For Airbnb, 2020 Was Supposed To Be A Banner Year. Then The Pandemic Hit
The CEO of Airbnb has made a lot of chocolate-chip cookies since the coronavirus pandemic began.
"People call it stress-baking," Brian Chesky said. "If that's the case, I'm going to be a Michelin chef pretty soon, because I got enough stress to do a lot of baking."
That's no surprise given that the lure of Airbnb — to have a unique experience by staying in a stranger's home — has lost considerable appeal as the pandemic courses its way through the world, paralyzing travel.
"In this crisis, it felt like I was a captain of a ship and a torpedo hit the side of the ship," Chesky said in an interview with NPR by Zoom, from his San Francisco home.
This new reality has sent Airbnb's executives into damage-control mode. Chesky has partnered with former U.S. Surgeon General Vivek Murthy to develop training for Airbnb hosts on how to disinfect their homes. Airbnb is also requiring rooms that opt into the new cleaning protocols to remain empty for 24 hours between guest stays. Prospective guests will be able to use the online platform to choose rooms that will be vacant for at least 72 hours, which is how long the coronavirus could live on plastic and stainless steel.
"In this new world, I think cleanliness is paramount. And so, this is now a paramount priority of Airbnb as well," said Chesky, whose cleaning push was followed by similar announcements by major hotel chains like Hilton and Marriott.
"Traveling," Chesky said, "is an innate human need," he said. "Travel will come back."
Many hosts who have seen their earnings collapse in the pandemic are far less sanguine about an Airbnb bounce back.
Josep Navas Masip, 44, took some time off his job as a college Spanish professor to pursue a master's degree, leaning on his Airbnb rentals in South Philadelphia to pay the bills. He even purchased a neighbor's home with the goal of doubling his $2,000-per-month Airbnb income. That was just before the pandemic struck.
"In the middle of the renovation, the coronavirus crisis hit," he said. "I had to cancel my renovations, and I had to tell the contractor to stop working."
Navas Masip now wonders whether he should rent out the house he just bought, or even put it up for sale.
Airbnb has set aside $250 million to help hosts. But the money covers about 25% of their cancellation fees, which is a fraction of what they used to make.
Airbnb also offers $5,000 grants to high-volume hosts but, under the rules, a host needs to have used the platform for at least a year. Navas Masip's time on Airbnb is just shy of that, so he does not qualify.
"I have, now, two mortgages. I don't have any income," Navas Masip said. "And I don't know when I'm going to be able to start doing Airbnb again," he said. "So I'm thinking about maybe taking a loan from a family member or start talking to a bank."
Airbnb set to go public in 2020
It was not supposed to be this way for Airbnb.
Twelve years ago, Chesky convinced people that rather than stay in a hotel chain, they can better explore a place by crashing at the home of someone they don't know. The concept has connected 150 million guests with rooms. Now, the idea faces is greatest threat ever: a public health crisis.
Chesky co-founded the company with his roommate Joe Gebbia in 2008. In the middle of the Great Recession, they discovered they could make money by renting out air mattresses in their apartment.
While the company has battled accusations that it drove up rents in many markets and contributed to the nation's housing-affordability crisis, the criticism did not slow the company's explosive growth.
The website now features 7 million short-term rental listings around the world. Investors last valued Airbnb at $31 billion. And this was the year they were going to cash in. Airbnb had announced it would sell its shares to the public in 2020.
Chesky said he's determined to make that happen this year, telling NPR he is "very confident" the company will have its initial public offering, or IPO, despite the industry's upheaval.
"I'm going to do everything in my power to work on this," he said.
CEO: Pandemic presents 'prolonged storm' for travel
While Airbnb will not reveal how deep of a hole it is in, travel analysts say the company's woes likely parallel with the rest of the industry.
According to one outside tracker of Airbnb listings known as AirDNA, hosts saw $1.5 billion in bookings dissolve last month as the virus forced millions of Americans to stay indoors. About 650,000 people in the U.S. earn money by listing rooms on Airbnb.
The coronavirus pandemic has exacted a devastating blow to every facet of the travel world.
Nearly 80% of hotels rooms in America are empty. A trade association for the hotel industry predicts 2020 will be the worst year on record for hospitality.
"You can't hedge an 80% drop decline in demand," said RBC Capital analyst Mark Mahaney. "It's impossible."
The virus outbreak will cause a "prolonged storm" for travel, Chesky acknowledged. But he said it thought it would give way, eventually, to "a new normal."
Airbnb data over the past few weeks indicate travelers are choosing to stay in rentals for longer periods of time than in the past. Chesky said more than half of bookings during the pandemic have been for stays of at least a month.
Chesky also expects travelers to forgo cross-country vacations for trips closer to home.
"I don't think travel will not come back, but I think it will come back by car before it comes back by plane," he said.
Airbnb hosts see cancellations into the fall
Janice Honeycut, 57, said she and her husband thought they'd "recession-proofed" their retirement before the pandemic came along.
They have 100 acres of land nestled right along the Appalachian Trail in eastern Tennessee. In addition to her Airbnb, she and her husband run an organic farm, a camp ground and a massage-therapy business.
Like more than half of Airbnb hosts, the money she made from her listings was a primary source of income. No longer.
"Every single one of them, we now realize, was dependent on hospitality," she said. "So, other than the farm, we really don't have any choice but to wait [the pandemic] out."
Honeycutt has seen her Airbnb cancellations stretch into the summer and fall, usually prime time for travel to the region.
While she has read about host aid offered by Airbnb, none of the relief has reached Honeycutt.
"We haven't seen any of that," she said. "We have received absolutely nothing, and it's been pretty rough."
She is planning to rewrite her online listing to emphasize how squeaky clean her rooms are, in hopes that it will eventually bring back guests.
"If they're not sure if we've sanitized everything, there is spray disinfectant and all kinds of stuff in the suite, so they can double-do it, if they want to. It's right there for them," she said.
Back on the Zoom call, Chesky says struggling hosts should not fret, displaying perhaps a founder's sense of boundless optimism.
He said his company's success is due to a basic insight about human behavior: people will seek out places that have character and feel more intimate than stodgy corporate suites.
A pandemic, he says, will not alter that.
"There is a fundamental human need to explore, and I think that travel will be, eventually, much larger after COVID than before," Chesky said. "But it may take years."
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