Published on December 15, 2020 by Holly Porter

What’s been happening in the commercial world over the last two weeks? Read on to find out!

Airbnb Goes Public

On the 10th of December, Airbnb went public. The American online renting marketplace has had a tumultuous year, after bookings plummeted 72% in April, leading the company to cut a quarter of its global workforce. Management at the unicorn (a privately held start-up company valued at over $1billion) quickly set about restructuring so effectively that there was a 1% increase in gross bookings by June. Measures included cutting jobs, suspension of all facilities build-outs, and reduction in executive salaries. Although the business remained under pressure, it is fair to say that Airbnb has weathered the pandemic comparatively well.

Despite this optimism, the success of Airbnb’s Initial Public Offering (IPO) should not be underplayed. Airbnb raised $3.5bn and saw its market capitalization soar past $100bn, making it one of the US’ largest IPOs of 2020. The popularity of the stock is likely fuelled by investors who are betting on a rebound in the travel sector.

However, the IPO is not risk-free. By going public, Airbnb has exposed itself to further regulation over security concerns. Moreover, the rising number of professional hosts on the site poses a threat to Airbnb’s initial business model of connecting people with people. The shift toward corporate-run properties gained momentum last year when professional hosts accounted for nearly 30% of nights booked in November and December.

Talking points: Why do you think there has been an increase in tech IPOs in 2020? Which other unicorns are considering going public?

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OPEC and Russia Agree to Raise Oil Production  

Earlier this year, there was a historic crash in oil prices as the Organisation of the Petroleum Exporting Countries (Opec) struggled to agree on a response to COVID-19. Initially, Russia and Saudi Arabia triggered a price war after the former refused to reduce oil production. This, in turn, led to a sharp 65% drop in the price of oil and eventually to a negative price on April 20th. Since then, Opec has facilitated multiple oil production agreements cuts of up to 10% of global supply.

This week, it was announced that Opec and Russia could boost oil supply from January, raising output by 500,000 barrels a day. Any changes in price after this point will be decided at monthly ministerial meetings. This decision could be viewed as a barometer of recovery in oil-dependent industries such as construction and travel. On Monday 9th November, as Pfizer edged closer to an approved vaccine, oil prices soared 9% and have remained on a steady climb since.

Talking point: Do you think the oil industry will fully recover?

UK Pubs Fear £560M Loss

The British Beer and Pub Association (BBPA) has issued a chilling prediction: that sales for December 2020 will be down 90% from last year’s takings of £740m. Normally, December provides up to a quarter of annual revenue, marking the year’s most lucrative month. However, with the news that London will be plunged into Tier 3 restrictions, only 1 in 5 of the UK’s 47,200 pubs are expected to remain open. As a result, BBPA has warned that 300,000 jobs are at risk, with people under 25 likely to be disproportionately affected.

Many UK breweries are also concerned about a no-deal. This would be detrimental to smaller chains and independents who do not have the resources to set-up manufacturing capabilities in Europe to avoid any tariffs.

Read more: How did COVID-19 affect hospitality in the early stages of the pandemic?

Talking point: What tariffs might breweries face if the UK leaves Europe without a deal? 

Is this Britain’s First ‘Gigafactory’

The PM is expected to sign-off on Britain’s first ‘Gigafactory’ this week. Construction of the £2.6bn project will begin next summer in the North East of England, marking the UK’s largest industrial investment in the region since Nissan’s arrival in the mid-1980s. The Japanese car manufacturer has expressed concerns over the sustainability of its Sunderland plant in the event of a no-deal Brexit, so government investment will certainly be welcomed. It is predicted that the Gigafactory will generate 3000 jobs alone, with a wider supply chain of up to 5000.

What is a Gigafactory? Essentially, a factory that will produce batteries for electric vehicles on a gigantic scale.  The aim of the Sunderland factory is to supply tens of thousands of electric cars with lithium ore batteries from 2023 onwards. The move comes as the EV market continues to grow, with Uber committing to an electric fleet, and manufacturers such as Bentley unveiling their first electric vehicles. The Gigafactory also marks an important point in the Prime Minister’s ten-point plan to a ‘green industrial revolution’.

Talking point: Who are the big EV players in the UK market? 

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