December 2020 should finally see the long-awaited IPO of Airbnb. The home-sharing titan was widely expected to make its market debut earlier this year. However, Airbnb postponed its IPO due to the ravaging effects of Covid-19 on the hospitality industry.
This caused the company to suffer losses of $700 million on revenues of $2.5 billion for the first three-quarters of the year. Such news was coupled with the fact that Airbnb had to cut 25% of its workforce as the travel industry struggled to come to terms with the pandemic.
It’s been a dramatic fall from grace from one of the darlings of the tech world. Airbnb single-handedly transformed the travel industry as a result of its innovative short-term booking platform. The company was founded in 2008 and posted revenues of $4.7 billion in 2019.
With over 7.4 million global listings and four million hosts, any other year would have been perfect for the IPO of Airbnb. But 2020 has been a year like no other, and there remain big questions about how Airbnb will make its market debut.
How will the market react to Airbnb’s IPO?
Many industry commentators have noted that Airbnb was already in decline before the devastating pandemic took hold. Last year was the third year where Airbnb had been experiencing slower rates of growth. Compared to the healthy growth rates in 2016, the past three years have seen Airbnb struggling to maintain its explosive start.
This came at a time where Airbnb had attempted to diversify its portfolio with new projects such as Airbnb Experiences. It looks like Experiences has yet to fulfill its expected potential, and the pairing of local guides with tourists is hardly likely to take off in the current pandemic.
The success of the IPO will ultimately depend on whether Covid-19 can be controlled. While the news about vaccines is encouraging, if travel restrictions are held in place for much longer, then many Airbnb hosts are going to be unable to survive.
Plus it’s worth noting that many cities like London are in the midst of applying regulation to limit the activities of Airbnb. This could mean that caps are introduced that attempt to limit how many nights a person can stay in an Airbnb apartment. All of which means that the Airbnb IPO might not be all that it could have been.