Ralph Hollister on how Airbnb is bouncing back

The GlobalData analyst has said the lodging company is keeping its head above water

Airbnb has made drastic changes to its business
Airbnb has made drastic changes to its business

A few months ago, the chance of Airbnb’s planned IPO going ahead in 2020 was slim to none. As the Covid-19 pandemic swiftly ground domestic and international travel to an abrupt halt, travellers cancelled their bookings en masse and its host community looked to list their properties elsewhere. However, Airbnb’s recent performance means that a stock market launch is now once again a possibility.

One of the first forms of tourism that has returned is close proximity domestic travel – or staycations. Airbnb’s nimble business model has allowed it to react quickly to this sudden change in traveller demand and it has reaped the rewards. There were more nights booked for travel to Airbnb listings in the US between May 17 and June 6 than there were during the same time period a year earlier. The ability of the platform to adapt in real time to macro-economic factors such as Covid-19 is a key differentiator.

Potential concerns regarding hygiene and sanitation in Airbnb properties do not seem to be as problematic as once thought. The fact that guests actually have more control over cleanliness may now put the company at an advantage over hotels - many guests may prefer to clean to their own standards once they arrive at their accommodation.

The proactive attitude shown by the company is also evident internally. Like many other travel companies, Airbnb has had to streamline its business to optimise efficiency due to impacts created by Covid-19. Laying off around a quarter of its workforce has allowed Airbnb to pursue a more efficient cost structure by ending more costly ventures in order to focus on its core operations.

Despite these positive signals, any IPO or direct listing should not be a rushed decision. Future risks such as a second spike in global Covid-19 infections as well as an increasing amount of cities clamping down on short-term rental regulations imply that Airbnb’s road to recovery may not be entirely smooth.

Ralph Hollister is an analyst in the travel and tourism division at GlobalData. He specialises in the creation of thematic reports, mainly in relation to major technology themes in the tourism industry. 

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