Airbnb says it's cutting 1,900 employees — about 25% of its workforce — in one of the largest layoffs to hit Silicon Valley as a result of the coronavirus outbreak.
The global pandemic is the "most harrowing crisis of our lifetime," Airbnb CEO and co-founder Brian Chesky said in an email to employees on Tuesday. The virus's devastating blow to the travel industry means the company's 2020 revenue is forecast to be less than half of what the startup pulled in last year, he said.
In an interview with NPR last week, Chesky described the challenge the virus presented to Airbnb, which is among the most valuable private technology companies in the U.S.
"You go from living year to year to month to month to week to week to day to day," Chesky said. "You go from having multi-year plans to figuring out how you're going to get to next Thursday because you can't even predict what the world is going to look like in two months."
Hundreds of startups have laid off a total of more than 30,000 employees since the outbreak took hold — and experts say the full extent of the coronavirus' toll on the technology sector remains untold. Airbnb, which employed 7,500 before the cuts and was last valued at $31 billion, is the latest high-profile tech company to buckle in the face of the virus.
In the interview, Chesky said Airbnb's future relies on his core belief that Americans will resume traveling, though when exactly and how traveling patterns will change is more uncertain.
"Traveling is not a trend that we rode. We didn't invent it," Chesky said. "There is a fundamental human need to explore. I think travel will be eventually much larger after COVID than before. It may take years."
In the meantime, many of Airbnb's 650,000 hosts in the U.S. have seen their income plunge. Nearly half of Airbnb hosts lean on their rentals to pay their monthly rents and mortgages, with some saying a $250 million host relief fund and other measures the company has taken to assist hosts aren't enough.
Airbnb's woes reflect larger pain being felt by the travel and hospitality industry. About 74% of hotel rooms in America are now empty, according to new figures from hospitality industry tracker STR.
Amid heightened concerns about germs, Airbnb and major hotel companies have unveiled cleaning initiatives to make travelers feel more at ease staying in lodgings around the country.
Chesky says he expects people to start traveling closer to home before embarking on far-flung destinations. He told NPR that Airbnb intends to focus on the company's "experience" services that link travelers with things to do like cooking classes and city tours. Chesky also expects people to stay for longer periods in Airbnb rentals if their employers allow them to work from anywhere they want.
In his memo to employees, Chesky said Airbnb will stop its forays into transportation and television production, areas outside of its core business that it had hoped to ramp up. The company will also scale back its investment in hotels and luxury rentals.
One major unknown is whether Airbnb will still move forward with its plans to take the company public. The company was once seen as one of the most anticipated initial public offerings in Silicon Valley.
Despite the gloomy outlook, Chesky told NPR last week he is "very confident" Airbnb can still go public in 2020.
"I'm going to do everything in my power to work on this," he said.
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