- Airbnb is scaling back its broad ambitions to disrupt the broader travel industry, as its business gets wiped by the coronavirus.
- Airbnb CEO Brian Chesky sent out a memo to Airbnb employees on Tuesday, informing them that the company was cutting 25% of its staff, or about 1,900 jobs.
- The cuts were guided by the company’s push to refocus on its core business of homesharing, a move that will directly hit 4 lines of business.
- Here are the main areas in which Airbnb is cutting costs.
- Visit Business Insider’s homepage for more stories.
Airbnb is scaling back its broad ambitions to disrupt the broader travel industry, as its business gets pummeled by the coronavirus.
Airbnb CEO Brian Chesky sent out a memo to Airbnb employees on Tuesday, informing them that the company would be cutting 1,900 jobs (25% of its workforce) as it refocused on its core business of homesharing to ride out the pandemic.
“Travel in this new world will look different, and we need to evolve Airbnb accordingly,” Chesky wrote in a memo to the company’s workforce. “This crisis has sharpened our focus to get back to our roots, back to the basics, back to what is truly special about Airbnb — everyday people who host their homes and offer experiences.”
While the layoffs will affect the entire company, Chesky said that the cuts “had to be mapped to a more focused business.” In other words, newer lines of Airbnb, originally established to diversify business, are now most vulnerable to layoffs.
Chesky outlined 4 key sectors where the company was either pausing its efforts or scaling back investment: Transportation, Airbnb Studios, Hotels and Luxe. Here’s how they factored into Airbnb’s original vision to transform itself into a full-fledged travel behemoth:
SEE ALSO: Airbnb says it’s going to focus on longer-term stays, but analysts worry its short-term rental roots will make it hard to grab a piece of the $18 billion market
Transportation was intended to be the last leg in transforming Airbnb from a home-sharing platform to a full-service travel platform. Now Airbnb is putting a pin on that effort.
What it is: Transport was intended to be the last leg of business that would transform Airbnb into a full-service travel website. However, what that business was intended to evolve into remained unclear.
Last year, the company hired Fred Reid, the founding CEO of Virgin America and a veteran from the airline industry, to become the global head of transportation.
“There was a time when getting on a plane was a magical trip of its own, but over the years, how you get to where you’re going has become an experience we endure, not enjoy. We believe that needs to change,” Chesky wrote, describing why Reid had been hired.
“I’m not interested in building our own airline or creating just another place on the Internet where you can buy a plane ticket, but there is a tremendous opportunity to improve the transportation experience for everyone,” Chesky added.
What’s happening to it: Airbnb is “pausing” efforts to build its Transportation business.
Airbnb Studios wanted to take on Netflix by producing films and documentaries to captivate potential travelers. Airbnb is temporarily pausing those efforts.
What it is: Airbnb had begun pushing to develop a slate of original shows around the travel sector as of last spring, beginning with the announcement that it developed and produced a documentary following the San Francisco Gay Men’s Chorus on a tour across the Southeastern United States.
The company’s top policy and communications sector Chris Legane later told Reuters that the company was considering options to allow streaming films through its app.
What’s happening to it: Along with Transportation, Chesky announced that Airbnb was pausing its efforts in Studios.
Airbnb is scaling back investments in real-estate and branded hotels, originally intended to help push the company’s offerings beyond home-rentals.
What it is: Over the past two years, Airbnb has been wading deeper into the business of hotel bookings and building development — it quietly opened branded apartment buildings in Miami, Austin, Orlando and Nashville, and began adding more boutique hotels from its platform.
It also acquired HotelTonight to further wade into the hotel-booking business, a move that was seen as a way for the travel giant to diversify beyond its rental roots.
What’s happening to it: Airbnb is “scaling back” its investments in Hotels, according to Chesky. However, the extent to which the business will shrink remains unclear.
Airbnb is scaling back investments in Luxe, a full-service intended to help Airbnb’s users plan the logistics of their holidays.
What it is: Airbnb released a feature in July 2019 that gave users access to over 2,000 exclusive luxury properties around the world.
But the feature offered more than just the ability for its users to book luxury homes. Each booking came with a “trip designer” to help plan the trip and figure out logistics that ranged from child care to private chefs and in-house massages.
What’s happening to it: Airbnb said it was scaling back its investments in its luxury offerings but like hotels, the extent to which the business line will be scaled back remains uncertain.