Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members


The impact of the Covid-19 crisis on different business sectors have been diverse. Some businesses that were digital in nature surged while many other sectors that needed physical contact or travel came to a complete standstill. As people were compelled to stay indoors and all international and intercity travels were banned globally, travel and tourism sector became the worst victim of the pandemic.

Airbnb – one of the rising stars of the hospitality sector was poised for a huge expansion leap when the crisis struck. As customers started cancelling their bookings with Airbnb, since they could not travel, Brian Chesky, the co-founder and CEO of Airbnb started feeling the heat. Chesky understood that the next few months would be most crucial for Airbnb’s survival and he made some difficult calls.

The Wall Street Journal mentions that in a recent interview, Chesky said “I did not know that I would make 10 years’ worth of decisions in 10 weeks”. Applauding Chesky’s quick response, Michael Seibel, the CEO of Y Combinator said that he was impressed, especially because Chesky could have chosen to wait it out. Here are some key lessons from Airbnb’s pivot.

Take the hard calls when necessary

Considering the uncertain nature of the pandemic, Airbnb decided to lay off about a quarter of its staff, primarily from its marketing department. Although thousands of employees were asked to leave, it was done in a single stroke, so that the staff that was retained wouldn’t afraid of a second wave and be able to work with a free mind.

Listen to all your customers carefully

Airbnb had to keep two sets of customers happy – the travelers and the property owners. According to Inc, the company had deal with the wrath of the property owners when they decided to refund the customers booking cancellations. Appreciating the contribution of the hosts to the company, Chesky said, “We are nothing without you hosts.” Thus, he tried to lighten their burden and refunded the hosts for one-third of the cancelled bookings by loaning funds from investment firms Sixth Street and Silver Lake. Chesky’s efforts to take care of the people who keep the business doors open is worth learning from.

Use data to fuel your decisions

Thriving in the pandemic is all about speed and to be fast you need to make decisions backed by data. As soon as the travel restrictions were eased, Airbnb tracked rise in local reservations. More than 50% of the company’s August bookings were within a 300-mile radius of the guests’ location. So, Airbnb changed its recommendation algorithm that was wired to show distant stays to display near-by stay options. Using data to track emerging industry trends and tracking shifts in consumer behavior, companies can ensure making informed decisions that are well-aligned with customer needs.

Step back with confidence

Before the onset of the pandemic, Airbnb had huge expansion plans. It acquired Hotel Tonight in 2019 and planned adding hotel stays to its rooster, along with many other exotic expansion plans. All those plans were put on hold and they returned to their core model of connecting travelers with property owners for short-term stays, because that model emerged perfectly suitable for the current times. By downsizing the business and pivoting, Airbnb succeeded to weather the storm, even after suffering tremendous revenue losses in the second quarter and is back on track to register profits in the third quarter of 2020. Airbnb is expected to go public in near future with bright prospects, although Chesky declined to comment on the matter.

Taking charge and leading through crisis requires determination and courage. However, Chesky has demonstrated that when business decisions are made fast, with a futuristic outlook backed by data, things can turn around pretty fast.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

Leave a Comment

Your email address will not be published.