Summary

• To put a check on unauthorised parties and ensure safety, Airbnb would not allow guests from Britain, France, and Spain aged less than 25 to rent an entire home through its platform, close to where they live
• Airbnb’s decision is important in the wake of the coronavirus pandemic, given the alarm that such unmanageable parties raise, in which social distancing norms could be easily ignored
• Airbnb reported a decline of approximately 67 per cent in its Q2 revenue, but the plans for an IPO in 2020 is still on

Airbnb Inc, the online marketplace for vacation rentals has been making news recently, first the company declared its second quarter (Q2) earnings and firm plans of IPO, secondly its announcement to confine bookings for unauthorised parties through its online platform. Let us delve deep into them one by one, starting with its latest announcement of restricting under-25s in UK, France and Spain.

Ensuring safety during a pandemic: Airbnb limits bookings for disorderly parties by guests below 25 years

Airbnb announced that it would not permit guests below the age of 25 from Britain, France, and Spain to rent an entire home through its platform, to check unauthorised parties and ensure safety. Providing details on these guests, Airbnb informed that people having less than three positive ratings would not be allowed to rent entire homes close to where they live. The online firm stressed that the latest limitations aim towards protecting the local communities. Airbnb, however, clarified that the company would still authorise the youngsters to book listings outside of their local area.

Airbnb specified that the restraint is not applicable for guests with at least three positive assessments and zero negative reviews on Airbnb. The online company also added that people who have long-term plans are welcome to make the bookings on its website. Besides, all other customers can continue to make bookings for private rooms or hotel rooms through its online platform.

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In order to restrict the unruly parties that supposedly cause problems to the residents residing nearby in certain communities, Airbnb had started to crack down on such parties since a year back. It is to be noted that the company keeps implementing such steps in the United States (US) and Canada as well. This effort has gained more significance during the coronavirus pandemic, given the alarm that these parties raise, in which social distancing norms could be easily ignored. In its endeavour to support the public health guidelines to curb the spread of the coronavirus infections, the firm has toughened its ban on gatherings that violate such health-related regulations. Citing the company’s commitment of operating as a responsible partner to the communities, Airbnb said that the latest ruling is an addition to its various measures to tighten the antisocial behaviour and unlawful parties among other things.

Coronavirus impact: Airbnb reports 67 per cent fall in its Q2 revenue, says IPO plans are on

In its results for the second quarter, which ended on 30 June 2020, Airbnb, the short-term home rental company, suffered a year-on-year (YOY) decline of approximately 67 per cent in income generation. The revenue for the quarter registered at $335 million (£256.8 million) falling from over $1 billion posted in 2019. In the first quarter of 2020, Airbnb’s revenue was reported at $842 million. In the second quarter, the loss before interest, taxes, depreciation, and amortisation was recorded at $400 million, an increase from $341 million reported for quarter one. The plunge in the company’s revenue was attributed to fewer people travelling due to the coronavirus pandemic. In the three months to 31 March 2020, the firm’s operating expenses included $569 million compared to $314 million that it earned from operating activities in 2019.

Nonetheless, as the second quarter was ending, Airbnb witnessed some signs of recovery. In June 2020, the bookings at the online platform were down 30 per cent when compared to the same period in 2019. The June 2020 numbers were a substantial increase from the May 2020 figures that showed a decline of 70 per cent YoY. As of 8 July 2020, there were more than 1 million nights booked globally. Airbnb informed in July that majority of these bookings included the trips that would begin on or before 7 August 2020 and also added that the bookings had reached the 1 million mark for the first time since 3 March 2020.

Also read: What Will It Take To Fully Recover From The Coronavirus Slump?

According to a report, Airbnb’s plan of debuting at the stock market before the end of 2020 is still on. Other media report has confirmed that the company definitely plans to file the necessary paperwork for its initial public offerings (IPO) with the United States (US) Securities and Exchange Commission (SEC) later in August 2020. The online marketplace platform’s plan for a stock market debut is considered to be one of the most awaited stock listings in 2020. It is pertinent to note that Airbnb is yet to come out with a formal announcement in this regard. It is important to note that Airbnb will be going for the IPO at a crucial time when its home-rental business is stressed due to the coronavirus pandemic, which has compelled travellers across the globe to either shun or postpone their travel plans.

Conclusion

As the governments have lifted travel restrictions, there are stringent social distancing guidelines for the companies in this sector to start operations to control any further rise of the infectious disease. The recent decision by the online marketplace Airbnb seems to be an effort in the right direction that during the coronavirus pandemic, highlighting the fact that it is not only the government or the health authorities that could enforce such measures, but there is an increased role of the corporate sector to achieve desired results out of the health advisories. During the global pandemic, travel and tourism-related businesses have been hurt in particular, firstly due to a complete shut during the lockdown and then the recent spike in the cases of infections after the governments relaxed travel restrictions. Amid the health advisories on social distancing, quarantine norms, and lack of Covid-19 testing facilities to check the spread of the infections, travellers remain concerned about their holiday trips. This scenario is increasingly hurting the businesses in the sector, including the airlines, accommodation providers and tour operators.