Apartment-sharing startup Airbnb secured a $1 billion debt facility led by JPMorgan, Citigroup, Morgan Stanley, and Bank of America to help fund new services and finance grown initiatives, according to sources close to the company.
Founded in August 2008, Airbnb was originally an online rental service that enabled people to list, find, and rent short-term housing, primarily for vacationers. It charges fees for connecting users with property to rent with users looking to rent the property. Airbnb has since evolved into a reliable platform for not only short-term housing, but also sublets, and long-term rentals. Currently, the San Francisco based company hosts 2 million listings in 34,000 cities and 191 countries.
Airbnb, last valued at $25.5 billion after raising $1.5 billion last year, is planning to focus on growing the company globally and expand their company past home-sharing. It has been working on building add-on travel services, such as the hotel-style packaging amenities it tested out in Sonoma, California, this past April. It also tested out a myriad of other services, including art gallery tours, personal chefs, and bicycle rentals that customers can book and utilize when they rent an accommodation. The company has not made any of these add-on services official, but does provide Guidebooks, which are Airbnb host-created guides for select cities.
In response to critics of Airbnb's experiments with such new services, Airbnb CEO Brian Chesky stated earlier this year that "Customers are willing to try new things, and if you can survive, you will have fewer competitors. It's like entering the eye of the storm. As long as you are strong enough to survive, you can end up in still water by yourself." Though there are already many platforms that provide similar housing services, Airbnb is currently the only company in the tech industry that has a firm position in the on-demand travel services market.
Airbnb is the fourth largest unicorn, a term used to describe start-up companies valued at over $1 billion, behind Uber, Xiaomi, and Didi Chuxing. Because they were founded within only a year of each other and have come to define the on-demand economy, Airbnb and Uber are often discussed within the same breadth. However, Airbnb in comparison runs low-cost business, while Uber has been spending heavily to subsidize growth, and battle both regulation and well-funded rivals such as Lyft in the United States, and Didi Chuxing, which are both transportation network companies that provide on-demand rides via smartphone applications. Uber lost $1.7 billion on $1.2 billion in revenue in the first three quarters of last year, while Airbnb has lost less than $250 million since its inception in 2008. Last year, it generated roughly $1 billion in revenue and is expected to achieve profitability in 2016.
Airbnb hasn't announced plans for a public offering, and is likely to test and establish new business initiatives before doing so. With over $2 billion in cash and more than $2 billion in customer deposits from booking payments people make to the company, Airbnb is more than profitable enough to experiment on its own terms before considering an IPO.
For more information, visit: https://www.airbnb.com/