People on a Pier in the sea in Aarhus, Denmark.
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Its a mixed picture of dismay and hope with Airbnb announcing the layoff of 25% of its workforce and a new survey on short-term rentals reporting more than a 76% increase in cancellations for spring and summer, at the same time of an early surge of bookings for European holidays as the continent continues to ease lockdown restrictions.
With the global lockdown which, according to a recent report from the United Nations’s World Tourism Organization (UNWTO), has affected literally every location on the global tourism map, the tourism industry is now facing its most profound crisis ever.
As it watched its bookings collapse, the short-term rental industry, along with hotels, cruises and tour operators among many others, faces a very uncertain future.
The announcement by Airbnb on May 5 of massive layouts — nearly 1,900 of its 7,500 employees will be let go worldwide — was taken as a sign not only of the troubles threatening the core business of the company but of the upending of the travel industry as a whole.
In a May 5 letter to employees, Airbnb CEO and cofounder Brian Chesky explained that Airbnb’s business has been “hit hard” with revenue this year expected to be cut by half of the $4.8 billions it took in 2019.
“We are collectively living through the most harrowing crisis of our lifetime, and as it began to unfold, global travel came to a standstill,” he wrote.
Airbnb takes it on the chin.
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A new survey of property management companies worldwide conducted by Guesty, a property management software used by organizations with listings across Airbnb, Booking.com, Vrbo, Agoda and TripAdvisor, found an increases of more than 76% in reservation cancellations for spring and summer.
The study, which surveyed nearly 400 rental businesses with 3-to-200+ properties in their portfolios around the world, including those with a majority located in cities/urban environments (46%), seasonal or seaside locations (38%) and rural/suburban areas (15%) addresses the impact of COVID-19 on bookings, revenue projections for the remainder of the year and predictions for future travel.
The majority of respondents reported that 76-to-100% of their reservations for April and May 2020 were cancelled. The same case was found for the summer with reservation cancellations for June – August 2020 up by 76-to-100% compared to last year.
At the same time, as the European countries started this week gradually to ease Covid-19 restrictions after almost two months of severe confinement, the industry has seen a rebound of reservations that brings some hope to the battered sector.
“A jump in Airbnb bookings in a number of European countries is signaling that housebound citizens are starting to make holiday plans as governments begin to ease lockdowns that have crippled the travel industry,” the Financial Times reported on Wednesday.
Although it’s not enough to affect the crisis in Airbnb and the rest of the short rental sector, Chesky, told the FT that “the recovery is better than what we had forecast even two weeks ago. Is it a temporary recovery? Is it a permanent recovery? Nobody knows.”
The Guesty survey also found some hope in their analysis: Despite the challenging first quarter and likely a quieter summer, fall looks bright: 61% of respondents reported that less than 10% of September – November 2020 reservations have been cancelled and 41% of respondents reported that the rate of reservation cancellations for September – November 2020 represented no change when compared to this same time last year.
“Respondents reported that a flexible cancellation policy (22%) and reduced daily rates (18%) were the two strategies that had the greatest impact on business stability thus far in light of COVID-19,” the study says.
When asked to project revenue through 2020 compared to 2019, 29% of respondents expect a 51-75% decrease in revenue and 27% anticipate a 26-50% decrease.
According to the FT, Norway, Sweden, Switzerland and Austria have seen some improvement in the number of domestic bookings. “At the end of April the number of Airbnb bookings by Danish users planning stays in their own country was at around 90% of April 2019 levels, while in the Netherlands domestic bookings were approaching 80% of last year.”
Despite the improvement in bookings, the paper reports that “many companies worry that even if travel restrictions are lifted and fear of the virus wanes, household budgets will be too tight for consumers to book trips. A survey of 7,000 consumers by Boston Consulting Group in April found that more than half of US consumers and almost 70% in the U.K. planned to reduce travel spending over the next six months.”
Although “travel as we know it won’t be the same,” Amiad Soto, co-founder & CEO of Guesty, thinks that “there is massive pent-up demand for travel, which is no surprise as many people are saving up their vacation days for use over fall. We are encouraged by this data which highlights that those impacted see this as a temporary crisis with the majority being optimistic about the ecosystem’s ability to recover.
He predicts that when people start traveling again, they will likely increasingly opt for private properties with more space over traditional hotel stays.