Against such a bleak backdrop, it was a surprise when the company’s CEO Brian Chesky announced that the online holiday rental company would go public in December 2020.

Typically businesses prefer to launch IPOs during a phase of sustained economic growth to gain advantage of the confidence in the market. They avoid IPOs during economic slumps and catastrophic events: like World War I and II, the great recession , or a pandemic. Going by traditional corporate finance practice standards, Airbnb’s decision to go public was nothing less than maverick. And its timing has attracted extraordinary attention.

But Airbnb had some strategic advantages, the first being its tech-based business model. Unlike other leisure and holiday businesses – such as hotels and airlines – Airbnb does not need to spend large amounts of money on the cost associated with the upkeep of its fixed assets. Instead, Airbnb can successfully pass on the risk of such rigid payment obligations to its “hosts” – the property owners. It then retains the profitable parts of the business for itself with enough agility to face systematic disruptions like Covid-19.

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