Airbnb, the short-term rental app that has gained increasing popularity in recent years, is planning to lay off about 25 percent of its workforce as it experiences a dramatic drop in revenue amid the coronavirus outbreak.
CEO and cofounder Brian Chesky announced the move in a letter sent to employees and later shared on the company's website. The layoffs will apply to nearly 1,900 of the company's 7,500 workers, Chesky said.
"We are collectively living through the most harrowing crisis of our lifetime, and as it began to unfold, global travel came to a standstill," Chesky said. "Airbnb’s business has been hit hard, with revenue this year forecasted to be less than half of what we earned in 2019."
Chesky noted that the company "raised $2 billion in capital and dramatically cut costs" after the outbreak began impacting its core business. But he said it wasn't enough considering the uncertainty around travel.
"While we know Airbnb’s business will fully recover, the changes it will undergo are not temporary or short-lived," he added. "Because of this, we need to make more fundamental changes to Airbnb by reducing the size of our workforce around a more focused business strategy."
The company plans to pause efforts related to Transportation and Airbnb Studios and scale back investments in hotels.
Laid-off employees in the U.S. will receive 14 weeks of base pay, plus an additional week for every year they worked the company, which said it will also provide 12 months of health care for laid off U.S. workers.
The coronavirus outbreak has upended the U.S. economy, leading to a dramatic reduction in travel and a mass shuttering of non-essential businesses. About 30 million Americans have filed for unemployment in the six weeks since states began implementing social-distancing restrictions.
Airbnb last month instituted a hiring freeze, suspended marketing and cut its executives' salaries in half, CNBC reported. The home-sharing service had been working towards a potential stock market debut later this year. Though the plans could be delayed because of the pandemic, according to Bloomberg News.