Five months ago, due to the COVID-19 pandemic, Airbnb was struggling due to a significant drop in bookings, estimated at between 41% and 96%. Earlier this week, it announce plans to take the company public. Here we outline five lessons Caribbean companies can learn from the Airbnb experience.
Earlier this week, online vacation rental marketplace, Airbnb, announced that it had submitted preliminary documentation with the intention of taking the company public, via an Initial Public Offering (IPO). Airbnb was among the crop of tech companies that included Lyft and Uber, which were founding on or around the time of the Global Financial Crisis in 2008. Lyft and Uber have already gone public, but have been experiencing a number of challenges, especially with regard to how they classifies the drivers that provide ride-sharing services. Airbnb had indicated its intention to go public in 2020, but had to shelf that plan earlier in the year. Now it is back on the table.
As of 2020, Airbnb had around 150 million users, and over 7 million accommodation listings in over 220 countries and regions worldwide (Sources: MuchNeeded; Airbnb). The traditional hotel and vacation accommodation industry was threaten by the Airbnb business model, because essentially, it allowed individuals who had a place (or room) to rent to compete directly with hoteliers.
The Airbnb IPO could happen before the end of this year; however, just the audacity to be considering such a move whilst COVID-19 rages on, could be an inspiration to other businesses. Here we highlight five lessons businesses could learn.
Takeaway 1. There are opportunities in crisis
One would not have thought that in the middle of a global pandemic a company could decide to public. In providing a vacation rental service, Airbnb suffered considerable losses, estimated at more than USD 1 billion in March 2020, with the shutdown of the global tourism industry, as air and sea ports were closed, and many countries went into partial or full lockdown, in order to reduce the rate of COVID-19 infections. Moreover, although many borders worldwide have re-opened, the travel industry cannot yet start to recover, as the pandemic has not yet been brought under control, and people are still reluctant to travel.
However, in the midst of this, and starting about May, people started to book staycations and summer road trips, allowing Airbnb began to recover. By June and July 2020, the gross revenue from bookings was on par with that recorded last year, which points to the resilience in the company.
In a time that might threaten the survival of many businesses, there are opportunities that can be leveraged. The environment has changed; hence the key is to be open to those opportunities and to be ready leverage them – even if they might be at the periphery of what you believe is your focus.
Takeaway 2. Agility and responsiveness are crucial to survive a crisis
In March, when the full impact of the COVID-19 was being realised, Airbnb was in the news due to the losses it was incurring due to cancelled booking. However, the company was quick to act. Among other things, and to cut costs, it slashed its marketing budget, cut the salaries of its top executives, and laid off almost 2,000 employees (about 25% of its workforce). The company also raised emergency funding to the tune of USD 1 billion, in addition to the estimated USD 4 billion to which it already access. In summary, and in these uncertain times, Airbnb decided to go lean(er), with a view to the company’s longer term survival.
For other businesses, and in the middle of a crisis it is easy to become overwhelmed and paralysed, or to want to stay with what had been the current course, and bet on ‘things going back to normal’ sooner rather than later. However, it may be more prudent to be proactive, and devise a plan to help your business navigate through the crisis, in order to come out safely on the other side.
Takeaway 3. Work-life balance is important
Currently, we are in the period when many people should be on holiday in the northern hemisphere. Children would be home for the summer, and families might arrange a short getaway during that time. Although to varying degrees, we were all at home over the last five or so months, due to school closures, lockdowns and work-from-home restrictions, it could be argued that we are craving a bit more variety in our lives, and to be out and about.
Further, many of us who have been working from home ended up working far longer hours than we would have at the office, and so might be even more vulnerable to fatigue and burn-out. Also, Millennials and Generation Zers, in particular, may have found their social life considerably curtailed over the past several months, which may also be driving the need to find ways to relax and enjoy life – even amidst constraints and restrictions.
Hence, work-life balance is becoming increasingly important. There may be opportunities to be explored, that allow people to relax and step away from their everyday lives, especially during this challenging time.
Takeaway 4. We are truly moving to ‘digital anywhere’
Over the course of the last five months, many of us have grown tired of looking at the four walls of our home. Although we might not be going on holiday, we might want a change of environment, which does not have to be a far-flung location. In other words, and without us realising it, more of us might be ready to embrace – in part – the digital nomad lifestyle.
The truth is, as was stated by Ingrid Riley in our August Community Chat podcast episode, “work is what I do, not where I do it’. So for those of us who have been working from home for several weeks, it may be becoming increasingly apparent that we can virtually work from anywhere (pun intended!), once there is Internet connectivity. This realisation is one of the contributors to the upsurge in bookings on Airbnb.
Takeaway 5. We may need to think about tourism and hospitality differently
To a considerable degree, much of the Caribbean region’s tourism product is outward-looking, that is geared towards visitors from North America and Europe, in particular. However, the region’s tourism industry has been decimated by the pandemic, the earliest projections that it could start to recover is the 2021/2022 high season – provided there are sound treatments for COVID-19 and/or a vaccine becomes available within the first half of next year.
However, the current situation has made it glaringly obvious that the region’s tourism industry seemed to have placed ‘all of its eggs in one basket’, and so is not as resilient as one might have hoped. More importantly, there seems to a greater appetite for conversations about diversifying the visitor segments we want attract. For example, the local market, those who might be looking for staycations or even remote work options, could be a powerful segment that has not been fully explored.
Image credit: Gerd Altmann (Pixabay)
