Airbnb Inc.'s investors Silver Lake and Sixth Street Partners are investing $1 billion in debt and equity securities to the company. The funding is an attempt by Airbnb to boost its finances after the coronavirus pandemic that slammed the global travel industry has destroyed its business.
Airbnb probably isn't in urgent need of financial support. The business had more than $2 billion in the bank prior to the fundraising round, along with a $1 billion credit facility, Bloomberg reported.
The company's plans to go public this year, however, now look unclear. "I'd be shocked if the company completed an IPO for 2020, despite the current debt and deep losses before the market improves," PitchBook analyst Paul Condra revealed.
Airbnb has suffered badly from the pandemic, cutting its value from $31 billion to $26 billion, freezing its recruiting and marketing as its reservations fell by as much as a reported 95 percent in some markets.
But while that puts the proposed public float of the company in jeopardy, both investors said that they believe their business is sound in the long run.
Egon Durban, co-head of Silver Lake, said though the current climate is obviously a daunting one for the hospitality industry, "the urge to travel and have authentic experiences is essential and permanent."
Airbnb continues to be hit hard by the ongoing crisis, which stopped traveling worldwide and was actually losing money long before the pandemic occurred.
The Financial Times claimed last week that the company had reduced its internal value to 16 percent from its last private value of $31 billion, PitchBook said.
Brian Chesky, chief executive officer of Airbnb, predicted earlier this week that the company would bounce back from the coronavirus pandemic, saying it had weathered crises before. Several experts agreed with this assessment, but Airbnb would still have to conquer several immense challenges before it can succeed again.
The entire field of hospitality is suffering. Seventy percent of hotel staff have been laid off or furloughed, according to the American Hotel and Lodging Association. U.S. hotels had an occupancy rate of just 30 percent as of the beginning of the month, and were on pace to lose more than $500 million in revenue every day.
One region for Airbnb and other short-term rental websites has seen growth: properties in rural areas outside cities such as Long Island's North Fork, Hudson Valley, and Cape Cod have seen a massive boost in demand as people leave urban areas, AirDNA said.
