Airbnb is laying off about a quarter of its employees today, or about 1,900 people. The company has been struggling for the past two months as home stay requests led to massive reservation cancellations, and future reservations are likely to return very slowly as the United States and other countries carefully lift the restrictions. Airbnb currently has 7,500 employees.
The virus has caused a sharp drop in Airbnb's revenue. Airbnb CEO Brian Chesky says 2020 revenue will be half of what the company contributed in 2019. "Airbnb's business has been hit hard," he writes in a note emailed to employees. Information, which first reported the layoffs, says the cuts are supposed to save the company between $ 400 and $ 500 million a year. An Airbnb spokesperson directed us to Chesky's note when asked for comment.
Airbnb announced a more flexible cancellation policy for reservations until May 31 due to the pandemic. While it was a great help to customers who were not going on their trips, the cancellations greatly affected the hosts as the expected revenue stream disappeared. That loss of revenue also severely affected Airbnb, as it primarily earns money through fees on every stay booked through its site.
In the past few weeks, Chesky has been cutting hundreds of millions of dollars in spending and preparing for a hopeful resurgence once people are ready to travel again. Until then, the company is abandoning more conspicuous projects, such as television and transportation plans, to deal with the dramatic loss of revenue caused by the pandemic. To overcome this moment, Chesky says the company needs to make "fundamental changes,quot; that "are not temporary or short-lived."
However, he hopes for an eventual change, writing that "we know Airbnb's business will fully recover."