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According to Airbnb, the funds it raised will be spent on its three major products: hosts, long-term stays and Airbnb experiences. It should help the company overcome the coronavirus crisis.
The coronavirus pandemic has devastated the tourism industry and hit hard the apartment-rental company Airbnb. To handle the consequences of the virus outbreak, the company conducted a fundraising round. Airbnb has raised as much as $1 billion in equity and debt securities from Silver Lake and Sixth Street Partners. The interest rate on Airbnb’s raise is between 11% and 12%.
Silver Lake managing partner Egon Durban said:
“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. 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.”
According to the Airbnb press release, the funds it raised will be spent on its three major products: hosts, long-term stays and Airbnb experiences.
The company stated:
“The new resources will support Airbnb’s ongoing work to invest over the long term in its community of hosts who share their homes and experiences, as well as the work to serve all stakeholders in the Airbnb community.”
Before Airbnb raised $1 billion, it had over $2 billion in the bank, with a $1 billion credit facility. In the fourth quarter of 2019, its loss made up $276 million excluding interest, taxes, depreciation, and amortization. A year earlier, the loss was $144 million. Revenue increased by 32% in the fourth quarter of 2019 to $1.1 billion. The company’s valuation after the funding round is still unknown. But in early March, Airbnb’s internal valuation was $26 billion, compared to $31 billion in 2017.
This year Airbnb was planning to go public. But this plan looks uncertain in 2020. Instead, Airbnb might raise a further $500 million to endure the coronavirus crisis.
Airbnb Introduced New Features amid Coronavirus Pandemic
Alongside with the funding round, Airbnb has introduced new features for its longer-term stays. In particular, Airbnb improved its main landing page to highlight longer-term stays. Besides, the company will provide a new guide to update hosts’ listings to accept bookings and educate them on longer-term stays. With the new landing page, Airbnb will have over 1 million listings that offer monthly stays. These accommodations have all the amenities necessary for a longer stay, like kitchens, laundry facilities, and Wi-Fi.
According to Airbnb, it has seen more students, doctors, and nurses in residency or others in long term work assignment to find an apartment for six to nine-month stays. Now the company will focus on a rising demand resulting from people self-isolating during the pandemic. In the first three months of 2020, Airbnb processed bookings for more than 600 days. The longest booking made so far in 2020 was over 700 days.