Airbnb Weathers the Crisis With $1bn Injection

Home-sharing giant Airbnb is looking to raise $1 billion in debt, the company's second injection of new capital in just two weeks.

The US$1 billion in senior debt, which was raised in collaboration with Goldman Sachs and Morgan Stanley, could help Airbnb weather the economic crisis and even make acquisitions without attempting a public listing.

The company confirmed in a statement it had secured the additional commitments, which will be paid at an interest rate of 9 percent, but didn’t name investors or elaborate on details.

The move follows a similar raising for an equal-sized funding round from the investment firms Silver Lake and Sixth Street after Airbnb’s business model came under pressure in March.

Last week’s bond deal included warrants for the two private equity firms that can be exercised at an $18 billion valuation, a fraction of its $31 billion peak it saw during a 2017 fundraising round.

That company, which transformed the short-term accommodation sector in 2010, has since seen bookings tied heavily to the tourist industry disappear over the past six weeks.

Airbnb has reportedly cancelled all marketing activities, put its founders’ salaries on hold and slashed the salaries of top executives by half.

The accommodation group was also set to list on the US stock exchange this year but is rumoured to have deferred those plans.

“We know travel will return and rather than merely hunkering down, the support we have received will allow Airbnb to continue moving forward as we invest in our community,” Airbnb chief executive Brian Chesky said.

“All of the actions we have taken over the last several weeks assure that Airbnb will emerge from the storm of the pandemic even stronger, regardless of how long the storm lasts.”

The stricken accommodation industry and short-term rental market is currently reeling following the suspension of travel and lockdown measures to stop the contagion, with Qantas and Jetstar grounding 90 per cent of international flights.

Occupancy levels of hotels across the country have nosedived to between 10 and 20 per cent, compared with a three-year average of about 80 per cent for this time of year.

There has also been a recent influx in short-term rentals coming onto the full-time rental market as many Airbnb's geared towards the tourism industry are now aiming to reposition their offerings.

Research from the University of Queensland estimates there are almost 350,000 Airbnb properties in Australia, a third of which are in NSW, and about 60 per cent are managed by the property owners.