Airbnb to Halt All Marketing, Most Hiring as Losses Mount

Airbnb plans to halt all of its marketing, pause most hiring, and likely withhold employee bonuses as it tries to conserve cash amid a slide in bookings, CEO Brian Chesky told employees in a video conference call Thursday, a person familiar with the matter said.

The steps are the first indication of how the company is planning to reduce costs to blunt the damage of the coronavirus pandemic. Airbnb’s losses have already stretched into the hundreds of millions of dollars, according to people close to the company. It wasn’t clear if the company, which has more than 7,000 employees worldwide, also intends to lay off staff. When asked about layoffs, Chesky told employees that nothing is off the table, another person familiar with the matter said.

The Takeaway

Airbnb to halt marketing, cut executives’ pay to conserve cash
Losses already have reached hundreds of millions of dollars
Layoffs haven’t been ruled out, CEO told employees

Chesky said the company’s three co-founders wouldn’t take a salary this year and that the pay of other executives would be cut by 50%. He estimated the cuts to the marketing budget would save $800 million this year. The company would continue hiring for some key roles, Chesky said.

Chesky tried to strike an upbeat tone about the future of the travel industry while recognizing the short-term hit the company would take, according to a person familiar with the meeting. The company has told bankers that it expects its average daily bookings volume to return to 2019 levels by early 2021.

“This may change some habits. This may change business travel. This may change a little bit how people work. But this isn't going to change human nature. Human nature has existed long before Zoom and long before the coronavirus,” Chesky said, according to one of the people.

The company faces several long-term challenges due to the virus. Legions of the travel site’s hosts have started offering their homes for long-term rentals to offset booking cancellations. If that trend persists, it would likely shrink Airbnb’s inventory of homes to offer tourists. It could also be expensive to lure those hosts back to the site.

The company has told bankers that its business bounces back well in times of crisis, pointing to Hurricane Maria in Puerto Rico as one example. The company, which had said it would go public this year, has been seeking to raise new capital privately. A fundraising would likely allow the company to push off its public debut until the crisis calms.

The cost reductions follow similar steps announced earlier this week by Booking Holdings, Airbnb’s main competitor, which owns Booking.com, Priceline.com, Kayak.com and OpenTable. Booking CEO Glenn Fogel said Monday the company would institute a hiring freeze, “dramatically reducing marketing spend worldwide,” cut business travel, and forego top executive salaries.

Cory Weinberg is deputy bureau chief responsible for finance coverage at The Information. He covers the business of AI, defense and space, and is based in Los Angeles. He has an MBA from Columbia Business School. He can be found on X @coryweinberg. You can reach him on Signal at +1 (561) 818 3915.