone on those teams would leave. Teams across the whole company would be affected, he wrote, and many would be reduced according to how well they fitted the narrower plan. He described that plan as a return to the company's roots: everyday people who host their homes and offer experiences.

Airbnb said it had employees in 24 countries and that the time needed to tell them would vary with local law. In the United States and Canada, departing staff were to be told within hours, and their final working day was Monday 11 May 2020.

Why Chesky said the cuts went this deep

The note gave two reasons for going beyond the earlier savings. Airbnb did not know when travel would return, and it expected travel to look different when it did.

“While we know Airbnb’s business will fully recover, the changes it will undergo are not temporary or short-lived,” Chesky wrote.

The earlier savings had been large. Reuters, in a dispatch republished by the news site Interaksyon on 7 May 2020, reported that in late March Airbnb suspended its marketing to save $800 million in 2020 and told workers that its founders would take no salary for six months, while top executives took a 50% cut. In April, Reuters said, Airbnb announced that the private equity firms Silver Lake and Sixth Street Partners would invest $1 billion, raising its cash reserves to around $4 billion.

The Associated Press set out how far the company had fallen in a few months. Airbnb was 12 years old, had been valued at $31 billion a few months earlier and had been planning a stock market listing. It listed around 7 million properties. AirDNA, a firm that tracks bookings for Airbnb hosts and others, put the fall in new bookings in the United States at 53% between 3 February and 13 April 2020, the AP reported.

The cuts were large by the standards of the technology industry that spring. NPR ranked them among the largest layoffs in Silicon Valley caused by the coronavirus outbreak, and counted more than 30,000 jobs lost at hundreds of startups since it began.

What departing staff were given

Airbnb set out the terms in the same note. The conditions, as the company wrote them, were these.

• Severance: employees in the United States received 14 weeks of base pay, plus one more week for every year at Airbnb, with tenure rounded to the nearest year. Outside the United States, all employees received at least 14 weeks of pay, plus increases for tenure in line with each country's practice.
• Equity: Airbnb dropped the one-year cliff on equity for everyone hired in the previous year, so that every departing employee left as a shareholder. Everyone leaving was eligible for the 25 May vesting date.
• Health cover: 12 months of health insurance through COBRA in the United States, and health insurance costs through the end of 2020 in all other countries, plus four months of mental health support.
• Job help: a public directory of departing staff who chose to be listed, a placement team drawn from Airbnb's own recruiters for the rest of 2020, four months of career services, and their Apple laptops to keep.

Where that left hosts

Hosts were short of money before the note went out. NPR reported that many of Airbnb's 650,000 hosts in the United States had seen their income fall steeply, and that nearly half of hosts relied on their rentals to pay their own rent or mortgage.

Their quarrel with the company was about refunds. The AP reported that Chesky had angered many hosts when he let guests cancel stays without penalty as lockdowns wrecked travel plans, and that in early April Airbnb agreed to pay hosts $250 million to make up for some of the money lost to cancellations. NPR reported that some hosts said the $250 million relief fund and the company's other measures were not enough.

Not every observer accepted that the pandemic explained all of the layoffs. SiliconANGLE, a technology news site, pointed to a report from February that Airbnb had lost $322 million in the first three quarters of 2019.

“Given that the company was known to be burning money precoronavirus, the job cuts may have been necessary anyway for Airbnb as it aims for profitability ahead of an initial public offering,” the site wrote.

Chesky had told NPR the week before the layoffs that he was confident Airbnb could still go public in 2020.

What it meant for hosts

The note was written to staff, but it told a host in May 2020 four practical things.

• Where the company expected demand. “People will want options that are closer to home, safer, and more affordable,” Chesky wrote. He told NPR he expected people to travel near home before they went far, and to stay longer if their employers let them work from anywhere. A host could act on that with prices, cleaning and longer-stay terms aimed at guests within driving distance.
• Where the company would pull back. Hosts in the Hotels and luxury programs sat in the lines Airbnb said it was scaling back. Home hosts and experience hosts sat in the part Chesky called the core.
• How little marketing to count on. Reuters reported that Airbnb had suspended its marketing in late March to save $800 million in 2020. A host could not rely on the platform's advertising to fill a calendar that summer.
• What the refund rules were. ShortTermRentalz reported on 4 May 2020 that Airbnb had extended its Covid-19 refund window, so that stays booked on or before 14 March with a check-in date up to 15 June could be canceled for a full cash refund or travel credit. The previous cut-off had been 31 May. Airbnb's own help page, updated on 1 May 2020, gave the same 14 March booking date and 15 June check-in limit. Hosts had to budget for that money going back to guests. The $250 million Airbnb had agreed to pay was meant to cover some of those losses, not all of them. The same report said a host could also cancel a stay covered by the policy without a charge and without losing Superhost status.

Sources

1. Airbnb Newsroom, A Message from Co-Founder and CEO Brian Chesky (5 May 2020).
2. Associated Press, published by the Honolulu Star-Advertiser, Airbnb laying off 1,900 employees due to travel decline (5 May 2020).
3. NPR, published by KAXE, Airbnb Cuts 1,900 Jobs, 25% Of Its Workforce, As Pandemic Freezes Travel (5 May 2020).
4. Reuters, published by Interaksyon, Airbnb cuts 1,900 jobs as coronavirus hits home rentals (7 May 2020).
5. Fortune, Airbnb lays off staff even as it raises money from investors (6 May 2020).
6. SiliconANGLE, Airbnb to lay off 1,900 employees, 25% of staff, amid COVID-19 pandemic (5 May 2020).
7. ShortTermRentalz, Airbnb extends refund window until 15 June (4 May 2020).
8. Airbnb Help Center (Wayback Machine capture of 4 May 2020), Extenuating circumstances policy and the coronavirus (COVID-19) (1 May 2020).