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Will coronavirus infect Airbnb’s public float?

Airbnb’s stock market launch may be put on hold as coronavirus continues to disrupt the global market.

According to Bloomberg, industry sources say the home-share giant’s initial public offering, due to begin shortly, may be pushed back to 2021 as Airbnb continues to suffer the effects of an international travel downturn caused by the outbreak.

Airbnb lost $484 million in the first nine months of 2019 compared with a $US300 million profit during the same period in 2018.

Other companies reported to have put their IPOs on hold because of the coronavirus include the Warner Music Group and the private-equity company Carlyle Group.

Bloomberg reported this week that Airbnb’s rapid rise to global popularity may be a problem as it looks to list publicly, the news service speculating Airbnb is “struggling to scale prudently”.

The travel platform has dedicated $US150 million to ensure safety improvements ahead of the float, following issues around the world with guest behaviour and the fatal shooting of five young people at a Californian Airbnb last Halloween. Increased overhead expenses and sales and marketing costs have also reportedly contributed to its recent financial performance.

“You want to come in with your best foot forward in a public listing – and this virus is hitting Airbnb hard,” David Hsu, a professor at the University of Pennsylvania’s Wharton Business School, told Bloomberg.

“I wouldn’t be surprised to see this particular listing delayed,” he said.

Airbnb has been allowing guests and hosts cancel reservations in China, Italy and South Korea with no penalty under its extenuating circumstances policy. This has slashed significantly affected business, particularly in China where insiders estimate Airbnb business is down by some 80 percent on the previous year.

Last week, Booking Holdings CEO Glenn Fogel revealed the OTA expects room nights booked to be down as much as ten percent over the first quarter.

While acknowledging travel demand was shrinking worldwide, he predicted the sector would bounce back once the pandemic threat subsided.

“I am confident that the business will be coming back,” Fogel said. “Travel is a basic need for people.”

While not commenting on the public float, Airbnb spokesperson Nick Papas said: “The coronavirus outbreak is causing travel restrictions and other disruptions that have a direct impact on the travel and tourism sector and beyond.

“Although nobody can know the extent of the impact that the coronavirus outbreak may have, we believe that history shows that when global disruptions happen, the travel industry has bounced back in the long run.”

Which makes a 2021 stock market float more likely for the short-stay giant.

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Kate Jackson

Kate Jackson is the editor of Accomnews. You can reach her at any time with questions or submissions: editorial@accomnews.co.nz

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