8 ms·

Is This the End of Airbnb?

78 points by brunoluiz 6y ago

betaby 6y ago
But why it's burning hole in the finances? AirBnB is all marketing. Scale down your cloud instances and don't spend on ads? What exactly burning money at the rate of 1B per month? It's not clear from the article at all.
- ksml 6y ago
  I'm sure it doesn't account for 1B a month, but paying employees is really expensive and airbnb has a lot of them
  - flatiron 6y ago
    1B a month just in employees is over 100k employees making 100k a year. i know the tech ones make more but i assume the customer support makes less. that's a lotttt of employees
    - davidwang34 6y ago
      it's not quite that simple. if an employee makes 100k a year in salary, they cost much more than that to the company - the company has to pay for payroll taxes, health insurance, any benefits like PTO or free food, not to mention all the infrastructure the employee uses like the office building, electricity, air conditioning, etc. according to a comment above, airbnb has 14,000 employees. that's a lot of office space and benefits to be paying for. and that's just the employee costs, not counting anything else
  - Barrin92 6y ago
    then the next question would be why in gods name have they so many employees. I just checked wikipedia and they have apparently twelve thousand workers? What do all these people do? I don't understand these sharing companies.
    - geronb 6y ago
      The Wikipedia number is incorrect. Actual number is ~7K with most being non-tech employees. About 1K engineers. If you break down the functions, the numbers start making sense. For example, Airbnb has a global payment processing platform, which is basically like mini-Stripe. That org is probably ~100 eng. Then there’s Homes, Experiences, Transportation, Lux, Plus, experimental projects etc. Each team owns a particular page in the flow. Each team needs a backend, frontend, iOS, Android person. Designer, PM, data scientist etc
- tmpz22 6y ago
  My guess would be employees since we haven't heard of any large layoffs from them. The facade is that Air BnB is an engineering/technology company and the second they start cutting into that they "lose their magic".
- paulcole 6y ago
  They must pay lawyers an astronomical amount to help them skirt the law?
- geronb 6y ago
  Current employee here. The burn rate is ~$100M/mo, not 1B/mo, after cutting marketing and reduced CS costs due to fewer bookings. You can see this in publicly available data from the WSJ and The Information. Not sure where people get these wildly inaccurate numbers.
cactus2093 6y ago
Clearly they're spending a lot of money, and maybe they'll need to do layoffs and/or other budget cuts to make it through this, but I imagine Airbnb will actually come out of this even stronger relative to the rest of the hotel industry. They don't own or lease buildings the way other hotel chains do, or have their own maintenance or cleaning staff, so they've got to be losing less money per unit right now while everything is shut down. If some hosts over-extended themselves on mortgages for their rental properties and get foreclosed on, that's not really Airbnb's problem. They may even get bailed out by the government, which then directly benefits Airbnb. And in the medium term, I think their booking rates might bounce back quicker than other hotels. In a world where the lockdowns have lifted but we're still recommending/enforcing social distancing in most places, which could last years, I imagine the demand to go and stay in a traditional, crowded hotel in Paris or NYC is still going to be pretty low. Business travel may not pick back up very quickly, as companies cut costs in the recession plus they've seen how meetings can mostly be done fine remotely. Massive conferences with thousands of people seem unlikely to happen for a very long time. But people will still want some kind of leisure and vacation. Renting a house or cottage a couple hours away on a lake or in a small vacation town is a relatively safe thing to do where you can maintain social distancing pretty well, which is the scenario where I'm most likely to use Airbnb instead of a hotel. On top of that, local governments have bigger problems to worry about than short-term rentals right now, so Airbnb may also get a couple years break from their constant legal battles with various cities.
- dumbfounder 6y ago
  Agreed. Where do you want to be, in a hotel around a bunch of strangers? Or in a house where you can keep distance from other families? We tried to rent a house down south (SC, GA, FL) where we could have a pool and our kids could swim, but most states have no short term rental orders in effect. As soon as those lift I think you will see certain properties bounce back. No hotels for us until this thing clears up.
  - r00fus 6y ago
    This makes sense, but honestly I thought about post-COVID airbnb and my trust of hosts or other guests - and that trust is pretty dang low. The fact that anyone hosting an airbnb may be more likely to be one of those reckless "open up America" folks is more likely than a properly organized hotel chain that can enforce cleanliness and social distance. It's sad - I can't foresee staying anywhere other than my home anytime in the medium term.
