Airbnb and RXR Cancel Plans to Add Hotel Rooms to 75 Rock
Airbnb has canceled its plans with landlord RXR Realty to convert part of the 75 Rockefeller Plaza office building into 200 luxury hotel rooms as the coronavirus pandemic decimated the hospitality sector.
The two companies mutually decided to scrap the plans at the 33-story skyscraper — originally announced last year — amidst the pandemic that caused hotel revenues to dwindle and availability rates to increase, Business Insider reported.
“Airbnb and RXR mutually agreed that under the circumstances it didn’t make sense to proceed with the project,” RXR CEO Scott Rechler told Business Insider. “It’s going to take some time for the industry’s occupancy rates to rebound enough where it justifies new supply.”
A spokeswoman for Airbnb confirmed the news and a spokesman for RXR did not immediately respond to a request for comment.
In May 2019, RXR announced a deal with the San Francisco-based Airbnb to turn 130,000 square feet of 75 Rock, a 1940s-era Midtown office building, into “high-end apartment-style suites with a diverse mix of amenities” to be listed on Airbnb’s platform, as Commercial Observer previously reported.
Airbnb did not have a financial stake in the partnership but the deal called for it to bring in its in-house design team to build out the rooms and commons areas, as CO reported.
It was a step towards the traditional hotel business for the short-term rental startup — after positioning itself as a hotel killer — and was seen as a move to diversify Airbnb’s business while it prepared to go public this year.
However, the coronavirus pandemic destroyed Airbnb’s revenues leading the company to cut its $800 million marketing budget, start a hiring freeze, spend $250 million to reimburse its hosts for canceled bookings and started to focus on longer-term stay and local experiences. Airbnb closed on $1 billion in combined debt and equity from Silver Lake and Sixth Street Partners earlier this month to survive the epidemic, as CO reported.
Hotels nationwide have been reeling from the coronavirus pandemic with revenues dropping by more than 80 percent in the last few weeks, according to the American Hotel & Lodging Association. As a response, thousands of hotel operators have filed CMBS debt relief requests to master services since mid-May, as CO previously reported.
For RXR, Rechler told Business Insider the landlord planned to use the space reserved for the Airbnb deal instead to build offices with a design to help slow the spread of diseases similar to COVID-19.