Airbnb shares sail past IPO price in stellar debut
Sabrina Kessler New York
December 10, 2020
In the middle of the largest tourism crisis of all times, travel company Airbnb began trading with a $100 billion market value amid rising appetite for new tech shares. The platform needs money for an uncertain future.
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It sounds like a bad joke. Now, at a time when the future of the travel industry couldn't be more uncertain, the accommodation rental platform Airbnb hits the trading floor.
Airbnb shares opened at $146 (€120.3) on the Nasdaq on Thursday, far above the initial public offering (IPO) price of $68 apiece. The stock hit a high of $165, rising 142.6% after the debut and making the San Francisco, California-based group worth more than $100 billion.
The listing comes 10 months after the coronavirus pandemic upended travel and appears to have stunned even Airbnb Chief Execturive Officer Brian Chesky. "I don't know what else to say," Chesky said when told about the potential opening price in a Bloomberg Television interview. "I'm very humbled by it."
Frankly, Airbnb could use the money. A glance at its nine-month balance sheet shows how much the company has suffered from the fallout of the coronavirus pandemic. Bookings fell by 39% in the last three quarters, reducing revenues by a third to $2.5 billion. Losses compared with the same quarters last year doubled to almost $700 million.
To cushion the blow, Chesky has pulled out all the stops. As early as this spring, he cut marketing expenses by $1 billion, slashed executive salaries by half, and even waived his entire salary. Still, it wasn't enough. A good quarter of the workforce had to go, a total of 1,900 employees. Even a $2 billion capital injection from investors like Silver Lake didn't help. The company was left with a big deficit for the year as a whole.
Coronavirus: The consequences for tourism
The COVID-19 epidemic poses a threat to the everyday life of people worldwide. Travelers are particularly affected, as are people working in tourism. Here are the latest developments.
Image: Jc Viens/AP/dpa/picture alliance
Cruise ships return to Venice
The cruise ship MSC Orchestra makes its way down the Giudecca Canal in the early morning. Early risers in Venice woke up on June 3, 2021 to the sight of a cruise ship sailing down the Giudecca Canal for the first time since the start of the coronavirus pandemic, despite the Italian governments' promises to reroute the huge ships due to safety and environmental concerns.
Image: Jc Viens/AP/dpa/picture alliance
Mecklenburg-Western Pomerania reopens to tourists
Mecklenburg-Western Pomerania will open its hotels to tourists from Germany on June 4. From June 11, day visitors to the northeast will also be able to return. Owners of vacation homes and boats, as well as long-term campers from outside the state, will already be allowed back on May 28. Tourists must present a negative coronavirus test upon arrival, which must be updated every three days.
Image: Jens Koehler/picture alliance
Museums and cafés in France have reopened
For the first time in six and a half months, France’s cafés and restaurants are once again allowed to open their outdoor areas. As of Wednesday (May 19), non-essential businesses and department stores, as well as museums, cinemas, and theaters have also reopened. The nighttime curfew across all of France is now in effect from 9pm – two hours later than its previous start time.
Image: Lewis Joly/AP Photo/picture alliance
Austria lifts quarantine requirement on entry
Austria from Wednesday (May 19) will allow entry from Germany without quarantine. Mandatory, however, remains a proof of vaccination, a negative test or full recovery from a COVID infection. "In many states, the infection rates are declining, so in parallel with the opening up steps in the country, we can also implement facilitation of entry into Austria," said Health Minister Wolfgang Mückstein.
Image: Patrick Daxenbichler/Zoonar/picture alliance
Portugal lifts entry restrictions for EU citizens
Portugal is easing its entry restrictions for travelers from most EU countries. People from EU countries where the COVID-19 infection rate is below 500 cases per 100,000 inhabitants over a 14-day period will be allowed back into the country, even for "non-essential" purposes. However, testing is strictly mandatory.
Image: Frank Hoermann/SvenSimon/picture alliance
No parties in Mallorca this summer
Francina Armengol, the President of the Balearic Islands, has issued a preliminary rejection of any hopes for parties on the island of Mallorca this summer. “We can only start to allow places to open and nightlife to return once we have a higher vaccination rate”, Armengol said. Responsible tourism will be prioritized. “Nightlife will follow, but later, and probably not this summer.”