1024core 6y ago
I still can't wrap my head around the fact that they have 14,000 employees. Fourteen thousand. For a company that owns no hotels or motels, no real-estate (other than their offices, of course). The website is decent (but no amazeballs), which is all there is to AirBnB (other than customer service, of course). I don't understand why this all can't be done by, say, 1000 or so employees.
- draw_down 6y ago
  Do you guys ever get tired of posting this exact comment?
- askafriend 6y ago
  They operate in 191 countries. Have you ever built a business that operates in that many countries?
- grumple 6y ago
  90% of the employees are not engineers. There's probably tons of customer service people, marketing, legal.
- timcederman 6y ago
  Every single time there's a thread about a company like Airbnb, there is a comment like yours. I am genuinely curious why you are so surprised that a company of their size would be that big? Particularly with a high touch business that works with so many businesses - between sales and support alone this number seems reasonable.
  - credit_guy 6y ago
    Google had 5000 employees in 2005 [1]. And no, in 2005, Google was not just a start-up, it was the same search juggernaut that it is now. There was no youtube yet, google maps was less than 1 year old, and android was 3 years in the future. But in terms of search, it was the only game in town. Their revenue was $6 BN [2]. Airbnb's revenue in 2019 was around $4 BN. Now, Google is and was an exceptional company, and it's not totally fair to compare a business to Google, but still, people who wonder why AirBnB has so many employees have a point. [1] https://medium.com/gabor/timeline-employee-count-growth-for-microsoft-yahoo-google-and-facebook-9ede22a37824 https://medium.com/gabor/timeline-employee-count-growth-for-... [2] https://www.statista.com/statistics/266206/googles-annual-global-revenue/ https://www.statista.com/statistics/266206/googles-annual-gl...
PeterStuer 6y ago
The end? I could only wish. That this social cancer was allowed to fester for so long means it will just raise it's ugly head once again when conditions are right.
rotterdamdev 6y ago
I hope so. It's cancer on our society.
dzonga 6y ago
airbnb is not a bad business, as a localized venture. imagine each city had it's own version of airbnb run by the local city council. not some vc funded, destroy regulations & rental market at all costs, company. a city owned short term rental market would be both beneficial to cities, tourists n hosts. aye, if there's any salesperson out there wanna partna on to build a platform we can sell to cities, I"m open.
- charia 6y ago
  The hotels in any city would lobby to kill any sort of government intrusion into the private sector like that. On top of that cities prefer nice compartmentalized systems, short term rentals are hotels, long term rentals are apartments. City planners designate different areas for different use cases, airbnb style rentals go against this and raise all sorts of problems. This is one of the major reasons why cities generally dislike airbnb.
rmason 6y ago
The question they should be asking is will this kill Marriott and Hilton's recently launched AirBnB competitors? While I'm sure Marriott and Hilton will get a ton of federal money they've got a ton of real estate mortgages to deal with right now. It would be pretty easy (especially if these efforts don't have a lot of traction and are costing a lot of money to keep afloat) to just shut them down.
jsilence 6y ago
Let the invisible hand of the market sort it out. Don't bail, let them fail.
watertom 6y ago
Airbnb If infection does not confer immunity could we be looking at the end of: Hotels, Shopping Malls, Eat in restaurants, Bars, Amusement Parks, Move Theaters, Clubs, Theaters, Public swimming pools, State and National parks, Beaches, Air travel, Train Travel, Bus Travel, Recirculating HVAC systems, Office buildings, Pro sports, college sports, high school sports, sports in general, gyms, parties, funerals, Just to name a few.
badpassword 6y ago
in bali, hotels are now offering 3,000,000 rupiahs for 30 days stay that's about 6-7 usd / day no breakfast / food / mineral water cleaning every 2 weeks minimum airbnb price floor is like what? 10 usd / day? that's 50% more expensive than hotel chains in bali for months to come
aussiegreenie 6y ago
Just remember why they started, a bloke could not afford to pay his rent. There was a popular conference and he offered to let someone stay at his house sleeping on an airbed. It was a hack. If the economy stays bad for a period of time both travellers and host will need an Airbnb or similar. Travellers want cheaper accommodation and host will need the money.
diogenescynic 6y ago
One can only hope.
FreekNortier 6y ago
I have an Airbnb booking for December 2020. Would it be best to cancel now when there is still a chance of a refund?

