Airbnb's Business Strategies and Pandemic Response Analysis

This report provides an in-depth analysis of Airbnb's response to the global COVID-19 pandemic. It begins by outlining the significant impact the pandemic had on Airbnb, including substantial revenue losses, a decline in valuation, and widespread employee layoffs. The report then details Airbnb's responses, such as its refund policies and the introduction of virtual experiences. Furthermore, the report offers suggestions for improved strategies, such as alternative refund policies and employee engagement in online classes. The report concludes by summarizing the challenges faced by Airbnb, the company's actions, and potential improvements for future resilience. The document also references various sources and provides a comprehensive overview of the company's business strategies during the pandemic.

AIRBNB RESPONSES IN
THE GLOBAL PANDEMIC

TABLE OF CONTENTS
AIRBNB RESPONSES IN THE GLOBAL PANDEMIC..............................................................1
INTRODUCTION...........................................................................................................................3
AIRBNB AND THE CORONAVIRUS PANDEMIC....................................................................3
Impact..........................................................................................................................................3
Response of Airbnb.....................................................................................................................4
Suggestions (keeping Myself in the place of the CEO of Airbnb)..............................................5
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
All the businesses whether big or small have been impacted negatively in terms of revenue
and many more by the global pandemic of COVID-19. Especially, the businesses who depended
on revenue generated from the tourists and the people travelling are highly influenced as the
government has enforced complete restrictions on travel of any purpose. Airbnb, Inc. is one of
the multinational American rental online marketplace company which is situated in San
Francisco, California, US which is growing rapidly (Henama and Apleni, 2020).
It provides services like lodging, homestays, tourism experiences etc. by acting like a broker
which receives commission from each booking having no real estate listing. The report below
will discuss the impact of the global pandemic on Airbnb and the challenges faced by it. It will
also describe the responses of the company to this pandemic and will also suggests some better
responses that the company can do in order to overcome the challenges.
AIRBNB AND THE CORONAVIRUS PANDEMIC
All the businesses in the travel industries were impacted greatly but Airbnb was hit hard by
the pandemic of COVID-19 (Xalilullaevna, 2020). It faced a great loss in terms of revenue,
value, employees and many more. This became a great challenge for the company to overcome
to get back near to its earlier position.
Impact
The main impact can be seen in its value which was $31billion in March 2017 and was worth
$18 billion by the end of April 2020. The CEO of the company Brian Chesky stated that the
company was forced to fire nearly 1900 individuals which was approx. 25% of the total staff
(Hosts criticize Airbnb’s refund policy in response to coronavirus outbreak for being unfair,
2020). It was also predetermined that the company’s revenue will be less than the half of the
revenue earned by the company in 2019.
Before this Coronavirus pandemic, Airbnb was facing a rapid growth having 7 million listings
worldwide and 50.2 million visits on its website whereas its main competitor VRBO saw only
14.7 million visits on its site. But this pandemic became its major challenge to overcome.
Millions and billions of tourists cancelled their plans (approx. 64%) for vacations for the
business purpose, family trips and many more (Bastola, 2020). This resulted in a rapid fall down
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of the revenue as the company is totally depended on the revenue from the travellers. In order to
compensate this, the company fired many employees but cannot leave them unpaid as it can
harm its goodwill and reputation. So, it decided to pay the amount of 14 weeks plus one
additional week every year to all the laid-off employees in US. Occupancy was completely down
as the properties were giving minimal income to the hosts thereby making Airbnb suffer from the
lack of commissions from them.
As many hosts were depended on income from Airbnb, it became very difficult to make
payments of mortgage, paying bills and even survive during this pandemic. It was noted that
47% of the hosts were not ready to take the risk to rent the guests and the 70% of the guests were
scared to stay at Airbnb (How Bad Are Covid-19 Pandemic Effects On Airbnb Guests, Hosts?
2020).
The hosts of Airbnb were expecting the decrease in their revenue by approx. 44% in the duration
of June to August. They even decreased their regular rates by $90 on an average. The major
impact was notices that if the pandemic will last for another 6 months then, 45% of the hosts will