Image: Lakomski/Jan Huebner/imago images
Germany's annual Oktoberfest canceled again
Munich's Oktoberfest will be canceled for a second year in a row due to the coronavirus pandemic. The decision was made by Bavarian state Premier Markus Söder and Munich Mayor Dieter Reiter. "In the classic beer tents at the big festivals, social distancing, masks and other measures are practically impossible to implement," Söder said. Reiter said canceling the Oktoberfest again was a great pity.
Image: Sammy Minkoff/imago images
Vatican Museums reopen
Following the third wave of the coronavirus in Italy, the Vatican Museums reopened on Monday (May 3). About 1,000 visitors registered for the first day alone, said Barbara Jatta, director of the museums. It was a "great joy" to finally no longer only be safeguarding the works of art, but also to be able to share them with others again, she said.
The U.S. has heightened its travel warnings on account of the coronavirus pandemic, now additionally advising against travel to Germany and other EU countries – where the U.S. State Department's has applied its red-alert level. This represents the highest of its four risk-advisory levels for travel. At the third level, previously in force, the advice was only to reconsider any planned travel.
Image: picture-alliance/robertharding/T. Auzins
Israel open for tourists who have been vaccinated
Starting at the end of May, Israel wants to let tourists with a Covid-19 vaccination back into the country. Tourists will have to comply with the requirements, which include proof of vaccination and negative Covid-19 test results. After the pandemic broke out, Israel had effectively isolated itself, with foreign citizens only allowed into the country in exceptional cases.
Image: Anton Starikov/Zoonar/picture alliance
Greece reopens for tourists from May 14
Starting May 14, Greece plans to open its borders to vacationers from EU countries as well as from some other countries such as Great Britain and Serbia, to save the domestic tourism sector. Travelers will be allowed to enter the country for a vacation without having to undergo quarantine. They will, however, require travelers to either be vaccinated or show a negative PCR test.
Image: Nicolas Economou/NurPhoto/picture alliance
Vaccinated foreigners allowed to enter Croatia
As of April 1, foreign travellers are permitted to enter Croatia again if they can present evidence that they have been vaccinated against coronavirus. In addition, anyone who has a negative PCR test or an antigen test or can prove that they have recovered from Covid-19 within the past six months may also cross the borders. Before, you had to present a negative PCR test or quarantine for ten days.
Image: Pablo Camacho/PhotoAlto/picture alliance
Malta to reopen to tourists from June
Malta is rapidly progressing with COVID-19 vaccinations and plans to open to tourists on a large scale from June. The island is focusing primarily on outdoor activities such as scuba diving. A total of 20 million euros will be invested in the reopening. Air and sea passengers with vaccination passes will then be allowed into the country, while all others will still have to present a negative test.
Germany introduces general testing as entry requirement into the country
On March 22, the entry rules into Germany were tightened again. After tourist travel to Germany had already been made unfeasible due to the coronavirus pandemic, in future travelers returning to Germany will also have to have a COVID test before departure - irrespective of the infection situation in the country of departure. The Infection Protection Act is to be amended accordingly.
Image: Boris Roessler/dpa/picture alliance
Vacation to Majorca possible again without quarantining
The German Foreign Office removed its travel warning for Majorca on Sunday (March 14). You can now visit Majorca again without needing to quarantine or take a test once you’ve returned to Germany. Bookings have increased significantly, and more flights are being added. The other Balearic islands as well as parts of the Spanish mainland are also no longer considered coronavirus risk regions.
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Tourism industry pushes for an early open in Europe
Norbert Fiebig, president of the German Travel Association (DRV), has urged that it is "time for a coordinated approach to restore safe travel." He is counting on vaccination certificates and rapid coronavirus tests – strategies also promoted by politicians. The EU decided on February 25, for instance, to have introduced standardized vaccination passports for travelers by the summer.
Image: Clara Margais/dpa/picture alliance
Discussion over travel benefits for vaccinated people
Greece and Israel signed an agreement (Feb 9) to that will allow vaccinated tourists to travel between their two countries withthout restrictions. In Europe, whether vaccinated people should be the first to be allowed to travel again is controversial. While Germany is still reluctant, some countries already allow easier entry with a vaccination certificate, including Estonia, Poland and Iceland.
Image: Frank Hoermann/SVEN SIMON/picture alliance
Tourism slumps worldwide
Just how disastrous the 2020 travel year was is made clear in the latest survey by the UN tourism organization UNWTO: 74% decline in global tourism worldwide, with over a hundred million jobs tied to it. Forecasts for 2021 also remain cautious in the face of travel restrictions. The emerging trends are home-based holidays, nature-based vacations, and more interest in sustainable travel.
