- Airbnb announced Tuesday it’s cutting 25% of its staff, or about 1,900 jobs.
- The cuts are meant to refocus the company on its core business of home sharing; the company plans to pause or cut back other efforts such as offering hotel accommodations or making travel videos, CEO Brian Chesky told employees in an internal letter.
- Although Airbnb has raised $US2 billion in recent weeks, it expects its revenue this year to be less than half the $US4.8 billion it recorded in 2019, Chesky said.
- Airbnb plans to offer affected workers at least 14 weeks of severance pay and, in the US, a year’s worth of healthcare coverage.
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Airbnb, hit hard by the global coronavirus epidemic, is laying off about 1,900 workers, or 25% of its staff, company CEO Brian Chesky told employees on Tuesday.
The job cuts are intended to help the home-sharing startup weather an economic shock that has frozen worldwide travel and halved the company’s revenue. Among the groups affected by Tuesday’s restructuring are those focused on transportation and luxury residences, as Airbnb seeks to reduce costs and position itself for a travel market that Chesky said will look much different after the pandemic.
“We are collectively living through the most harrowing crisis of our lifetime,” Chesky told staffers in an email, noting that Airbnb needs to “reduce our investment in activities that do not directly support the core of our host community.”
The 38-year old Airbnb cofounder spoke to employees at an all-hands meeting at noon on Tuesday, as first reported by Business Insider, then confirmed the layoffs in an internal letter he subsequently sent to workers.
The cuts come despite the fact that Airbnb has raised $US2 billion in the last month through debt financing. The company is forecasting that its revenue will be less than half the $US4.8 billion it pulled in last year.
Airbnb, once valued at roughly $US31 billion by private investors and en route for an IPO, is among numerous high-profile “sharing economy” companies built during the past decade whose businesses are now being devastated by the coronavirus pandemic. Uber, the ride-sharing company, told staffers that layoffs were expected in the coming weeks, Business Insider reported on Tuesday, and numerous smaller startups involved in everything from scooter sharing to physical fitness have slashed payrolls.
“For a company like us whose mission is centered around belonging, this is incredibly difficult to confront, and it will be even harder for those who have to leave Airbnb,” Chesky said.
Airbnb sees a changing travel market
Airbnb is planning on returning its focus to home sharing – people who offer accommodations in the rooms, apartments, and houses that they own or manage. As a result, Chesky said, it’s planning on pushing the pause button on its efforts in transportation and in Airbnb Studios, its effort to produce streaming travel videos. The company also is planning to cut back on investments in offering hotel rooms and in Lux, it’s luxury accommodations effort, he said.
The company plans to notify affected workers in the US and Canada later on Tuesday. Workers in other countries will be notified according to local laws and standards. The effective date of the layoffs in the US and Canada is next Monday.
Airbnb plans to pay laid off US workers 14 weeks of base pay plus an additional week for each year or partial year of service to the company. Non-US employees will get at least 14 weeks of pay.
The company is also planning on providing 12 months worth of health care coverage to US workers. Outside the US, workers will have their health insurance costs paid through the end of this year.
The mass job cuts are only the latest effort by Airbnb to slash expenses in response to the crisis. Last month, the company laid off most of its contractors and postponed its summer internships. In late March, it slowed its hiring and froze its marketing spending.
Last month, right after Airbnb raised its first $US1 billion in debt financing, Business Insider estimated that at its burn rate from 2019, it could still run out of cash in less than a year.
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