Airbnb announced a $1 billion funding round from new investors Monday as it faces an increasingly uncertain market ahead of its planned 2020 initial public offering.
- The influx of cash from private-equity firms Silver Lake and Sixth Street Partners comes at a time when hosts on the website are seeing mounting cancellations. According to short-term rental analytics firm AirDNA, more than 80% of bookings for the first half of April were cancelled.
- Airbnb had initially planned to go public this year with an expected valuation of $31 billion; it reportedly lowered its internal valuation to $26 billion last month.
- The funding announcement did not include a new valuation or a timeline for the IPO.
- The company also said that $5 million of the funding will go towards its Superhost Relief Fund, which helps the site’s top hosts pay their rents and mortgages during the pandemic.
Key background: The entire hospitality industry is suffering. According to the American Hotel and Lodging Association, 70% of hotel employees have been laid off or furloughed. As of the beginning of the month, U.S. hotels had an occupancy rate of only 30% and were on track to lose more than $500 million in revenue per day.
Upside: One area for Airbnb and other short-term rental websites has seen growth: properties in rural areas outside cities like the North Fork of Long Island, the Hudson Valley and Cape Cod saw a big boost in demand as residents fled urban areas, according to AirDNA. Airbnb says it will make use of the new funding to expand its long-term rental business for customers like college students and professionals relocating for work, which could be less susceptible to travel disruptions.