(Bloomberg) -- Home sharing company Airbnb Inc. said it will give $250 million to hosts on its platform who have lost money from coronavirus-related cancellations at their properties.
The startup, whose plans to go public this year have been thrown into question, has alternately faced criticism from guests and hosts over its refund policies related to the global pandemic.
Airbnb initially resisted refunding U.S. guests over coronavirus-related cancelations, relenting only after the World Health Organization declared the outbreak a global pandemic on March 11. A few days later, Airbnb said travelers in the U.S. could receive refunds. The decision eased criticism from consumers but was bad news for hosts, many of whom were already worried about their future lost earnings.
Monday’s announcement is a response to sustained backlash from those hosts, some of whom bought properties specifically to list them on Airbnb. The company said it would pay 25% of what the host would “normally receive through your cancellation policy.”
Airbnb Chief Executive Officer Brian Chesky described the company’s dilemma in a letter to its hosts. “If we allowed guests to cancel and receive a refund, we knew it could have significant consequences on your livelihood,” he wrote. “But, we couldn’t have guests and hosts feel pressured to put themselves into unsafe situations and create an additional public health hazard.”
Airbnb also reminded hosts it had successfully lobbied Congress to let its hosts apply for federal aid through small business relief programs and unemployment insurance, as part of the recent economic stimulus package. The company's founders have committed another $10 million to help certain hosts who are having trouble paying their rent.
The platform itself rarely owns the properties it lists, acting instead as a middleman between guests and hosts. This model, which has turned Airbnb into one of the most highly valued private startups of all time, foists much of the risk on its hosts.
Even before the pandemic sent the global travel industry into a nosedive, Airbnb faced financial challenges. In the last three months of 2019, it lost $276.4 million excluding interest, taxes, depreciation and amortization, compared with a loss of $143.7 million a year earlier, a person familiar with the matter told Bloomberg. Revenue increased 32% in the period to $1.1 billion.
Airbnb had at least $2 billion of cash earlier this year, a person familiar with the matter said. The company is also considering raising more money from investors, people familiar with the matter have said.
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