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Airbnb turns to private equity to raise $1 billion
Airbnb said Monday that it has raised $1 billion in debt and equity from private equity firms Silver Lake and Sixth Street Partners, even as the online rental marketplace has seen its business plummet due to the COVID-19 pandemic.
Terms of the deal were not disclosed. It’s unclear how this funding might alter Airbnb’s previously shared plans to go public.
COVID-19, the disease caused by coronavirus, prompted governments throughout the world to issue stay-at-home orders, triggering a wave of cancellations in the travel and hospitality industries. Airbnb emphasized that the funds would support its ongoing work to invest over the long term, a statement aimed at couching this raise as strategic and not a bailout in troubled times.
“While the current environment is clearly a difficult one for the hospitality industry, the desire to travel and have authentic experiences is fundamental and enduring,” Silver Lake co-CEO and managing partner Egon Durban said in a statement. “Airbnb’s diverse, global, and resilient business model is particularly well suited to prosper as the world inevitably recovers and we all get back out to experience it.”
Airbnb CEO Brian Chesky acknowledged Monday that while the desire to connect and travel has been reinforced during this time, the “way it manifests will evolve as the world changes.”
Airbnb is betting how and where people work will evolve. As a result, the company said it will direct its attention and new funds toward three core products: hosts, long-term stays and Airbnb experiences.
Last month, Airbnb said it would direct $250 million to help hosts who have been impacted by COVID-19. The funds will be used to pay a host 25% of what they would normally receive through their cancellation policy if a guest cancels a reservation due to COVID-19 between March 14 and May 31. Airbnb said this policy applies retroactively to all cancellations during that period.
The move was an attempt by Airbnb to make amends to its hosts who complained that the company’s policy would allow guests to cancel reservations and receive a full refund. That policy, which is still active, lets guests who booked reservations on or before March 14 that begin anytime on or before May 31 to cancel and receive a standard refund or travel credit.
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Airbnb to verify all of its listings
Following the death of five people at a Halloween party hosted at a California Airbnb rental, and a scathing Vice report outlining Airbnb’s failure to prevent nation-wide scams, the company says it will begin verifying all seven million of its listings.
Airbnb properties will soon be verified for accuracy of photos, addresses, listing details, cleanliness, safety and basic home amenities, according to a company-wide email sent by Airbnb co-founder and chief executive officer Brian Chesky on Wednesday. All rentals that meet the company’s new standards will be “clearly labeled” by December 15, 2020, he notes. Beginning next month, Airbnb will rebook or refund guests who check into rentals that do not meet the new accuracy standards.
The long-awaited updates to Airbnb’s security measures come months before the company plans to complete an initial public offering or direct listing and just days after Chesky announced the business would ban “party houses,” and work harder to combat unauthorized parties and abusive host and guest conduct.
“We believe that trust on the internet begins with verifying the accuracy of the information on internet platforms, and we believe that this is an important step for our industry,” Chesky said in the staff email.
Airbnb also will launch a 24/7 Neighbor Hotline, which will allow guests to reach a real Airbnb employee from any location at any time. The company will fully roll-out the service next year. Finally, Airbnb will expand its screening of potentially high-risk reservations globally next year.
The new efforts are led by Margaret Richardson, Airbnb’s vice president of trust, who Chesky tasked with rapidly formulating a response to the Halloween party massacre. The company has also tapped Charles Ramsey, former chief of the Philadelphia and Washington, D.C. police departments, and Ronald Davis, the former chief of the East Palo Alto police department, to advise the projects.
“More than eleven years after Joe, Nate, and I started Airbnb, I have been asked what has surprised me most about the world,” Chesky writes. “My answer is two things: that people are, in fact, fundamentally good, and that we are 99% the same. We still believe this, and with these changes, we hope to continue to demonstrate this to the world.”
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Airbnb is bringing on Greg Greeley, Amazon’s current VP of Prime & Delivery Experience, Airbnb CEO Brian Chesky wrote in a blog post today. His first day at Airbnb will be March 18.