Airbnb: Plan for $ 1 billion fund to benefit hosts
The 4 million hosts who rent their homes, apartments and rooms to temporary visitors are the backbone of Airbnb, the vacationrental company headquartered in San Francisco. As Airbnb prepares to go public this year, it wants to reward hosts’ loyalty by including them in its Wall Street plans.
But it won’t be as simple as giving them shares in the company.
Such grants would be problematic for the 85% of hosts who hail from outside the U. S., even if the Securities and Exchange Commission would allow them. The company could still consider stock grants for U. S. hosts, however. It did not say that it had ruled those out.
Airbnb said Friday it is putting 9.2 million shares into a fund it calls a “host endowment.” That is worth $ 320.9 million, per a Bloomberg report that shares were valued at $ 34.88 each as of Sept. 30, after a stock split. Airbnb said it may make additional stock contributions, up to 2% of its value, over time.
“As we prepare for Airbnb to become a public company, we want to institutionalize our commitment to hosting, and our investment in
the host community,” Airbnb CEO Brian Chesky wrote in an email to hosts Friday morning.
When the fund reaches $ 1 billion, the company will start to “invest” it in hosts.
“The endowment will provide support in areas including education, financial resources, and much more,” he wrote.
A separate document said the money could go toward “policy changes, grant programs, and new product concepts.” That could include emergency funds for hosts during a crisis, “an annual payout to a select group of hosts who most advance the Airbnb mission,” and grant programs for education, it said.
A new 10to 15member Airbnb Host Advisory Board will give input on allocating the fund, as well as suggesting improvements to Airbnb, he wrote. It will meet monthly with Airbnb, serving as a formal link between the company and its hosts.
The committee members will be named this year, initially drawing from Community Leaders, people who organize other local hosts, and will reflect diversity of “region, race, gender, socioeconomic background and host type,” Airbnb said. They will serve oneyear terms.
Airbnb said in August that it had filed confidential papers to go public. While such filings do not constitute a commitment and can be withdrawn, the company has been adamant for some time that 2020 would be the year it made its Wall Street debut. Its workers are eager to liquidate their holdings. Adding to the pressure, in November, stock options for some of the company’s earliest employees will start to expire, losing all value if it does not go public first.
The pandemic had a harsh impact on Airbnb as worldwide travel ground to a halt — and hurt its usually congenial relationship with its hosts, whose rental incomes plunged. Many publicly complained that its refund policies for canceled stays favored visitors over hosts.
“Your frustration made me see the gap that had grown between us,” Chesky wrote Friday. “We needed to get more connected to you.”
Before the pandemic, private markets valued Airbnb at $ 31 billion. When it raised $ 2 billion in debt in April, investors pegged its worth at $ 18 billion.
In May, the company laid off a quarter of its workforce, almost 1,900 people, among other costcutting measures.
“Airbnb’s business has been hit hard, with revenue this year forecasted to be less than half of what we earned in 2019,” Chesky wrote to employees at the time. Its revenue last year was $ 4.8 billion.
However, the company said it has seen a faster than expected rebound as working from home spurs people to seek monthslong temporary rentals far from city centers.
Securities rules limit stock compensation to employees, directors and consultants.
Airbnb and some gig companies asked regulators to change that so they can share their success with nonemployees, such as hosts and drivers.
As a workaround, last year when Uber and Lyft went public, the ridehailing companies gave their mostactive drivers cash bonuses to either keep or use to buy stock at the opening price on the day they went public.
Airbnb was founded in 2008 by Brian Chesky, Nathan Blecharczyk and Joe Gebbia. The name stems from its start, offering crash pads using air mattresses.
Bloomberg said the company hopes to raise $ 3 billion in the IPO. That would suggest Airbnb has decided against a direct listing, in which existing shares become available for trading without selling shares to the public. In that scenario, a company does not raise money, but simply unlocks the value of equity held by employees and investors. Slack, the San Francisco business communication software company, pursued a direct listing to become publicly traded last year.