Airbnb assured that on Monday it has raised $1 billion in debt from private equity firms Silver Lake and Sixth Street Partners, just as the online rental marketplace saw its COVID-19 pandemic plunge.
The terms of the contract have not been disclosed. It’s unclear how this funding will alter the previously shared plans for Airbnb to go public.
According to research firm CB Insights, Airbnb, a short-term rental company established in 2008, has earned more than $3 billion over the years and secured a $1 billion credit line. Airbnb, headquartered in San Francisco, is Number 2 behind Uber, the ride-hailing firm, according to CB Insights, the most valuable private company in the United States.
COVID-19, the disease caused by Coronavirus, prompted governments worldwide to issue stay-at-home orders, causing a flood of travel and hospitality cancellations. Airbnb stressed that the funds will support its ongoing long-term investment research, a gesture aimed at couching this raise as strategic rather than a rescue in troubled times.
“While the current climate for the hospitality industry is a tough one, the urge to travel and have authentic experiences is fundamental and lasting,” said Silver Lake co-CEO and managing partner Egon Durban in a statement. “The dynamic, global and resilient business model of Airbnb is especially well adapted for recovery as the planet eventually recovers, and we are all returning to experience it.”
Brian Chesky, CEO of Airbnb, admitted Monday that while the urge to interact and travel during this period was strengthened, “the way it functions will evolve as the world shifts.” Airbnb is betting on how and where people work will evolve. As a result, the company said it would turn its focus and new funds into three main products: hosts, long-term stays and experiences with Airbnb.
Airbnb said last month it would channel $250 million to support hosts impacted by COVID-19. Where a guest cancels a reservation due to COVID-19 between March 14 and May 31, the funds will be used to pay a host 25 percent of what they would usually earn from their cancelation policy. Airbnb said that, during that time, this policy applies retroactively to all cancelations.
Airbnb’s change was an effort to amend its hosts who protested that the company’s policy would encourage guests to cancel reservations and obtain a full refund. The policy, which is still current, allows guests who have booked reservations on or before March 14 to cancel and receive a regular refund or travel credit at any time on or before May 31.