Update: Airbnb ended up filing the paperwork for an initial public offering on Wednesday. Read more about that here

Airbnb has had an interesting pandemic. After an initial drop in bookings, the company has since seen travelers returning to its short-term rentals. And, now amid that resurgence, rumors are once again swirling that the firm may go public.

Though Airbnb hasn’t confirmed anything publicly, the company has been massively disruptive to the real estate and rental industries and a publicly traded version — which would have access to even more capital — would presumably be even more so. With that in mind, here are four things real estate and rental professionals will want to keep an eye on while awaiting the company’s expected initial public offering (IPO).

What do we know about Airbnb going public?

Rumors that Airbnb would go public have circulated for some time, but last week the Wall Street Journal reported that the company could filed for an IPO as early as this month. Bloomberg also reported last week that an IPO filing is planned for August. (A filing is just the first public step toward an IPO. Shares wouldn’t be available for trading until some to-be-determined point later on.)

Brian Chesky | Airbnb

Both Bloomberg and the Journal cited anonymous sources and Airbnb declined to tell Inman what its plans are for going public. But during a June CNBC interview, CEO Brian Chesky said the firm “was on track” for an IPO this year before the pandemic struck. And even with the crisis ongoing, he added that “we’re not ruling anything out.”

“We’re not ruling out going public this year but we’re not committing,” Chesky added.

Given those comments and the recent anonymous reports, it seems well within the realm of possibility that the company will file documents to go public soon.

What kind of an IPO will Airbnb pursue?

The Journal also reported that Airbnb may pursue one of several paths for going public. One path would involve a conventional IPO, which involves creating new shares and allows a company to raise new funds. When people talk about companies going public, this is typically what they’re referring to.

But there are other options, such as a direct listing. In a direct listing, a company doesn’t create any new shares. Instead, it simply allows the public trading of existing shares — which past investors, employees and others may already own. This method allows a company to avoid underwriting costs and means the existing shares won’t be diluted. It also allows existing investors to cash in. A recent high profile example of this approach is music streaming company Spotify, which went public with a direct listing in 2018.

A third option would be to merge with a blank-check company. Blank-check companies, or special-purpose acquisition companies (SPACs), are firms that go public via an IPO with the express purpose of later merging with another firm. The idea is that the investors in the blank-check company can make huge returns when an acquisition happens, and the firm that merges into the blank-check company has a faster and easier path to going public. Chesky revealed in July that a blank-check company had come forward and “presented us some opportunities,” suggesting this option is on the table.

For most regular people, the biggest reason this will matter is probably because it will influence the timeline over which Airbnb shares become available to buy and sell on the open market.

How might regulation impact the company?

So far, at least, the company seems to be enduring through the pandemic. Though the early days of the pandemic cost hosts $1.5 billion, forced Airbnb to make 1,900 layoffs and according to Chesky dramatically reduced business in March, bookings have been increasing since then. Specifically, by mid July guests had booked 1 million stays in a single day — the first time since March the company clocked so many bookings in a 24 hour period. And more recently, rural bookings through the site have been rising as well.

Additionally, Bloomberg reported last week that while Airbnb’s revenue fell significantly in recent months, there were signs of recovery toward the end of the last quarter.

All of which is to say that despite some turbulence, the company does now appear to be on the upswing again.

But there’s a big real estate-related open question: If the pandemic makes housing overall more expensive, will that eventually translate into more regulatory hurdles for Airbnb?

In the past, at least, rising housing costs have indeed fueled interest in short-term rental regulation. In Los Angeles, for example, tenants rights groups, lawmakers and others have expressed concern that short-term rentals were eating into the supply of housing, thereby raising costs for permanent residents in the region. Those concerns eventually translated into sweeping regulations at the end of 2018 that significantly limited how hosts can rent properties out through sites like Airbnb.

Similar pushes for regulation have happened in other parts of the country as well, and a frequent underlying concern in these debates about regulation is housing affordability.

The reason this matters now is because real estate has roared back to life during the pandemic, leading to rising home prices and brutal bidding wars. At the same time, millions of Americans have been unable to make payments on their housing.

Ergo, if the lasting legacy of the pandemic is to exacerbate the factors that fueled short-term rental regulation in the first place — namely, affordability issues — it’s reasonable to assume more regulations could be on the horizon. And if that happens, at least some hosts — including some who weighed in on a recent Inman discussion — could potentially decide to do something different with their properties.

On the other hand, Airbnb has survived regulatory battles before. And in June Chesky said that “we have more hosts today, more homes today, than before COVID started” — suggesting the company at least hasn’t suffer from real estate price inflation yet.

Will Airbnb be “reshuffled” along with the rest of the housing market?

During a recent earnings call, Zillow CEO Rich Barton argued the pandemic is having a “reshuffling” effect on real estate. The idea is that with people no longer tethered to offices, they’re choosing to move to new communities, many of which are further flung from major job centers.

But a shift in consumer preference could also impact short-term rental companies like Airbnb as well. For example, Airbnb has had success building its rental business in major metro areas — financial services firm IPX1031 has ranked Miami Beach as the top area for per capita listings — but if travelers suddenly all want to visit rural areas to avoid the coronavirus that could slow the company’s return to full operating strength.

Investor and market analyst Thomas Paulson recently pointed to this issue as a potential challenge for Airbnb, telling Skift that a shift away from urban areas could diminish the company’s business by 25 percent, making it hard to ramp back up or to grow.

Like so many other pandemic-related things right now, how any reshuffling plays out remains to be determined. But Chesky has indicated the concept, at least, will likely be a factor going forward: During his CNBC interview in June, he argued that “travel as we knew it is over.”

“That doesn’t mean travel is over, just the travel we knew is over, and it’s never coming back,” he continued. “It’s just not.”

Chesky went on to say he thinks travel will see a “redistribution,” with people visiting “thousands of local communities” instead of the few big tourist centers that have dominated in the past. If that does happen, it could shape Airbnb’s path toward profitability. And it will impact the kinds of returns owners and investors can expect to see from the properties where the company’s guests actually stay.

Email Jim Dalrymple II

coronavirus | rentals
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