Airbnb raises $1 bln in private equity funding

Airbnb has raised $1 billion in debt and equity from private equity investors to weather the coronavirus storm.

Deirdre Bosa and Laura Batchelor reported the news for CNBC:

Airbnb is raising $1 billion, even as the coronavirus crisis hits the travel and hospitality industries especially hard.

In a press release, Airbnb says that private equity firms Silver Lake and Sixth Street Partners will invest $1 billion in a combination of debt and equity that will support Airbnb’s ongoing work to invest over the long term.

The company did not disclose the latest valuation. But in early March, it lowered its internal valuation to $26 billion, from the $31 billion figure it raised money at in 2017, according to two sources familiar with the matter. Over the last month, travel stocks Expedia and Booking Holdings have declined about 40% and 17%, respectively. 

The terms of the round were not disclosed, but a source familiar with matter said, “there is no rachet or any other coercive terms. It’s attractive for Airbnb.” The source added the funding doesn’t depend on Airbnb’s performance or reaching a target date to go public.

Tyler Sonnemaker from Business Insider wrote:

Last week, the Financial Times reported that the company lowered its internal valuation to $26 billion, a 16% decrease from its last private valuation of $31 billion, according to PitchBook, as the short-term rental company deals with a sharp drop in bookings due to the coronavirus pandemic.

Airbnb CEO Brian Chesky predicted earlier this week that the company’s business will bounce back following the coronavirus pandemic, saying that it has weathered crises before. Some experts have agreed with that assessment, though Airbnb will still have to overcome some huge obstacles before it can thrive again.

TechCrunch’s Kirsten Korosec noted:

“While the current environment is clearly a difficult one for the hospitality industry, the desire to travel and have authentic experiences is fundamental and enduring,” Silver Lake co-CEO and managing partner Egon Durban said in a statement. “Airbnb’s diverse, global, and resilient business model is particularly well suited to prosper as the world inevitably recovers and we all get back out to experience it.”

Airbnb CEO Brian Chesky  acknowledged Monday that while the desire to connect and travel has been reinforced during this time, the “way it manifests will evolve as the world changes.”

Airbnb is betting how and where people work will evolve. As a result, the company said it will direct its attention and new funds toward three core products: hosts, long-term stays and Airbnb experiences.

Last month, Airbnb said it would direct $250 million to help hosts who have been impacted by COVID-19. The funds will be used to pay a host 25% of what they would normally receive through their cancellation policy if a guest cancels a reservation due to COVID-19 between March 14 and May 31. Airbnb said this policy applies retroactively to all cancellations during that period.