Airbnb axes 25% of workforce as global travel industry 'comes to a standstill'

Airbnb is laying off about 1,900 out if its 7,500 employees, comprising approximately 25% of the company. This comes as Airbnb was hit hard by the COVID-19 pandemic, which caused the global travel industry to come to a standstill, co-founder and CEO Brian Chesky said.

The company assessed how each team mapped to its new strategy, and determined the size and shape of each team going forward. Airbnb then did a comprehensive review of every team member and made decisions based on critical skills, and how well those skills matched its future business needs. Airbnb’s spokesperson declined to comment on Marketing’s queries regarding the impact on its Asia Pacific marketing team. Among the list of Asia Pacific companies it is present in include Singapore, Malaysia, Indonesia and Hong Kong.

Chesky explained that the headcount reduction process started with creating a more focused business strategy built on a sustainable cost model. Elaborating on the focused business strategy, Chesky said Airbnb will cut its investment in activities that do not directly support the core of its host community. It will pause efforts in Transportation and Airbnb Studios and scale back investments in Hotels and Lux.

“These decisions are not a reflection of the work from people on these teams, and it does not mean everyone on these teams will be leaving us," Chesky said.

Additionally, teams across all of Airbnb will be impacted. Many teams will be reduced in size based on how well they map to where Airbnb is headed.

According to him, 2020 revenue for Airbnb is forecasted to be less than half of what it earned last year. In response, the company raised US$2 billion in capital and “dramatically cut costs” across Airbnb. Despite this, Chesky said the company still does not know when exactly travel will return and whether it will look different.

“While we know Airbnb’s business will fully recover, the changes it will undergo are not temporary or short-lived. Because of this, we need to make more fundamental changes to Airbnb by reducing the size of our workforce around a more focused business strategy,” he explained. The company is helping affected employees with job opportunities via its alumni talent directory, alumni placement team, career services RiseSmart, employee offered alumni support, and laptops. It is also covering the insurance of non-US employees until the end of 2020.

In March, Airbnb halted its marketing activities and froze hiring, saving approximately US$800 million in 2020, according to Reuters. Airbnb's founders are also reportedly not accepting salary for the next six months. Meanwhile, Reuters said that senior executives will also take a pay cut of 50%. Meanwhile, media reports including The Straits Times reported that Airbnb was in talks to raise another US$1 billion debt deal shortly after it finalised a US$1 billion bond deal with private equity firms Silver Lake and Sixth Street.

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