The vacation rental company extended refunds to all reservations with check-in dates between March 14 and April 14, 2020. Hosts are paying the price.
The Airbnb logo is displayed on the screen of an iPhone.(Photo by Chesnot/Getty Images)
On Saturday, Airbnb took an unprecedented step by granting any guest who wants to cancel upcoming travel plans a full refund for a set time frame. This applies only to existing reservations with check-in dates between March 14 and April 14, 2020, per its new Extenuating Circumstances Policy.
Guests are relieved, hosts are furious, and Airbnb is facing backlash.
Why set a mid-April cutoff, when health officials urge Americans not to travel and recommend events be canceled through May? One day after Airbnb’s announcement, the Centers for Disease Control and Prevention (CDC) released a recommendation that all in-person events of 50 or more people be canceled or postponed throughout the entire United States until at least May 10.
In response, the company says it is remaining “flexible” and monitoring the coronavirus situation closely. Airbnb CEO Brian Chesky posted this tweet:
In other words, Airbnb could decide to extend its policy beyond April 14 and continue to override cancellation policies set by hosts. Keep an eye out for policy updates. Meanwhile, the good news is that this automated “self service” function does not require the time-suck customer service approval process that applies to virtually all other types of request for a refund.
Here’s the simple message you’ll receive by Airbnb, if you qualify:
This offer extends globally to Airbnb guests affected by COVID-19 until April 14, 2020, per its … [+]
Hosts Aren’t Happy
Before the COVID-19 crisis, Airbnb’s reservations came with one of six cancellation policies set by the host, which range from flexible to super strict. Naturally, hosts are not happy with the new requirement to refund guests through April. They may be tempted to jump ship and move to a competitor such as Vrbo, which has issued no such refund requirement.
“Homeowners and property managers who list their homes on Vrbo set and enforce their own cancellation policies,” writes Vrbo president Jeff Hurst in a letter to travelers regarding COVID-19. To homeowners, Hurst writes: “In the spirit of good hospitality, we strongly encourage you to offer a full refund.”
This is a two-sided marketplace in seesaw mode, and rental platforms are struggling to balance it. Airbnb and Vrbo only get paid when reservations are processed, which requires the cooperation of three parties (host, guest, and their chosen transactional platform). Right now, this dynamic is being put to the test.
It remains to be seen if any relief for hosts will come from Airbnb. Though Chesky offers this non-committal reassurance:
Airbnb and its competitors are, in fact, incurring revenue losses as travel reservations decrease. “Looking forward to the beginning of May, most destinations are averaging about half the bookings that were made back during the preliminary impact period in mid-February,” reports AirDna, a vacation rental market research firm.
Meanwhile, rental hosts are still open for business. Supply volume isn’t going anywhere. Airbnb has listings in more than 220 countries and regions, across more than 100,000 cities. The company was last valued in 2018 at 38 billion U.S. dollars, up from 31 billion the previous year, according to Statista. Somehow, they’re going to get through this.
Plus, rental businesses can rely on booking behavior following common-sense logic. Leisure travel locations far removed from the crisis are faring better than dense urban locations facing lockdowns. Though, brave travelers, be forewarned: no one is guaranteeing a robust toilet paper supply when you get there.