78 points by brunoluiz 6y ago

But why it's burning hole in the finances? AirBnB is all marketing. Scale down your cloud instances and don't spend on ads? What exactly burning money at the rate of 1B per month? It's not clear from the article at all.

ksml 6y ago
I'm sure it doesn't account for 1B a month, but paying employees is really expensive and airbnb has a lot of them
- flatiron 6y ago
  1B a month just in employees is over 100k employees making 100k a year. i know the tech ones make more but i assume the customer support makes less. that's a lotttt of employees
  - davidwang34 6y ago
    it's not quite that simple. if an employee makes 100k a year in salary, they cost much more than that to the company - the company has to pay for payroll taxes, health insurance, any benefits like PTO or free food, not to mention all the infrastructure the employee uses like the office building, electricity, air conditioning, etc. according to a comment above, airbnb has 14,000 employees. that's a lot of office space and benefits to be paying for. and that's just the employee costs, not counting anything else
- Barrin92 6y ago
  then the next question would be why in gods name have they so many employees. I just checked wikipedia and they have apparently twelve thousand workers? What do all these people do? I don't understand these sharing companies.
  - geronb 6y ago
    The Wikipedia number is incorrect. Actual number is ~7K with most being non-tech employees. About 1K engineers. If you break down the functions, the numbers start making sense. For example, Airbnb has a global payment processing platform, which is basically like mini-Stripe. That org is probably ~100 eng. Then there’s Homes, Experiences, Transportation, Lux, Plus, experimental projects etc. Each team owns a particular page in the flow. Each team needs a backend, frontend, iOS, Android person. Designer, PM, data scientist etc
tmpz22 6y ago
My guess would be employees since we haven't heard of any large layoffs from them. The facade is that Air BnB is an engineering/technology company and the second they start cutting into that they "lose their magic".
paulcole 6y ago
They must pay lawyers an astronomical amount to help them skirt the law?
geronb 6y ago
Current employee here. The burn rate is ~$100M/mo, not 1B/mo, after cutting marketing and reduced CS costs due to fewer bookings. You can see this in publicly available data from the WSJ and The Information. Not sure where people get these wildly inaccurate numbers.

cactus2093 6y ago

Clearly they're spending a lot of money, and maybe they'll need to do layoffs and/or other budget cuts to make it through this, but I imagine Airbnb will actually come out of this even stronger relative to the rest of the hotel industry. They don't own or lease buildings the way other hotel chains do, or have their own maintenance or cleaning staff, so they've got to be losing less money per unit right now while everything is shut down. If some hosts over-extended themselves on mortgages for their rental properties and get foreclosed on, that's not really Airbnb's problem. They may even get bailed out by the government, which then directly benefits Airbnb. And in the medium term, I think their booking rates might bounce back quicker than other hotels. In a world where the lockdowns have lifted but we're still recommending/enforcing social distancing in most places, which could last years, I imagine the demand to go and stay in a traditional, crowded hotel in Paris or NYC is still going to be pretty low. Business travel may not pick back up very quickly, as companies cut costs in the recession plus they've seen how meetings can mostly be done fine remotely. Massive conferences with thousands of people seem unlikely to happen for a very long time. But people will still want some kind of leisure and vacation. Renting a house or cottage a couple hours away on a lake or in a small vacation town is a relatively safe thing to do where you can maintain social distancing pretty well, which is the scenario where I'm most likely to use Airbnb instead of a hotel. On top of that, local governments have bigger problems to worry about than short-term rentals right now, so Airbnb may also get a couple years break from their constant legal battles with various cities.

dumbfounder 6y ago
Agreed. Where do you want to be, in a hotel around a bunch of strangers? Or in a house where you can keep distance from other families? We tried to rent a house down south (SC, GA, FL) where we could have a pool and our kids could swim, but most states have no short term rental orders in effect. As soon as those lift I think you will see certain properties bounce back. No hotels for us until this thing clears up.
- r00fus 6y ago
  This makes sense, but honestly I thought about post-COVID airbnb and my trust of hosts or other guests - and that trust is pretty dang low. The fact that anyone hosting an airbnb may be more likely to be one of those reckless "open up America" folks is more likely than a properly organized hotel chain that can enforce cleanliness and social distance. It's sad - I can't foresee staying anywhere other than my home anytime in the medium term.

