The tone of the press about Airbnb.com is changing. The company is now treated as the comeback kid that has matured. Over interviews, the company positions itself as agile and resilient, with good numbers, lower costs, and a relevant offering of homes. Airbnb may be stealing a bit of Vrbo’s thunder here in terms of who is better positioned, but their PR machine is still moving along nicely.
Deirdre Bosa:
The travel industry was decimated by the COVID-19 pandemic. But as you’ve heard, Airbnb is starting to see green shoots of improvement. So I asked Brian Chesky if he’s seeing a sustained rebound in his business in the United States, and if that’s in jeopardy, given a rise in COVID infections in certain states.
Brian Chesky:
It’s hard to know. I mean, I think one thing I’ve learned is not to try to get in the business of predicting the future. Anyone who has, has not done very well in the last few months. But what I can tell you is the following.
Beginning with March, travel was in a standstill, almost virtually stopped. Two and a half billion people locked down. And not surprisingly, we spent 12 years building Airbnb’s business and lost almost all of it in a matter of four to six weeks.
What’s happened over the last three, four months, though, is something else entirely. People are saying they want to get out of the house, but they want to be safe. They don’t want to get on airplanes, they don’t want to travel for business, they don’t want to go to cities, they don’t want to cross borders. What they are willing to do is get in a car, drive a couple 100 miles to a small community, where they are willing to stay in a house.
And because of that, though our business has not recovered, I want to be very clear, something remarkable happened, which was the end of May, early June, we have the same volume of bookings in United States as a year before, without any marketing. Zero marketing whatsoever. I think this is just showing that people are yearning for something. They’re yearning for connection, and they want to be connected to each other, to the communities. They want to get outside. And so I think that travel is going to come back. It’s just going to take a lot longer than we would’ve thought, and it’s going to be different.
Deirdre Bosa:
Is Airbnb be prepared if we do see, perhaps not lockdowns, but potentially lockdowns or more businesses close, more communities shutting down to outside?
Brian Chesky:
We have dramatically reduced our costs. We reduced our costs and it was an incredibly difficult harrowing experience because we said, “We don’t know how long the storm will take.” And so I’m going to hope for the best, but I’m planning for the worst. So if there is a shutdown or multiple shutdowns, if communities get shut down, if travel stops, we’ll be okay because of the changes we’ve made. We’ve cut nearly a billion dollars of marketing. We’ve had to reduce our staff. We’ve been very, very lean and nimble.
And we’ve also been resilient. We’ve launched online experiences. People can do it from home. We have longer-term stays. A large percent of our bookings, almost a fifth of our booking or nights, are for stays longer than 30 days. And the other thing is, we have not lost any host on our platform. Or I should say it differently. We have more hosts today and more homes today than before COVID started.
So the important thing here is that the market is resilient, the community is resilient. And I think that one trend that is going to happen is the following. Travel, as we knew it, is over. It doesn’t mean travels over, just the travel we knew is over, and it’s never coming back. It’s just not. No one quite knows what it will look like, but I have a couple of thoughts. I do think that instead of the world population traveling to only a few cities and staying in big tourist districts, I think you’re going to see a redistribution of where people travel. They’re going to start traveling because they’re going nearby to thousands of local communities.
Deirdre Bosa:
Are you looking at potentially cutting Airbnb’s corporate footprint?
Brian Chesky:
We’re definitely going to not have… We had fairly ambitious real estate expansion plans and we have paused those plans. So we’re not adding a lot more new real estate. I think, more people are going to work remotely. And work from home also could be work from any home, and that’s an opportunity for Airbnb, because you’re going to see major population redistribution on the table. Not everyone’s going to want to live in the same city. That being said, we don’t know the full cost of entire workforces being remote.
Deirdre Bosa:
Is there more room to cut costs at Airbnb?
Brian Chesky:
We’re certainly done with the layoffs. We told our team, there will be one layoff, we’re not going to want to do this twice. So when you do cut, you must cut deep enough. And we made sure we cut deep enough so we didn’t have to do this twice, and that we’d have enough money to be able to take care of people, do everything we can for those departing. We cut nearly a billion dollars of marketing spend run rate. We’re not doing any marketing right now. We’re not spending any on advertising.
And actually, what it turns out is our business is probably a little more efficient and profitable than we realized, because of all the demand we’re getting. There’s still opportunities on AWS and customer service to get more efficient in how we use data, how we handle context. So we’ll continue to make the business more efficient. The business is definitely pretty lean at this moment.
Deirdre Bosa:
How are you thinking of an IPO these days? It was on track for this year.
Brian Chesky:
Was on track, then the crisis happened. We kind of focused our efforts on other things. And at this point, we’re not ruling out going public this year, but we’re not committing. We want the world to be ready for Airbnb. And that means that travel needs to see a little bit more of a sustained recovery. The market needs to recover a bit, and we just need to kind of weigh our options. So we don’t have any news to say, but we’re not ruling anything out.
Deirdre Bosa:
Are you encouraged, though? We’ve seen a number of IPOs go out pretty successfully so far.
Brian Chesky:
You think you’re on top of the world. Something difficult might be around the corner. And so maybe we just have to start living in a little bit more of a measured world and not get too high, not get too low. I hope these last four months have been a lesson. So, I’m trying to take that advice and say, “Things are never quite as good as they seem or as bad as they seem.” And so we’re going to kind of play it by ear and be pretty careful, pretty thoughtful.
