Numerous layoffs, nearly $ 700 million in losses, disgruntled investors, and calls for CEO Brian Chesky to resign – 2020 was a turbulent year for Airbnb.
A turbulent year with a happy ending? On Monday, the vacation rental broker surprisingly announced its long-awaited IPO. Analysts expect the company’s value to rise to nearly $ 30 billion.
This success is due in large part to Chesky. With a strategic realignment, he managed to prepare Airbnb for the pandemic. Initially severe losses were followed by a profit of $ 219.3 million in the third quarter. Mind you, in an industry that has been particularly hard hit by the pandemic.
Of course, Airbnb wasn’t immune to the economic consequences of the pandemic either. When the pandemic hit, the company was faced with a spate of cancellations. In cities like Beijing, bookings fell by up to 96 percent at times.
When the pandemic hit, Chesky immediately realized that Airbnb needed to rethink the way it was spending its money and cut back where necessary. “This crisis has sharpened our focus,” Chesky wrote in a public message to employees in May.
There is now much praise for this willingness to adapt. Airbnb is widely regarded as a role model for resilience and adaptability. Chesky himself, some experts say, could serve as a model for a “new generation” of CEOs.
Most experts are impressed by Chesky’s determination
After numerous layoffs, Airbnb made further tough cuts: The company cut Airbnb Experience, cut marketing costs by 54 percent and halved the salaries of its executives for six months.
These cuts were important factors for the rapid recovery, believes Ralph Hollister, travel and tourism analyst at the information service provider GlobalData.
“The company has realized that it needs to get smaller and more efficient in the short to medium term,” Hollister wrote in an email to NewsABC.net.
“What impressed me was how quickly he did it,” said Michael Seibel, head of Silicon Valley accelerator Y Combinator, in the Wall Street Journal of CEO Brian Chesky. “Airbnb is no longer a small organization. He could have sat it out. “
A new way of traveling
But for Chesky, it wasn’t just about making cuts – it was also about realigning the company to cope with the new challenges that traveling in the pandemic era would bring.
“I didn’t know that in ten weeks I would be making decisions that would take ten years,” Chesky told the Wall Street Journal.
These decisions also included making accurate assumptions about customer behavior – he predicted, for example, that home office and remote work would make more people seek long-term vacations in rural areas.
Business travel is out, local travel is in
“We used to travel a lot for work and then we talked on screens. It’s now the other way around, ”Chesky told NewsABC.net in August. “I think we’ll be working more on screens and talking in the real world.” For Airbnb, that means fast business travel is out, and local destinations like country houses are in instead. The low fixed costs and the ability to adapt quickly to this new situation gave Airbnb a clear advantage over hotel chains such as Accor and Hyatt, which rely on high investments in hotel buildings and are hardly represented in rural areas.
In June, Airbnb redesigned its website and app so the algorithm shows potential travelers more local destinations. A new option for monthly stays has also been introduced for guests looking for longer-term accommodation. Instead of Airbnb Experiences, Chesky introduced Online Experiences, which offer virtual activities that guests can participate in without leaving their homes.
Chesky was largely praised for his compassionate leadership
Chesky has been controversial in recent months, however.
In the first few months of the pandemic, he was criticized for having skyrocketed and for travelers receiving full refunds for cancellations related to Covid-19, largely at the expense of landlords’ individual cancellation policies.
Some Airbnb investors refused to put more money into the company unless Chesky stepped down or reduced his voting control, even though company spokesman Nick Papas later denied it.
Most of all, Chesky was praised for his quick, strategic, and – perhaps most – compassionate leadership.
Following Chesky’s decision to reimburse travel expenses for canceled stays, he made $ 250 million available for hosts to cover COVID-related cancellations. He also partnered with local and state governments to create Frontline Stays, a COVID relief program that sees Airbnb-funded hosts providing free accommodations for doctors, nurses and other first responders.
“A New Kind of CEO”
“He’s a new breed of CEO who cares about more than the bottom line,” Robert Mollins, an equity research associate at Gordon Haskett Research Advisors, told NewsABC.net. “He doesn’t really have to give in to the pressure in a time of trouble; he will do the right thing ”.
Even the manner in which Chesky laid off workers in May was hailed as an act of compassion: Airbnb gave US-based employees 14 weeks base salary, 12 months health insurance, and dropped the year-long “cliff on equity” in May, which meant employees didn’t have to wait at least a year to benefit from stock options. They also received significant support in finding new jobs.
“That sounds good,” said Mollins. “When you look at the people of my generation – thousands of years – I feel more comfortable supporting a company that shares values similar to mine. If you are a consumer, you will want to support brands that treat their employees well ”.
This text has been translated from English. You can find the original here.