Impact of COVID-19 Pandemic on Shareholders of Airbnb in the Tourism and Hospitality Sector

This case study analysis examines the impact of COVID-19 pandemic on Airbnb's shareholders in the tourism and hospitality sector. It discusses the financial loss caused to the shareholders due to downsizing of dividends and plans to overcome the difficulty. The study also analyzes the fallout of the pandemic on the functioning of Airbnb and the contemporary market conditions of the company. Recommendations are made on how to mitigate the fallout of the pandemic and plan for improving marketing conditions in the future.

Case Study Analysis

Executive Summary
The report below concern itself with Airbnb, which is reputed enterprise dealing in
tourism and hospitality industry. Its a web site based on connecting the clients with hosts for the
purpose of renting the homes. Its in the public knowledge that the enterprise is has been severely
hit due to the recent pandemic. This global catastrophe has had a crucial role in downsizing the
dividends of the shareholders among other things. The shareholders are facing uncertainty of
future options available to the company. Airbnb is well aware of the plight of shareholders. The
enterprise wants to provide top notch services to the customers whilst maximizing revenues so
that dividend given to shareholders increases. This necessitates keeping contingency plan and
imparting appropriate training to the workers so as to evolve their professional knowledge.

Table of Contents
Introduction.................................................................................................................................................4
Case study description.................................................................................................................................5
Statement of problem and analysis plan:..................................................................................................6
Analysis and Findings...................................................................................................................................8
Plans to overcome the difficulty:..............................................................................................................10
Recommendations ................................................................................................................................10
Limitation of the study:.........................................................................................................................11
Scope for further research:....................................................................................................................11
Conclusion.................................................................................................................................................12
References.................................................................................................................................................13

Introduction
The recent pandemic other than having worldwide health crisis has broken the spine of
the tourism and hospitality sector. The severe nature of restrictions meant there were travel
bubbles created between countries, only people of certain countries were allowed to travel. This
entailed severe repercussions on the hospitality sector since very few were reservations made by
the people. (Bharwani, and Mathews, 2021)Several enterprises have declared bankruptcy in the
backdrop of such restrictions. Certain on the enterprise in order to reduce operating cost
restricted the dividends that were given to shareholders. In this pandemic background the
current report analyses the impact of the pandemic on the functioning of Airbnb.(Gerwe, 2021)
Further it shall delve into the financial loss caused to the shareholders due to downsizing of
dividends. Airbnb offers people a feeling of being at home while they are out on business or
vacation since the places they stay at are not hotel rooms but actual houses on temporary rent
from the owners. The company is its headquarters in United states of America and was started in
2008 by Brian Chesky and Joe Gebbia. They currently have millions of houses on offer
throughout the world which give the guests a top notch staying experience.
Background of study:
This particular study shall examine the fallout of the Covid 19 Pandemic on the dividends
of the shareholders. Specifically how it has changed the dividends prospects of the Airbnb for
shareholders. The contemporary market conditions of the company shall be discussed. Further
recommendations will be made on how to mitigate the fallout of the pandemic and plan for
improving marketing conditions in the future.
Research Aim: “To analyze the fallout of COVID-19 pandemic on capitalism of shareholders in
the tourist and hospitality sector of the United Kingdom” Based on Airbnb.

