Airbnb raises $1bn new investment to see it through its coronavirus crisis

Airbnb has received a $1bn ($820m) vote of confidence from major Silicon Valley investors as it struggles with a massive drop in business.

The online home rental service said on Monday that it would receive $1bn from Silver Lake Partners, based in Menlo Park, California, and Sixth Street Partners, headquartered in San Francisco, in a combination of debt and equity securities.

Airbnb has suffered grievously from the pandemic, slashing its valuation from $31bn to $26bn, freezing its hiring and marketing as its bookings drop by as much as a reported 95pc in some markets.

But although that puts the company's planned public float in jeopardy, both investors said they believe its business to be sound in the long term.

Egon Durban, Silver Lake's co-chief executive, said: “While the current environment is clearly a difficult one for the hospitality industry, the desire to travel and have authentic experiences is fundamental and enduring.

"Airbnb’s diverse, global, and resilient business model is particularly well suited to prosper as the world inevitably recovers and we all get back out to experience it.”

Alan Waxman, chief executive of Sixth Street, likewise praised the company for "create[ing] an enormous new category" of travel bookings.

The new funds will include $5m towards special relief grants to head off a growing rebellion among Airbnb hosts, who accuse it of choosing to protect travellers instead of them by unilaterally changing its cancellation policy to give full refunds at the last minute.

In late March, the Wall Street Journal reported that Airbnb bookings had declined by 95pc in Asia, 75pc in Europe and 50pc in the US, costing hosts potentially thousands of dollars each.

The new investment deal is reportedly not conditional on any particular performance metrics or on the company going public by a certain date.

Airbnb said it would be switching to focus on long-term stays, such as student housing or people away from their homes on extended work assignments.

Paul Condra, lead emerging technology analyst at PitchBook, said he did not expect the company to go public this year given the new debt it was taking on, along with the losses it was suffering.