Short-term rental startup Airbnb is laying off approximately 25 percent of its global workforce, attributing the decision to a slump in global travel and a decline of the company’s business.
In a message to employees of the firm, co-Founder and CEO Brian Chesky said that 1,900 staffers will be laid off due to what he described as the “most harrowing crisis of our lifetime” as the coronavirus pandemic upended the travel industry, bringing business to a standstill for the firm.
“Out of our 7,500 Airbnb employees, nearly 1,900 teammates will have to leave Airbnb, comprising around 25 percent of our company. Since we cannot afford to do everything that we used to, these cuts had to be mapped to a more focused business,” Chesky wrote.
The letter noted that Airbnb’s business for the year 2020 was forecasted as being less than half of the revenue the company had made in 2019. Stating that while business is gradually expected to improve, even as travel will look completely different on the other side of the pandemic, the letter noted that fundamental changes had to be made to reduce the workforce – to implement a more focused business strategy.
When it comes to severance packages, the letter said that “employees in the US will receive 14 weeks of base pay, plus one additional week for every year at Airbnb” while “outside the US, all employees will receive at least 14 weeks of pay, plus tenure increases consistent with their country-specific practices.”
In an attempt to reduce the burden of rising healthcare costs amid the pandemic, the firm said that US employees would be eligible for 12 months of health insurance, while for employees outside of US, the coverage would extend till the end of 2020.
The firm also announced that everyone departing from the firm, regardless of tenure, would be a shareholder.
“We are dropping the one-year cliff on equity for everyone we’ve hired in the past year so that everyone departing, regardless of how long they have been here, is a shareholder. Additionally, everyone leaving is eligible for the 25 May vesting date,” the letter read.
‘This is Not Your Fault’
Airbnb also said said that those laid off would be helped in finding new job opportunities.
Chesky concluded the letter by saying:
“I am truly sorry. Please know this is not your fault. The world will never stop seeking the qualities and talents that you brought to Airbnb… that helped make Airbnb. I want to thank you, from the bottom of my heart, for sharing them with us.”
Airbnb has reportedly grappled with “appeasing frustrated customers with refunds, and supporting its hosts, many of whom are struggling to make mortgage payments and pay bills.”
(With inputs from CNN)
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