Research objectives:
 To gather the fallout of the recent pandemic on tourist and hospitality sector in the
United Kingdom.
 To gather the fallout of the recent pandemic on the Capitalism of shareholders of Airbnb.
Case study description
The below study concern itself with Airbnb, Which has carved out a niche in the
hospitality an tourists sector. The website connects a person who wants a place to stay with the
person who has a place to stay and wants to rent it out. Airbnb has kept due regard for all the
people connected to it including the guests, the shareholders, the workers, etc. For addressing the
issue at hand the management decided to adopt efficient shareholders model in order to carve
their specific part in the prosperity of the enterprise. In the year 2020 a new and deadly strain of
corona virus started infection the people across the world. To stop it in its tracks the government
put curbs on traveling. These curbs had a immediate and far reaching consequences for the
tourists and hospitality sector the reverberation of which are still being felt by the country.
(PETCU and DAVID-SOBOLEVSCHI 2020). It altered the lifestyle of the people by closing
down bars, hotels and restaurants and everything that was not considered essential activities by
the government. During this time Airbnb faced huge losses because people started canceling
their reservation in light of lock downs and restrictions on air travel. In the month of march they
had to cancel nearly half of the reservation while in April nearly three fourth of the people
canceled their reservations. In order to effectively respond to the growing crisis the Airbnb
management had to keep an eye out for the continuously changing landscape of guidelines due to
the pandemic. The company put all its efforts to navigate these hurdles to provide relief to the
shareholders. The company reaped the benefits of its efforts and saw uptick in the amount of
people making reservations moreover the enterprise got a new customers handling wing to make
them aware about the safety and health issues and ways how to protect themselves. Additionally
the management decided to expedite the cancellation of reservation and return of payment.
However many people had to cancel their reservations due to lock downs and new guidelines
which made the investors weary and wanting to pull back on their investments. The concerns of

the shareholders were addressed by the chief executive officer who made an appeal for calm,
resolve and optimism to navigate through these hard times.
Statement of problem and analysis plan:
In the scenario provided, its been observed that the pandemic has had monumental impact
on hospitality sector in specific.(Cai, and Leung, 2020 )Severe stress has been caused to the
sector in terms of continuing operations. The restriction coupled with health consideration has
resulted in cancellation of bookings and has reduced the number of tourists visiting the country.
Reluctantly the sector has had to optimize operations to save on capital and let go of its workers.
Airbnb has not been unscathed due to the whole ordeal because it essentially functions like the
hotels. The restriction placed on movement domestically and internationally meant that the
amount of people booking the available place has plummeted. The resultant revenue loss has
meant that the company has had to function with little to no operational costs. (Biswas,
2021)The lifestyle change which was brought about by the onset of the virus meant that the
people were weary to travel from one place to another due to safety concerns.(Mirehie, and
Cho,2021 )The ordeal was further exacerbated due to restriction placed on flights which made
the price of airline ticket shoot up. In the interest of keeping the clients happy the enterprise
expedited the cancellation policy and gave the entire amount back to the customers. The people
that were the owners of the place whose reservation were canceled opposed the policy as it
caused them financial loss. The company was also not faring any better than the owners of
houses as no new reservation meant that there was no revenue for them to carry day to day
operations. Taking stock of the whole situations the investors wanted to pull back on their
investments in the enterprise. The company was far from earning profit and was in loss due to
the day to day operations costs. Which resulted in the investors not getting anything back from
their investments. The virus and the ensuing restrictions caused insurmountable problems for the
enterprise, the reverberation of the turmoil faced will have a bearing on the future operations of
the company.
Impact of COVID-19 pandemic on hospitality and tourism industry
The pandemic hit the sector of tourists and hospitality very hard, probably more so than
many of the other industries combined. Because the nature of restrictions were directly

