Airbnb Asks Banks To Extend $1B Credit Facility Due To Coronavirus Impact: Report

Airbnb Inc. has asked banks to extend the deadline of a $1 billion credit facility it was granted in 2016, according to a Reuters report Wednesday.

What Happened

The homestay-marketplace startup has $3 billion in cash but is seeing increased financial strain due to the novel coronavirus (COVID-19) pandemic, a person close to the matter told Reuters.

J.P. Morgan Chase & Co. JPM, Citigroup Inc. C, Bank of America Corp. BAC and Morgan Stanley MS together gave the $1 billion debt line to Airbnb in 2016.

According to the Reuters source, Airbnb has never used the credit facility, and it doesn't expire for another year, but the company wants to boost its cash holdings to sustain the impact of the pandemic.

The company also reportedly told the banks that it expects to recoup 2019 booking levels by early 2021. It pointed out that, at least in the United States, the hosts on its platforms will benefit from a planned $2 trillion economic stimulus, Reuters noted.

The source told Reuters that Airbnb had been cash positive for four straight years until 2019. The company had suggested last September that it could finally go public in 2020, but it's not clear if it will follow through on the plan given the pandemic.

The San Francisco-based company is also receiving investment inquiries during the pandemic, with offers ranging between $100 million to $1 billion, the person told Reuters, but it is currently only "listening" to the offers.

Why It Matters

The entire travel and hospitality sector has been affected by the COVID-19 outbreak globally, with governments imposing widespread lockdowns and banning non-essential international travel.

Airbnb has been offering full refunds for bookings made before March 15 on its platform, which have a check-in date before April 14.

The Airbnb hosts are facing wide losses due to mounting cancellations or lack of new bookings.

CNBC reported Wednesday that the hosts are scrambling to other platforms for long-term bookings, including marketplaces like those operated by Facebook Inc. FB and Craigslist, as the demand for short-term accommodation has fallen flat.

Photo Credit: Public domain photo via Wikimedia.