Image: Felicitas Wilke/DW
Beijing cancels flights and trains for Chinese New Year
Hundreds of millions of Chinese are currently seeing their travel plans put on hold for the Chinese New Year on February 12, with flights and train services canceled on Thursday, especially in Beijing, at the start of the most important travel season of the year. Across the country, people are being asked to refrain from traveling to prevent a major outbreak that could lead to "massive lockdowns."
Image: picture-alliance/dpa/SIPA/Hao Qunying
Israel suspends international flights
Israel is largely suspending its international flights for nearly a week. The flight suspension goes into effect at 00:00 local time on Tuesday (Jan. 26) and will remain in effect until Sunday. The measure is intended to prevent coronavirus strains from entering the country. Up to 40 percent of new cases in Israel are due to the British COVID-19 mutation.
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Tourists allowed back into Sri Lanka - under conditions
Ten months after the border closure, international tourists can travel to Sri Lanka again. As confirmed by officials on Monday (Jan 18), travelers will be able to re-enter the island from Jan. 21 if they comply with strict security regulations, present a negative PCR test and stay in a quarantine hotel for 14 days.
Image: picture-alliance/robertharding/R. Francis
Pompeii reopens to visitors
Despite extended coronavirus restrictions in Italy, as of Monday (Jan 18), museums and exhibitions in some regions will be able to reopen. This rule applies to the so-called Yellow Zones, where the coronavirus infection situation is less tense. Among others, the Archaeological Park in Pompeii is again able to receive visitors because it is located in the yellow region of Campania.
Image: Colourbox
Australians allowed quarentine-free travel to New Zealand again from 2021
New Zealand is setting up a "travel bubble" with neighboring Australia. After months of border closures due to the coronavirus pandemic, New Zealand will once again allow tourists from Australia to enter the country without quarantine requirements in the New Year. New Zealanders have been able to travel to Australia again since October without having to go into quarantine.
Image: picture-alliance/All Canada Photos
After an eight-month break Aida Cruises launches cruise again
On Saturday (December 5) the first Aida cruise ship is scheduled to leave for a one-week trip to the Canary Islands. The ship, designed for 3300 passengers, will reportedly be 50 percent full. All passengers will need to provide a negative coronavirus test, no more than 72 hours old. On board, strict hygiene and distancing rules apply, and only guided shore excursions will be possible.
Image: Ingeborg Knol/imabeBROKER/picture alliance
Australian airline to introduce obligatory vaccination
Australian airline Qantas wants to introduce compulsory vaccination for intercontinental flights. "We will require international travelers to be vaccinated before we allow them on board," Qantas CEO Alan Joyce stated. The general terms and conditions would be adjusted accordingly. Whether this will also be a requirement for domestic flights has not yet been decided.
Image: Bai Xuefei/Xinhua News Agency/picture-alliance/dpa
Machu Picchu is open again
Machu Picchu, the ancient Inca city in the Peruvian Andes mountains, has reopened almost eight months after it was closed down due to the Covid-19 pandemic. Peruvian authorities organized an Inca ritual to mark the reopening. To allow for distancing, a maximum of 675 tourists per day are allowed to enter the old Inca city. That is less than a third of the normal number allowed.
Image: Martin Mejia/AP Photo/picture alliance
Rio cancels its famous carnival parade for the first time in a century
Rio de Janeiro's famous annual Carnival spectacle will not go ahead in February. Organizers said the spread of the coronavirus in Brazil made it impossible to safely hold parades which with some seven million people celebrating are a cultural mainstay, tourism magnet and, for many, a source of livelihood. Brazil has the second highest death rate in the world after the United States and India.
Image: Alexandre Schneider/Getty Image
Germany to enter a one-month lockdown
To curb the spread of the coronavirus pandemic the German government has announced though new measures to start Monday, November 2. The new restrictions effect the travel business as overnight stays in hotels for tourist purposes will be banned, entertainment facilities such as theaters and cinemas will be closed as will bars and restaurants, which will only be allowed to offer take out services.
Image: Jens Kalaene/dpa/picture-alliance
Nuremberg cancels Christmas market
The city announced on Monday (Oct.26) that this decision had been made in view of the rapidly increasing number of coronavirus cases. The mayor explained that it was to be assumed that in the near future the Covid-19 traffic light in Nuremberg will change to dark red. "Against this background, we think it would be the wrong signal to go ahead with the annual Christkindlesmarkt Christmas market.