detrimental to the entire sector. The united states government limited the avenues of traveling to
only when it was essential. Moreover the so called travel bubbles meant only few countries were
within the scope of international travel. (John, and Thakur)wing to these restriction the turnover
of the Marriot group of hotels was cut by seventy five percent which still fared better than the
enterprises which had to close down completely. The sector of aviation is very closely linked
with the hospitality sector.( Morgan, and Wright, 2021)The aviation sector took continuous hits
due to the pandemic because the planes if not flown within certain intervals would need a lot of
maintenance and overhaul and converting them into cargo planes would also consume time and
money both of which were in short supply. As a result several airlines and the hospitality based
companies tanked and had to lay of employees or declare bankruptcy.(Costa and Costa,, 2022)
The consequences of COVID-19 pandemic on capitalist structure of Airbnb.
Arguably the most important people for long term existence of a company are its
shareholders as they exercise a certain degree of control over the company. Further the people
for responsible for day to day operation are supreme in short-term such as employees, customers
and business partners. The enterprise of Airbnb grasps the importance of these individuals owing
to which they have dedicated plans to serve them in the best way possible. Due to which the
benefits accrued to all the people involved are maximized. The model for stakeholder practiced
by the company is provided below:
 The building block of the model is to delineate all the pertinent stakeholders. In this
particular scenario they are the workers, investors, the people who make reservation and
the owners of the property. (Elmo,Arceseand Rossi, 2021)All these stakeholders are
significant for the revenue aspect of the company.
 The second block of the model is to delineate appropriate and relevant plan of action or
guidelines for each of them so that they could make their decisions or act in accordance
with the set guidelines so that business outcomes are conducive to the interest of the
enterprise.(Karsavuran, 2021.)
 The third block determines the compensatory practice and governing of the corporate
body in accordance with set guidelines.

 The next block pertains to the creation of yearly shareholder meetings in which the
company will divulge all the relevant information to stakeholders to make it conducive
for them to reach befitting decisions.
Where Airbnb is concerned the virus and its ensuing restrictions severely dented the prospects
of all the stakeholders. The people making the reservations had to cancel their reservations in
light of the restrictions. ( Bagheri, and Abdi, 2021) Also the company in order to stay viable
came out with improved cancellation policy which alienated the owners of the places. Further the
turnover of the company was also downsized and resultant they were not able to pay the
dividends to the customers and the investors started pulling back on their investments which
made the stock prices of their shares hit new low points thereby annihilating the capitalistic
structure of the enterprise.
Analysis and Findings
The current finding and deductions are based on the highly esteemed enterprise in the
hospitality industry known as Airbnb. The company connect the people who want to rent houses
for short duration and the people who want to let out their houses for short duration. It was
started by two college buddies from Rhode island school of design back in 2008 and now
maintains presence in many different continents all around the world. However the starting phase
of the company was not exactly rosy, they had to contend with lots of issues such as the people
renting causing harm to the property of the owners. Moreover they also had objection from the
guests that the amenities offered were not up to par or were entirely absent in some cases.
Despite all of these hurdles the enterprise rose to fame and was regarded as being unique and
excellent in terms of services they offered. The enterprise launched Airbnb experience in order to
intensify the possibility for the tourists to connect with the owners of the properties. In 2019 the
enterprise had listed propertied in excess of six million,(Airbnb Revenue and Usage Statistics
(2022).) which considerably higher than the amount of rooms available through traditional
hotels. Life was all rosy for them as they were gaining more and more customers and reaping the
ensuing profits. However in the year 2020 the whole world was feeling the tremendous impacts
of the virus an its rapid transmission.

Because of which lock downs were imposed in almost every nation which barred air or
any other sort of travel activity. Governmental authorities around the world took stock of the
growing situations and barred people from roaming around unless absolutely essential and
penalties were also imposed on the people who were in contravention the guidelines. This whole
ordeal led to people not being able to go out and the hospitality sector hanging by a thread. The
effects of the virus were intensely felt by the enterprise Airbnb which witnessed large
cancellations of reservations. As the people were not able to commute to other places it resulted
in them not wanting the services provided by the hospitality sector. The company in order to not
alienate the customers came out with a cancellation policy which returned the entire amount back
to customers which did not appease the owners. The resultant tanking of profits also made the
investors pull back on their investment as they were apprehensive of the volatility created in the
market.
The leadership capabilities of the Airbnb are unparalleled as they have Chesky at the
helm of affairs to mitigate the fallout of the lock downs. The investors and shareholders were
told to keep a positive outlook for their investments and were told that the negative effects were
temporary which meant in the long term it was crucial for earning profits that they must not pull
out their investment. The focus on shareholders reaped positive results for the enterprise and
their outlook improved significantly. Their timely espousing of the stakeholders model let them
make decisions which significantly improved the outlook of all the people involved. In the
stakeholder model the pertinent members are outlined to form guidelines specifically for them in
order to improve business outcomes. The enterprise of Airbnb gives due consideration to the
people involved so that they could intensify the benefits accrued to them.
Due to these steps the outlook of the enterprise is steadily improving after the pandemic
related restrictions were lifted off. The company was planning to go public by launching initial
public offerings in the year 2020 which was put off due to the abrupt catastrophe. In the
following year the enterprise had a turnover of nearly six billion dollars which was nearly
seventy five percent increase from the previous year. In comparison to pandemic year the
enterprise recived nearly three hundred million reservations in the year of 2021. There are more
than seven million properties listed on Airbnb website which are owned by four million people.

