Airbnb raises $100m and maintains $25.5b valuation

Online accommodation startup Airbnb has secured its $25.5 billion valuation after raising over $100 million in its latest funding round.
Written by Asha Barbaschow, Contributor

Airbnb has raised more than $100 million in a new funding round that sees the home-sharing startup keep its value at approximately $25.5 billion, sources with knowledge of the matter say.

The latest fundraising round was first reported by the Wall Street Journal, which said the San Francisco-based firm generated $340 million in the recently ended fiscal quarter on bookings of $2.2 billion.

The revenue and bookings figures were approximately double those seen a year earlier, according to the report.

Airbnb expects to become profitable next year, a source close to the firm told AFP while confirming details of the funding round.

Airbnb is among the most prominent of the sharing economy startups, helping property dwellers rent a room or their entire residence, while stirring concerns in the hotel industry about unfair competition.

Some critics also claim the startup provides an incentive for property owners to evict long-term residents and convert lodgings to short-term rentals, creating an upheaval in the traditional market for rentals.

The company promised this month to pay taxes and not cut into long-term housing amid criticism it unfairly competes with hotels and has exacerbated a San Francisco housing crisis.

The surging startup released a so-called Community Compact in which it vowed to pay its "fair share" of hotel and tourist taxes.

It also pledged to be transparent with information about home sharing activity, and to work to prevent short-term rentals from biting into the availability of long-term housing.

Earlier this month, San Francisco voters rejected a measure that would have limited short-term housing rentals in what was seen as a referendum on Airbnb.

The controversial startup gained its initial $25.5 billion valuation in July this year, which followed the cash injection of $1.5 billion from investors.

At the time it was said the billion dollar investment would be used to expand Airbnb's offerings in Asia, and in response to the 700 percent increase in the number of Chinese users last year, Airbnb went on a local hiring spree in August.

At $25.5 billion, Airbnb is worth more than hotel giants Marriott ($20.90 billion), Starwood ($14 billion), and Wyndham ($10.01 billion), and just behind Hilton Worldwide -- valued at $27.7 billion.

Last week, Airbnb came up against the Australian government, facing the Senate's inquiry into the tax avoidance of multinational companies. The committee probed the online accommodation startup, demanding an explanation of where the money paid in Australia was going.

Dismissing the requirement for Airbnb to pay tax in Australia, Sam McDonagh, Airbnb Country Manager Australia and New Zealand, said the service results in guests injecting money into the community and often staying longer than a typical tourist would, adding that although Airbnb continues to grow, typical hotels have also experienced a rate increase.

McDonagh also said an average of $7,100 is earned by Airbnb hosts per year, and it is assumed that hosts pay their required tax in their locality.

All Airbnb transactions within Australia move through its Ireland-based platform, as Airbnb Australia Pty Ltd is wholly owned by Airbnb Ireland.

Facing similar tax concerns in the United States, the city of Philadelphia, Pennsylvania legalised and set plans to tax Airbnb and other short-term rentals earlier this year. At the time, Philadelphia was the largest city in the US to legalise rentals through online marketplaces, joining San Francisco, California, and Portland, Oregon, in authorising the company's services.

In July, Philadelphia City Councillor William Greenlee said Airbnb-type rentals are essentially short-term hotels, and should be made to follow the same rules.

Australian telecommunications carrier Optus partnered with Airbnb in September to provide customers of both services with a AU$30 prepaid SIM offering international data roaming, as well as a AU$50 accommodation voucher.

"This news will be a welcome bonus to Aussies heading overseas this Christmas with Airbnb," McDonagh said at the time. "Next week alone, more than 25,000 locals will use Airbnb to book their accommodation somewhere in the world. This fabulous partnership will let both Optus and Airbnb customers land on their feet as soon as they touchdown anywhere in the world."

With AAP

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