Image: picture-alliance/dpa/D. Ebner
Global cruise ship association to require coronavirus tests for all
The cruise industry has decided to make coronavirus testing mandatory for all guests and crew members aboard cruise ships. The Cruise Lines International Association, the world’s largest such organization, announced on October 8 that passengers can only board ships by providing proof of a negative test result. All member shipping companies worldwide must now comply with this rule.
Image: Daniel Bockwoldt/dpa/picture-alliance
German government declares all of Belgium and Iceland risk areas
In the wake of significant increases in coronavirus infection figures in Europe, Berlin has announced further EU countries as risk areas for travelers. In addition to Belgium and Iceland, additional areas of France and Great Britain, including all of Northern Ireland and Wales, were also classified as risk areas on September 30.
Image: Stefan Ziese/imageBROKER/picture-alliance
Taj Mahal reopens for tourists
India's most famous building was closed for six months, but since Monday ( September 21) it can be visited again, under strict restrictions. Only 5000 online tickets will be issued per day. There are temperature checks at the entrance. Selfies are allowed, group photos are prohibited. The Taj Mahal is a UNESCO World Heritage Site and is normally visited by 8 million people every year.
Image: Pawan Sharma/picture-alliance/AP Photo
Historical sales losses in global tourism
Because of the coronavirus pandemic, the tourism sector has suffered a loss of 460 billion dollars (388 billion euros) from January to June, the World Tourism Organization reported in Madrid. The loss of sales was five times higher than during the international financial and economic crisis of 2009, and the total number of tourists worldwide fell by 65 percent in the first half of the year.
Image: AFP/D. Martin
Berlin to start 'differentiated system' for travel warnings
The German government has extended its travel warning for around 160 countries through September 30. The advisory applies to "third countries" — i.e. countries that are not members of the EU or associated with the Schengen area. From October 1st, a "differentiated system" will apply, in which individual travel and safety information will be given for each country.
Australia has extended its travel restrictions for a further three months. The borders will remain closed for visitors from abroad until at least December 17. However, the government announced that domestic travel will soon be allowed for residents of the country. An exception will be the state of Victoria, with its metropolis Melbourne, for which a lockdown has been in place since early July.
Image: SeaLink Travel Group
Germany extends global travel warning
The German government has extended the travel warning for around 160 countries outside the European Union by two weeks until September 14. A spokeswoman for the German Foreign Ministry explained the move on Wednesday (Aug 26) with rising coronavirus infection rates. "The situation will not relax sufficiently by mid-September to be able to lift the worldwide travel warning," she said.
Image: picture-alliance/dpa/A. Arnold
Compulsory COVID-19 tests on entry into Germany
Anyone entering Germany from a high-risk area must take a coronavirus test from August 8, after an order by Health Minister Jens Spahn. Currently, many countries are classified as risk areas, including the United States and Brazil. In the European Union, Luxembourg, the Belgian region of Antwerp and the Spanish regions of Aragon, Catalonia and Navarre were risk areas as of early August.
Image: Reuters/F. Bensch
Setback for cruise holidays
Norwegian cruise operator Hurtigruten has stopped all cruises on August 3 until further notice after an outbreak of the coronavirus on one of its ships. At least 40 passengers and crew members on the Roald Amundsen tested positive for COVID-19. Meanwhile, German cruise line Aida Cruises has also postponed its planned restart due to the lack of necessary permits.
Nevertheless, Airbnb went public on Thursday, bolstered by a recent bright spot. In the third quarter, the company surprisingly recorded a net profit of $219 million. "Our business rebounded faster than anyone expected."
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Indeed, Airbnb is weathering the crisis much better than the traditional hotel industry. "Airbnb has enjoyed an increase in demand during the pandemic from people seeking to get away from the city," strategy consultant Peter Cohan, who teaches at Babson College in Massachusetts, told DW.
While sales of apartments in the world's metropolises have fallen significantly, the rural vacation homes market is booming. This is where Airbnb has the advantage over traditional hotel chains.
Added to this are its comparatively low operating costs. To keep its own business running, Airbnb has little to pay other than the salary of its employees. The direct costs of vacant houses and apartments are borne exclusively by the property owners. Unlike other hotel and travel providers, Airbnb doesn't have to pay for vacant accommodations, half-full planes or docked cruise ships.
Spain: Gentrification creeps up on Barcelona
Barcelona's traditional "barrios" are losing their charm. Rents have skyrocketed, forcing out locals, who are replaced by the rich and expats. Investors are making a fortune, not least through Airbnb arrangements.
