World News – CA – Pandemic Resistant Airbnb leads IPO

The Associated Press
Employee

This file photo dated Nov.. July 2017 shows the skyline behind a row of Victorian houses in San Francisco. (AP Photo / Eric Risberg, file)

Airbnb has proven its resilience in a year that has upgraded global travel. Now it has to prove to investors that it has more growth ahead of it.

The San Francisco-based home sharing company makes its long-awaited debut in the public market on Thursday. The company valued its shares at $ 68 apiece late Wednesday, bringing the total to $ 47 billion, according to one person with knowledge of the transaction who was ineligible to speak because the amount has not yet been disclosed was. The shares trade on the Nasdaq Stock Market under the symbol « ABNB ». « 

Airbnb raised $ 3. 7 billion in its supply which makes it the biggest U. S.. . IPO this year, according to Renaissance Capital, which is tracking IPOs. The company initially set a price range of $ 44 to $ 50 for its shares, but raised it to $ 56 to $ 60 earlier this week, indicating increased investor demand.

Airbnb’s listing comes a day after another San Francisco-based company, DoorDash, shot up from its IPO, the second largest after Airbnb. DoorDash’s stock rose 85. 8% close at $ 189. 51. The food delivery app raised $ 3. 4 billion with his offer.

Airbnb is looking to add more hosts and real estate, expand in markets like India, China and Latin America, and attract new guests.

First, it needs to be restored. Airbnb – which has never made an annual profit – announced that its revenue has fallen 32% to $ 2. 5 billion in the first nine months of this year when the coronavirus forced travelers to cancel their plans. The company delayed its IPO – originally planned for spring – and financed operations with loans totaling 2 billion. USD. In May, Airbnb 1. 900 employees – or 25% of his workforce – cut and programs that are not related to his core business, such as film production, discontinued.

In the months since then, Airbnb’s business has recovered faster than hotels as travelers felt more secure booking private homes outside of the crowded downtown area during the pandemic. For example, in Miami, short-term rental occupancy hit 83% in October, while the average hotel occupancy rate was 42%, according to STR, an accommodation data firm.

According to Airbnb, the number of nights and experiences booked, down 72% year over year in April, fell 20% in September. Airbnb debuted in 2016 with experiences – from cooking classes to surfing lessons.

Airbnb now has 7. 4 million advertisements, from castles to tree houses, in 220 countries. They are operated by 4 million hosts. According to Euromonitor, the company controls around 39% of the global short-term rental market. It’s the market leader in Europe but lags behind VRBO, Expedia’s North American rental company.

Looking ahead, Airbnb believes that people who are able to work remotely could see a surge in business.

« We believe the lines between travel and life are blurring and the global pandemic has accelerated the ability to live anywhere, » Airbnb said in a recent financial report.

The offer could also be extended to boutique hotels, as the purchase of the last-minute hotel room operator Hotel Tonight signaled in 2019.

However, Airbnb admits that attracting new hosts and guests will be difficult and expensive. Sales growth had already slowed in the years leading up to the pandemic.

« I think the company will benefit from the pent-up demand for travel once the vaccine is widely available. But why would anyone want to buy into a travel-related, unprofitable, slower-growing company? ”Said Scott Rostan, Training the Street CEO who advises Wall Street analysts.

Airbnb was born 13 years ago in the San Francisco apartment shared by Brian Chesky – now CEO of the company – and Joe Gebbia, head of the design studio and Airbnb. org, its non-profit arm.

Chesky and Gebbia were looking for a way to subsidize their apartment. When they learned that a design conference was coming to town and the hotels were full, they set up a website – AirBedandBreakfast. com – and rented air mattresses. You have three customers. In 2008 they started a company with Nate Blecharczyk, a software engineer.

Home sharing wasn’t new. VRBO was launched in 1995. booking. com, another older rival based in Amsterdam, primarily offers hotel rooms but has branched out into vacation rentals as well.

What made Airbnb different was its focus on affordability and hosting guest rooms and sofa beds, said Tarik Dogru, an assistant professor at Florida State University’s Dedman College of Hospitality who studies Airbnb. The guests strayed further into the neighborhood than in a hotel.

That was a problem sometimes. The company has angered some cities accusing it of promoting overtourism and making neighborhoods less affordable by taking housing off the market. Los Angeles, Paris, and even Airbnb’s hometown, San Francisco, have passed laws restricting rentals.

Airbnb’s rapid growth – the number of hosts and active listings increased more than 20% in both 2018 and 2019 – has also made it difficult for the company to ensure quality. Last November, Airbnb promised to double-check all entries to make sure they match the photos on its website. It also spent the last year removing party houses and tightening the rules for guests after an illegal Airbnb house party was fatally shot in California in 2019.

Relationships with hosts and guests were difficult at times. After several reports of racist behavior against guests, Airbnb put in place a non-discrimination statement that all guests and hosts must sign. A guest’s profile photo is not displayed until a property has been booked. Therefore, a host cannot refuse a room due to a guest’s race.

And earlier this year, the hosts outraged after the company allowed guests to cancel bookings and receive full refunds due to the pandemic. Airbnb promised the hosts $ 250 million to make up the deficit.

Cary Gillenwater, a university professor and Airbnb host in Duivendrecht, the Netherlands, said the company hadn’t given him much financial support, despite the fact that he canceled many guests without penalties.

Gillenwater typically earns over 21. $ 000 a year by renting a room on his property with a private entrance. This year he will be lucky enough to 2. Earn $ 500. He wants to rent the room to office workers so that they can use it during the day.

Despite his experience, he is considering investing in Airbnb and believes it will continue to grow. Sharing houses is invaluable to his family of five as it is difficult to find hotel rooms that are big enough.

« I feel like there is a future for them, but we have to get through it all first, » he said.

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Airbnb, IPO, Brian Chesky