From the discussion above it can be deduced that reservation on Airbnb web interface has
been intensified exponentially. Reeling from the monumental consequences of the pandemic the
enterprise is performing exceptionally. This exceptional improvement is going to put the
company at a improved place in the market.
Plans to overcome the difficulty:
Recommendations
In the context above to mitigate the fallout of the pandemic and protect the enterprisefrom
negative effects on stakeholders of the enterprise some recommendations are made to the
company to better deal with the issues:
 It is recommended that the enterprise needs to keep contingency plans in order to
minimize uncertainty which stems from events such as pandemic. Such contingency
plans direct the company away from all the negative effects and help it while navigating
the onset of adverse conditions.
 As far as the problem which already exists , the management of the enterprise need to
impart training onto the workers so that they are not stumped by the events and can
handle the business operation in an efficient and effective manner. The training relates to
following the health and safety guidelines in order to alleviate the fears of the guests.
 C operation among various business actors is essential to mitigate the fallout, to this point
the Airbnb needs to keep the communication channels open between various
stakeholders. If they can communicate their fears it means steps could be taken to
alleviate those fears and the worse parts of the problems could be dealt with swiftly so as
to focus on creating conducive business outcomes.
 While the world was under the lock down spell, the company needed to evolve tech based
methods of communication fro conducting smoother business operations such as skype,

zoom and other channels. For the company to still be able to function without having the
physical employees it is essential to adopt these practices.
The recommendations provided above are efficacious and relevant if the company wants to
not buckle under the pressures of such uncertainties in the future. Moreover it sufficiently needs
to address the queries of all the stake holders such as investors or clients or employees so that the
business operations run smoothly.
Limitation of the study:
The analysis above is concerned with economic effects of the pandemic on various
people who hold a steak in the company. This has the effect of restricting the discussion in that
context of business operations. Moreover the analysis is done through keeping reliance on data
which is secondary in nature which makes the authenticity of the information not particularly
reliable. Owing to the factors mentioned above the analysis lacks in credibility and
dependability.
Scope for further research:
In this scenario there is a huge scope of conducting more research to determine the
consequences of the virus based restrictions on the hospitality and tourists sector. Moreover data
which is primary in nature could be collected from the relevant people in direct manner, which
shall greatly improve the credibility and dependability of the analysis.

Conclusion
Based on the discussions above , its been deduced that the pandemic related restriction
had intense fallout on the tourists and hospitality sector. The travel bubbles and curbs on flight
routes and passenger capacity negatively influenced the behavior of people when it came to
going to a place for vacations.(Honerkamp,2020. )Moreover the severe restrictions which were
put on activities which were not essential meant that bars hotels or restaurants all had to be
closed down and some of them even went bankrupt. The preceding analysis is based on Airbnb
which is a highly esteemed organization in the hospitality sector. The stakeholders of the
company were tremendously impacted by the pandemic however the post pandemic situation
looks to be very promising for everyone related to the company. Further recommendations were
made for the company to deal with the issues arising out of the pandemic.

References
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Online
Airbnb Revenue and Usage Statistics (2022).[Online]. Available through:<
https://www.businessofapps.com/data/airbnb-statistics/>