1024core 6y ago

I still can't wrap my head around the fact that they have 14,000 employees. Fourteen thousand. For a company that owns no hotels or motels, no real-estate (other than their offices, of course). The website is decent (but no amazeballs), which is all there is to AirBnB (other than customer service, of course). I don't understand why this all can't be done by, say, 1000 or so employees.

draw_down 6y ago
Do you guys ever get tired of posting this exact comment?
askafriend 6y ago
They operate in 191 countries. Have you ever built a business that operates in that many countries?
grumple 6y ago
90% of the employees are not engineers. There's probably tons of customer service people, marketing, legal.
timcederman 6y ago
Every single time there's a thread about a company like Airbnb, there is a comment like yours. I am genuinely curious why you are so surprised that a company of their size would be that big? Particularly with a high touch business that works with so many businesses - between sales and support alone this number seems reasonable.
- credit_guy 6y ago
  Google had 5000 employees in 2005 [1]. And no, in 2005, Google was not just a start-up, it was the same search juggernaut that it is now. There was no youtube yet, google maps was less than 1 year old, and android was 3 years in the future. But in terms of search, it was the only game in town. Their revenue was $6 BN [2]. Airbnb's revenue in 2019 was around $4 BN. Now, Google is and was an exceptional company, and it's not totally fair to compare a business to Google, but still, people who wonder why AirBnB has so many employees have a point. [1] https://medium.com/gabor/timeline-employee-count-growth-for-microsoft-yahoo-google-and-facebook-9ede22a37824 https://medium.com/gabor/timeline-employee-count-growth-for-... [2] https://www.statista.com/statistics/266206/googles-annual-global-revenue/ https://www.statista.com/statistics/266206/googles-annual-gl...

PeterStuer 6y ago

The end? I could only wish. That this social cancer was allowed to fester for so long means it will just raise it's ugly head once again when conditions are right.

rotterdamdev 6y ago

I hope so. It's cancer on our society.

dzonga 6y ago

airbnb is not a bad business, as a localized venture. imagine each city had it's own version of airbnb run by the local city council. not some vc funded, destroy regulations & rental market at all costs, company. a city owned short term rental market would be both beneficial to cities, tourists n hosts. aye, if there's any salesperson out there wanna partna on to build a platform we can sell to cities, I"m open.

charia 6y ago
The hotels in any city would lobby to kill any sort of government intrusion into the private sector like that. On top of that cities prefer nice compartmentalized systems, short term rentals are hotels, long term rentals are apartments. City planners designate different areas for different use cases, airbnb style rentals go against this and raise all sorts of problems. This is one of the major reasons why cities generally dislike airbnb.

rmason 6y ago

The question they should be asking is will this kill Marriott and Hilton's recently launched AirBnB competitors? While I'm sure Marriott and Hilton will get a ton of federal money they've got a ton of real estate mortgages to deal with right now. It would be pretty easy (especially if these efforts don't have a lot of traction and are costing a lot of money to keep afloat) to just shut them down.

jsilence 6y ago

Let the invisible hand of the market sort it out. Don't bail, let them fail.

watertom 6y ago

Airbnb If infection does not confer immunity could we be looking at the end of: Hotels, Shopping Malls, Eat in restaurants, Bars, Amusement Parks, Move Theaters, Clubs, Theaters, Public swimming pools, State and National parks, Beaches, Air travel, Train Travel, Bus Travel, Recirculating HVAC systems, Office buildings, Pro sports, college sports, high school sports, sports in general, gyms, parties, funerals, Just to name a few.

badpassword 6y ago

in bali, hotels are now offering 3,000,000 rupiahs for 30 days stay that's about 6-7 usd / day no breakfast / food / mineral water cleaning every 2 weeks minimum airbnb price floor is like what? 10 usd / day? that's 50% more expensive than hotel chains in bali for months to come

aussiegreenie 6y ago

Just remember why they started, a bloke could not afford to pay his rent. There was a popular conference and he offered to let someone stay at his house sleeping on an airbed. It was a hack. If the economy stays bad for a period of time both travellers and host will need an Airbnb or similar. Travellers want cheaper accommodation and host will need the money.

diogenescynic 6y ago

One can only hope.

FreekNortier 6y ago

I have an Airbnb booking for December 2020. Would it be best to cancel now when there is still a chance of a refund?