Image: DW/S. Derks
Eclectic and diverse
Originally Barcelona's El Poble-Sec area was a poor neighborhood where factory-workers from the power plant used to live. It is an eclectic working-class district, home to many Dominicans.
Image: DW/S. Derks
Driven away
Due to the exorbitant rises in rent, local residents are being driven from their neighborhoods. As a result, community networks are disrupted, leaving locals with little sense of cohesion.
Image: DW/S. Derks
Trendy snacks
Blai Street, the main street of El Poble-Sec, has been transformed into a hotspot for bars and cafes selling pinchos, a typical snack much like Tapas, to visitors and tourists.
Image: DW/S. Derks
Rents spiraling out of control
Rising rents are often directly linked to the presence of Airbnbs in the neighborhood. Barcelona's city council has stopped issuing new short-term rental licences, making Airbnb illegal for most of the landlords in the city.
Image: DW/S. Derks
Speculation on a grand scale
Gentrification leads to speculation and as a result prices and rents for housing have increased exorbitantly. Nowadays the average rent of an apartment is €950 euro ($1,056). The minimum wage is around €1,050.
Image: DW/S. Derks
Taking over the city
When local residents move out of the city, their places are taken over by more affluent residents, expats and businesses. Originally from Brazil, Catarina Jakovac has been living with her boyfriend in a El Poble-Sec apartment for six months. Both work as researchers at European universities.
Image: DW/S. Derks
Summer in the city
During the summer season especially, Barcelona is a mass-tourism destination. It's in the top 10 most visited destinations worldwide, accounting for 30 million tourists annually.
Image: DW/S. Derks
Market forces
Last year, neighbors joined forces and protested against the eviction of a man living here in the El Poble Sec neighborhood. An investor bought the property to convert it into upmarket designer apartments.
Image: DW/S. Derks
On the street
Mohamed became homeless a few weeks ago. After separating from his wife he rented a room in El Poble Sec. However, with his €600 allowance, he can't afford rents over €220 However, lodgings in that neighborhood (and Barcelona in general) start at €300.
Image: DW/S. Derks
'Cities against Gentrification'
Barcelona has suffered the consequences of mass tourism. As a result more and more initiatives are popping up to confront gentrification. Under Mayor Ada Colau, an initiative called "Barcelona Manifesto: Cities against Gentrification" has been developed to highlight the housing problems here and elsewhere in cities where gentrification is becoming a serious problem.
Image: DW/S. Derks
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The importance of sharing
It's the basic concept of the sharing economy that is paying off for Airbnb now more than ever. "Access is more important than possessions." It's the mantra that made successes out of companies like ride-hailing service Uber or shared workspace provider WeWork.
The idea was born out of the founders' own financial difficulties. "I never thought about being an entrepreneur," Chesky admitted in an interview with Linkedin founder Reid Hoffman a few years ago.To afford the high rent on his apartment in San Francisco, he came up with a simple idea.
Together with his roommate, Airbnb co-founder Joe Gebbia, Chesky set up three air beds in his living room. He then rented the air beds at a low price to people participating in a design conference near their apartment. Chesky added breakfast free of charge, giving rise to the name Airbnb, short for "Airbed and Breakfast."
Twelve years later, the company has become the largest private accommodation platform in the world. More than four million providers in 220 countries now regularly rent out their houses and apartments. Since 2017, tours and activities with locals can also be booked on the platform. For its services, Airbnb charges a commission of the sale, an impressive 15%.
Regulators pose problems
The company has generated more than $110 billion since it was founded. But the business model is regularly criticized. For years, the company has wrangled with cities over strict regulations for renting out private apartments on Airbnb. Some have accused the platform of causing housing shortages and rising rents in metropolises such as Barcelona, Paris and Berlin.
More than two-thirds of the most popular city destinations found on Airbnb now restrict renting through the platform. In the stock exchange prospectus, the company warns of potential consequences. "The number and significance of these claims, disputes, and proceedings have increased and we expect they will continue to increase," it says. In large cities like New York, regulations and lawsuits could lead to long-term revenue losses.
Still, company experts like Cohen are confident the IPO will be a success. "I do not think those regulatory issues will deter demand for Airbnb," says Cohan, himself a venture capitalist who invests in startups. Of course, the investment is risky, especially since the company has yet to prove its adaptability in the long term. But Airbnb is so well-known now even among private investors that backers will probably turn a blind eye in view of expected increase in sales.