Airbnb files preliminary paperwork for IPO, bans house parties
AIRBNB FILED preliminary paperwork to sell company stock on Wall Street, undaunted by a global pandemic that has taken some wind out of its home-sharing business.
THE SAN Francisco company said it submitted a draft registration statement to the Securities and Exchange Commission. It kept details in the statement confidential.
Airbnb said Wednesday that the number of shares in the company it plans to sell and their price haven’t yet been determined. The timing of the initial public offering, or IPO, also hasn’t been set.
Airbnb, which was founded 12 years ago, has long been expected to go public. Its CEO, Brian Chesky, told The Associated Press this summer that he was working on the IPO documents when the coronavirus pandemic hit the United States in March.
The Wall Street Journal reported last week that the company was close to filing.
The pandemic initially hurt demand for the seven million properties listed by Airbnb. Chesky has said that Airbnb’s 2020 revenue will likely be less than half of what the company booked last year.
In May, Airbnb cut 1,900 employees, or around 25 per cent of its workforce. The company funded operations with US$2 billion in loans, including a US$1- billion investment from private equity firms Silver Lake and Sixth Street Partners.
But demand has rebounded some, as some travellers see home rentals as safer during the pandemic than crowded hotels. On July 8, the company said guests booked more than one million nights’ worth of future business. It was the first time that threshold had been reached since March 3.
“Our business has not recovered, but we are seeing encouraging signs,” Airbnb said in a post on its website last month.
In a report issued last week, AirDNA – a company that tracks the short-term rental industry – said occupancy rates for shortterm rentals have recovered more quickly than those for hotels. Airbnb has also said that rural destinations within driving distance of travellers’ homes have seen growing demand.
Renaissance Capital, which follows the IPO market, said in a
recent note to investors that market conditions for Airbnb are about as strong as the company can hope for.
Airbnb’s IPO “will be a remarkable comeback after the pandemic decimated global travel, and proof that IPO investors think long-term,” Renaissance CEO and co-founder William Smith wrote.
IPO activity plunged in March and April but has shown signs of a resurgence more recently. In the second quarter, 38 IPOs raised US$15 billion, Renaissance Capital said. That was up from 25 IPOs that raised US$6.8 billion in the first quarter.
Among the bigger debuts in June was Royalty Pharma, which raised US$2.2 billion, and Warner Music Group, which raised US$1.9 billion.
As it readies for the IPO, Airbnb has announced a ban on house parties worldwide as it tries to clean up its reputation and comply with coronavirus-related limits on gatherings.
The home-sharing company has been trying to shed its couch-surfing image and appeal to more types of travellers ahead of the IPO. Last year it announced an effort to verify all of its properties, for example.
The company will limit occupancy in its rental homes to 16 people. It may offer exceptions for boutique hotels or other event venues.
Airbnb said it may pursue legal action against guests and hosts who violate the ban. Last week, for the first time, Airbnb took legal action against a guest who held an unauthorised party in Sacramento County, California, last Halloween at which five people were shot to death.
Airbnb said the coronavirusrelated closure of bars and nightclubs has led to an increase in big house parties, sometimes at its rentals.
“We do not want that type of business, and anyone engaged in or allowing that behaviour does not belong on our platform,” the company said in a post on its website.