not be able to sustain among which 16% have already quitted (Xalilullaevna, 2020). This will
become a direct loss to the Airbnb because the company had done a lot to have such number of
loyal hosts having trust on it.
Therefore, this Coronavirus pandemic had impacted greatly in a negative way to the Airbnb and
its hosts which will take a lot of time to recover those losses. Not only revenue, the company lost
many hosts which makes it difficult to sustain in this competitive market.
Response of Airbnb
In order to maintain the goodwill and the image, Airbnb announced penalty free
cancellations of their trips during the months of March to June. Airbnb was handling the refund
requests in a very unstable manner. It had frustrated maximum number of guests and the hosts.
When the pandemic started, the company announced that there will be complete refund as well
as no penalty on cancellation of bookings done between March and April.
But, as the pandemic was continuing, the company also extended its policy dates till June, 2020.
But it proved difficult for the guests as they were not sure that they will get the refund or not and
proved very difficult for the hosts like Diana Jeong who was the “Superhost” of Airbnb, also as
after this pandemic get over, the guests can choose better options than them (Hosts criticize
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Airbnb’s refund policy in response to coronavirus outbreak for being unfair, 2020). So, this
refund handling policy of Airbnb was not accepted by neither the guests nor the hosts to whom
the company was completely depended upon.
Airbnb also fired many employees which made them unemployed with no or minimal income
which was not enough for their survival. This made the employees and the hosts to supplement
their income by doing another jobs which can be possible in this pandemic leading to lack of
skilled employees in the industry.
The best thing which was done by Airbnb in this time was it planned of some another sources of
income instead of travel bookings. Airbnb and its hosts organized online cooking and dancing
classes which got a great response from many people (Coronavirus effect: Airbnb slashes 1,900
jobs as COVID-19 hits global travel, 2020). It was also noted that approx. 30% of the travellers
took part in taking the virtual experience sitting at home and the hosts were also facilitated by the
extra revenue without leaving their homes.
Suggestions (keeping Myself in the place of the CEO of Airbnb)
If I would become the CEO of Airbnb, then I would not give 100% refund in the
cancellations because this can shift the guests to another options. I must have announced that the
people who have booked their trips cannot cancel it instead can give approval to postpone it.
This will give a large benefit to the company as it will be able to regain the guests as soon as the
pandemic gets over. I would give 50% refund on the cancellations along with approval of
postponing the bookings (Hosts criticize Airbnb’s refund policy in response to coronavirus
outbreak for being unfair, 2020). I would also engage the employees to organize all the online
classes like painting, dancing, singing etc. according to their talents which will not leave them
unemployed and the company will continue to get the revenue which helps it to survive in this
situation.
CONCLUSION
The above report analysed the impact of the Coronavirus pandemic on Airbnb Inc. It also
described the ways in which the company and its hosts respond to this pandemic. The various
policies including the refund was also highlighted. At the end, various suggestions were given to
the company in order to come up with this problem which proved to be a great challenge.
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REFERENCES
Books and Journals
Bastola, D., 2020. Measures of Post Covid-19 Pandemics in Hospitality and Tourism
Industries. Research Nepal Journal of Development Studies. 3(1). pp.56-66.
Henama, U.S. and Apleni, L., 2020. Airbnb as a Tourism Supply Chain Champion for Small
Businesses: The Case of South Africa. In Strategies for Promoting Sustainable
Hospitality and Tourism Services (pp. 22-38). IGI Global.
Xalilullaevna, M.D., 2020. COVID-19: Tourism has been hit hardest by the
pandemic. ACADEMICIA: An International Multidisciplinary Research Journal. 10(6).
pp.548-555.
Online
Coronavirus effect: Airbnb slashes 1,900 jobs as COVID-19 hits global travel, 2020. [ONLINE].
Available through :< https://www.businesstoday.in/sectors/jobs/coronavirus-effect-
airbnb-slashes-1900-jobs-as-covid-19-hits-global-travel/story/402990.html>
Hosts criticize Airbnb’s refund policy in response to coronavirus outbreak for being unfair,
2020. [ONLINE]. Available through :< https://www.business-humanrights.org/en/hosts-
criticize-airbnbs-refund-policy-in-response-to-coronavirus-outbreak-for-being-unfair>
How Bad Are Covid-19 Pandemic Effects On Airbnb Guests, Hosts? 2020.[ONLINE]. Available
through :< https://www.forbes.com/sites/lealane/2020/06/09/how-bad-are-covid-19-
pandemic-effects-on-airbnb-guests-hosts/#4794cd037432>
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