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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

#41

Post by pwned1 »

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…

I have a lot of cash sitting on the sidelines, waiting for opportunities like these in the next few monts.

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

#42

Post by Pandabob »

vincentmarle wrote: post #18
gadnuk wrote: post #3

Weren't they already losing money prior to this? Seems like a lot of companies are attributing losses to the Coronavirus masking the actual problem behind it all.

They lost close to $300M last quarter. And those were the good times.

I'm a little baffled, how is this possible? Surely their core business is profitable and the losses are because of investments in new growth areas?

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

#43

Post by drwl »

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.

> Airbnb was never profitable (I think)

Do you have any sources for this?

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

#44

Post by paxys »

Traster wrote: post #34
tibbydudeza wrote: post #27

Is WeWork still worth something ... guess co-working is a bum idea right now.

Isn't it hilarious looking back, people were making the argument "In the next recesion co-working spaces are going to explode as a great way of managing costs". Turns out... maybe not this recession.

Who the hell was saying that? It was pretty universally acknowledged that if there was a recession WeWork would be the first one to go bust. Of course, they did it before the recession actually happened.

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

#45

Post by tclancy »

CydeWeys wrote: post #25
yesplorer wrote: post #19

Why should Airbnb be making losses at this point? Are they refunding booking fees to customers while paying hosts? Traditional hotels lose money because of huge amount of, costs (both fixed and variable) associated with running a hotel. shouldn't Airbnb be making so much money at this point? Edit: "...at this point?" not in reference to the current pandemic, rather at this point of how far Airbnb has come and how the…

Why would they be making lots of money when their business is tanking? Their reservations have more than halved, so that's a huge drop in revenue without much if a drop in costs (unless they fire half their workforce and walk away from half of their office leases).

I think the OP's point is they don't have to pay for the real estate regardless of occupancy unlike traditional hotels. This is more lost opportunity cost than revenue being taken away.

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

#46

Post by colinmhayes »

ukabwlsbeux wrote: post #31
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…

I don’t think that’s frightening at all. A bunch of rent seekers lose everything, and everyone else wins. This practice should be, and in some places is, illegal.

Airbnb isn't rent seeking. They're providing a valuable service to tourists. I find it very hard to see how short term rentals should be illegal.

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

#47

Post by listenallyall »

CydeWeys wrote: post #25
yesplorer wrote: post #19

Why should Airbnb be making losses at this point? Are they refunding booking fees to customers while paying hosts? Traditional hotels lose money because of huge amount of, costs (both fixed and variable) associated with running a hotel. shouldn't Airbnb be making so much money at this point? Edit: "...at this point?" not in reference to the current pandemic, rather at this point of how far Airbnb has come and how the…

Why would they be making lots of money when their business is tanking? Their reservations have more than halved, so that's a huge drop in revenue without much if a drop in costs (unless they fire half their workforce and walk away from half of their office leases).

He's probably referring to the fact that they were losing tons of money before coronavirus. They recently reported that they lost $276 million in Q4-2019, which was almost double Q4-2018. Which does lead to the question, how is this company losing so much money when they are, essentially, a broker with very few fixed assets and no COGS?

https://news.ycombinator.com/item?id=22561933

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

#48

Post by yesplorer »

CydeWeys wrote: post #28
atwebb wrote: post #22

Earlier quoted context omitted.

I think the OP was asking, why is income negative on any revenue (they lost in Q3/Q4 of FY19), what are the expenses that can't be covered?

They employ a lot of people and have office space. Any big company has a large amount of fixed costs that will drag you under when income dries up.

Airbnb has over 5 million listings and 150 million customers around 190 countries and they don't make enough in commissions to pay rent, salaries and server costs?

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

#49

Post by shartshooter »

user5994461 wrote: post #38
CydeWeys wrote: post #25

Earlier quoted context omitted.

Why would they be making lots of money when their business is tanking? Their reservations have more than halved, so that's a huge drop in revenue without much if a drop in costs (unless they fire half their workforce and walk away from half of their office leases).

They should not be tanking. Airbnb is in a highly profitable business with very high operating margin. For reference, they take 20 to 30% commission on each booking, whereas the fixed costs to run a website are ridiculously low. Even with half the bookings, it's still a cash cow.

A company growing as aggressively as AirBnB wasn't taking a 20-30% profit and paying out shareholders.

They were taking that 20-30% and reinvesting back into growth. That means people, offices, tech, marketing, audits of homes, process, insurance, etc.

When things look good you can run lean and focus on growth. If things start to turn you can ratchet back those costs.

Unfortunately, things turned on them very fast and they aren't that nimble. When you've got 15k employees with salary, bonuses, benefits, offices that aren't being used and overnight you reduce your top line revenue by 50%+ you're likely in the red and from what I hear, they were in the red prior to this.

AirBnB will likely be a casualty of this downturn. They're highly focused on the part of the economy hardest hit by COVID-19 and are unable to diversify in time.

Lots of folks will lose their jobs, a lot of others may lose second or third homes that were used solely for part-time rentals. It's going to be hard on a lot of people and had AirBnB not gotten so far out over their skis they'd likely be OK, but would not be the market leader they were a few weeks back.

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