Airbnb is taking advance measures to assure that all things are smooth when it inevitably goes public. The company confidentially filed for an Initial Public Offering with the SEC earlier this month, and with it came sweeping change to the hospitality company’s policy, including a ban on gatherings over 16 people at all of its listings around the world. While Airbnb banned parties, it also signals a period of growth after a particularly tough first and second quarter because of the pandemic.
The company was previously valued at $31 billion, but came down to $18 billion ahead of its confidential IPO listing. There is no word yet on when the company will go public, but as soon as regulators are finished with an initial review the company will begin the process of going public with a traditional IPO, according to the Wall Street Journal.
Airbnb saw major losses related to the COVID-19 crisis earlier in 2020 and estimates that it lost around $1 billion worth of bookings in a single night when the world shut down in March. By May, the company had laid off as much as 25% of its staff to cut costs amid the financial crisis that ensued from the pandemic. Since then, however, things have picked back up. While global travel is on hold for the foreseeable future while borders between the United States and many countries around the globe remain closed, Americans are traveling domestically.
The company, which might or might not be profitable, is changing its policies in order to assure smooth sailing as it aims for an IPO. Airbnb’s sweeping policy change includes a limit of 16 people in all rentals, even its larger ones, in addition to a ban on parties at all listings around the world. The company cited the pandemic and social distancing guidelines as a reason for the rule change in a blog post on its website. Since unauthorized parties have always been banned at Airbnb listings, the rule change only really impacts less than 40% of the listings on the site that didn’t specify whether or not guests could throw parties.
Though Airbnb will now limit listings to just 16 people, it says that it understands that number is not a clear definition that could work with all of its listings. For boutique hotels and other larger listings, the company says it’s working with those owners to find a solution. In the same sense, the company is also making it clear that it could still take legal action on parties that receive complaints from neighbors or local law enforcement even if the party has less than 16 people. “We will continue to enforce our party rules against groups of any size and will be taking action both on guests and listings if we receive reports from neighbors,” the company said in a statement. Airbnb began to crack down on parties after a shooting occurred at a California rental during an unauthorized party.
WeWork, another trendy tech company that saw massive growth in the early 2010’s set an example of Silicon Valley startups that file for an IPO with too high of a valuation last year, when the company nearly imploded from the inside out after filing with a valuation that was far higher than its actual value. Uber, another Silicon Valley star, saw a less than exciting entry to the U.S. Stock Market after setting its own valuation too high. The company, which has yet to profit, is currently facing controversy in California over a new law that complicates its gig worker reliant business model.
