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Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus

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Re: Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus

#71

Post by qwerty456127 »

saltedonion wrote: post #21

This is fair. A lot of hotel groups have seen their revenue drop 75 to 90 percent. Airbnb was never profitable (I think) and this round of trip cancellations put them deeply in the red.

Why was AirBnB never profitable? How do they even loose anything? All they seemingly do is maintaining a website a small team can maintain. Obviously they also pay for an office, hosting, legal support and ads. I can only see some millions (at most) of expenses per year here. And they are extremely popular, most of the people I meet use AirBnB regularly, they are for short-term living like what Gmail is for e-mail.

Re: Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus

#72

Post by cactus2093 »

chadmeister wrote: post #4

It's kind of frightening to think of the broader economic impact it would have on the whole real estate market if Airbnb went belly up. Aren't there a ton of cases where people are mortgaging multiple homes and paying them off with the revenue they generate? That cash just dried up over night and there doesn't appear to be any incoming federal support. Edit: Look, I'm all for affordable housing, but when viewing this…

There are only so many possibilities for the housing market.

One possibility would have been to take advantage of the boom times and strong economy over the past decade, and build lots of housing to support the huge influx of new jobs created in big cities. Make our prosperous cities actually feel prosperous, and accessible to anyone who wants access to opportunities. Creating this world would inherently mean that housing is not nearly as good of a capital investment for individuals. That would make property owners less vulnerable in an economic downturn. Low risk for low (financial) reward. But the public has and continues to overwhelming reject this option.

Another possibility, is that we could have gone a very long time without a downturn, and let our housing values just increasingly get more and more expensive with no upper limit. This is clearly the path most homeowners were hoping for. It creates a more and more stratified society, where only the very wealthy and the very few lucky subsidized-housing lottery winners can live in or near prosperous cities. We're already there in many places, and it certainly would only keep getting more and more extreme if unchecked.

And then there's the new scenario you suggest and that we may be approaching - a major crash that will lower prices that have grown unchecked for a long time.

I would have really, really liked to see the first option. Maybe one day we will. But since that's off the table for the foreseeable future and the only remaining possibilities are the 2nd or 3rd options, it seems like a major correction in the housing market is the preferable one. Obviously the coronavirus outbreak itself where many people might get sick or die is terrible, and I really hope that the shelter in place measures will be effective to stop the spread. And I feel for people that are losing their jobs at this time. But as far as just the impact on the housing market, this correction may turn out to be a good thing for the majority of the population who are not wealthy homeowners. It could transfer a lot wealth from the older generations to the younger ones, whereas our society has been doing the extreme opposite for a long time now.

Re: Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus

#73

Post by yesplorer »

CydeWeys wrote: post #63
yesplorer wrote: post #36

Earlier quoted context omitted.

I don't mean making money during this very pandemic. Rather, making money overall. What are they doing besides providing intermediary service all around (most of) the world throughh their website. I presumed they would be profitable by now, just as Facebook was profitable before IPO. Not saying they should be as profitable as Facebook but they should be profitable from taking a cut off every booking.

They're just doing what almost all VC-funded private tech companies do: Spend massive amounts of money to grow faster than if you limited yourself to what could be accomplished while maintaining profitability. And the comparison to Facebook isn't really fair; not everyone can be a Facebook. They're an exceptional success story. Airbnb isn't.

Airbnb takes approximately 15% off every booking.

What are they doing as an intermediary that 15% on each booking isn't enough to pay salaries, rent and server costs?

Re: Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus

#74

Post by unlinked_dll »

shartshooter wrote: post #53
foepys wrote: post #5

It will be interesting to see what happens to all these VC-backed companies that have been losing money for years and are still not profitable. When the VC money runs out not even government bailouts will help. Helping money-losing companies to lose more money isn't in the interest of a government unless they are essential to the rest of the economy or national security. Maybe the bay area will be hit much harder tha…

A lot of the herd will be thinned out for sure. Customers of ours are starting to lay folks off. Ultimately, it's a question of how long and deep the downturn is. A couple of months and VC-backed companies already losing money may be ok. A couple of quarters and you'll see a lot go belly-up depending on who they sell to.

This isn't winter kill thinning the herd though, it's more like the mass extinction of American Buffalo during the push to the west.

Companies with good fundamentals are laying people off en masse and burning their cash reserves rapidly. It's not just the VC backed companies, or the low marging/highly leveraged mom-and-pop, big box retail, airline, whatever.

I'm terrified what's going to happen on May 1 when rent checks and mortgage payments bounce.

Re: Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus

#75

Post by unlinked_dll »

fny wrote: post #33

Why don't they borrow given we're at 0 percent rates?

That's the rate the fed loans to the banks, which can't fail.

The banks aren't going to loan AirBNB at a low interest rate when it looks like they're on the edge of insolvency.

Re: Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus

#76

Post by chewz »

chadmeister wrote: post #4

It's kind of frightening to think of the broader economic impact it would have on the whole real estate market if Airbnb went belly up. Aren't there a ton of cases where people are mortgaging multiple homes and paying them off with the revenue they generate? That cash just dried up over night and there doesn't appear to be any incoming federal support. Edit: Look, I'm all for affordable housing, but when viewing this…

Many people had been moving from bank deposits into short-term rentals in search of yield. Now they are also learning about value of liquidity.

Re: Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus

#77

Post by lykr0n »

tylerchilds wrote: post #12
chadmeister wrote: post #4

It's kind of frightening to think of the broader economic impact it would have on the whole real estate market if Airbnb went belly up. Aren't there a ton of cases where people are mortgaging multiple homes and paying them off with the revenue they generate? That cash just dried up over night and there doesn't appear to be any incoming federal support. Edit: Look, I'm all for affordable housing, but when viewing this…

As someone that would like to buy a house one day, I welcome this. People owning multiple houses to rent out to vacationers that people would like to actually live in doesn't upset me at all. If people buying houses to rent on Airbnb artificially inflated the housing market, it's just a necessary correction and federal support would be a mistake.

Agree. There are stories of people kinking out tenants to let on Airbnb. If these people get fucked by the loss in income, that'll be a simple on my face.

Airbnb as a whole, is a good idea- but some people are doing horrible things to the housing market and at worst AirBNB is complicit.

Re: Airbnb Racks Up Hundreds of Millions in Losses Due to Coronavirus

#79

Post by chadmeister »

tylerchilds wrote: post #12
chadmeister wrote: post #4

It's kind of frightening to think of the broader economic impact it would have on the whole real estate market if Airbnb went belly up. Aren't there a ton of cases where people are mortgaging multiple homes and paying them off with the revenue they generate? That cash just dried up over night and there doesn't appear to be any incoming federal support. Edit: Look, I'm all for affordable housing, but when viewing this…

As someone that would like to buy a house one day, I welcome this. People owning multiple houses to rent out to vacationers that people would like to actually live in doesn't upset me at all. If people buying houses to rent on Airbnb artificially inflated the housing market, it's just a necessary correction and federal support would be a mistake.

Look, I'm all for affordable housing, but when viewing this within the context of a looming recession and potential financial crisis I can assure you that the last thing you want to do is add in a potential amplifier to a housing market crash. Houses may get cheaper, but everyone is going to suffer in very difficult to imagine ways. Corporate debt markets are looking scary as hell right now. If you threw a housing market meltdown at it right now, we could easily be looking at something much much worse than what we saw in '08.
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