Airbnb During the Covid Pandemic: Stakeholder Capitalism Faces a Critical Test

Case Solution

Benjamin C. Esty, Allison M. Ciechanover
Harvard Business School ()

When the Covid pandemic spread in early 2020, global travel came to a standstill. For San Francisco-based home rental platform Airbnb, the impact was swift and severe, with revenues plummeting more than 70% year-over-year. Responding to the sudden recession was a challenge for CEO Brian Chesky and his leadership team as the company followed a stakeholder model with five main components: guests (tenants), hosts (owners), employees, communities and shareholders. While all five groups could benefit in the long run if the venture was successful, it was less clear how to balance potentially conflicting demands in the short term, especially given mounting losses. For example, given travel restrictions, Airbnb could help guests by asking hosts to refund deposits, or help hosts by allowing them to retain deposits. Similarly, should Airbnb use existing cash to keep employment levels high, or should it be scaled back to protect financiers? In the extremely uncertain environment that prevailed in April 2020, Chesky and his team had to make many unprecedented critical decisions with limited information to guide them. As one of the first Silicon Valley unicorns to adopt a stakeholder business model, the world would watch what they did, how they did it, and why.

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