Vacation rental guests and hosts are all feeling the cancellation crunch
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Kathy Forest owns two Airbnbs in Arlington, Virginia. As the novel coronavirus swept across the globe, she saw virtually all of her reservations for April and May canceled. She had been booked solid for cherry blossom season.
On March 13, just days after the World Health Organization (WHO) deemed the coronavirus outbreak a global pandemic, Forest received a communication from Airbnb saying it was implementing an extenuating circumstances policy. Regardless of a host’s personal cancellation policy, guests could now cancel without penalty and receive a full refund.
“I definitely think that was the right thing to do,” Forest told TPG. “The issue I ran into is that hosts [at that time] did not have the opportunity to cancel on their end.”
One of Forest’s Airbnbs is a private room in her house. That initial policy meant that, unless guests chose to cancel their own reservations, Forest couldn’t initiate the cancellation without being penalized.
Airbnb has since loosened its policy, and now allows hosts to cancel without risking their status. But Forest says the action came a bit too late for her.
“Most of my [guests] for March had already canceled,” Forest said, saying she blocked off her Airbnb availability after that. But there was one international couple who hadn’t canceled their reservation. She asked about potential COVID-19 exposure, but was worried if she canceled, she could lose her Superhost status. “That’s a big ding,” Forests explained. “People can filter specifically for Superhosts, [and] a lot of people will only book a Superhost specifically because they’re known not to cancel. To lose that status is really going to affect your bookings, and you’ll lose it for a year.”
Forest was stuck: “I would lose my Superhost status [if I canceled] and I’d be leaving this poor young couple from the Czech Republic stranded.”
Ultimately, Forest honored the reservation. “But that did make me feel uncomfortable,” she said.
Airbnb and other vacation rental platforms like VRBO and HomeAway have received a lot of criticism for the speed at which they’ve responded to the crisis.
Though Forest says Airbnb ultimately took the necessary and appropriate actions, she believes it may not have been an urgent enough response for the scope of this pandemic. And what of the hosts?
Forest says she runs her Airbnbs for fun. It’s nice to have extra money for travel, and she enjoys having international visitors. “But for a lot of people,” Forest told TPG, “it’s their business — their livelihood. People are in a really tough situation now.”‘
Like Forest, Julianna K. is an Airbnb host who has watched the reservations calendar for her Airbnb near Stowe, Vermont empty out completely.
“When the coronavirus became more prevalent [at] the end of February, bookings started to slow down,” Julianna told TPG. “We are usually booked up to a month in advance, but March was fairly empty. We had three different groups cancel [or] change their reservations within 48 hours of each other that first week of March.”
Now, Julianna says they don’t have any guests scheduled to arrive before the summer.
“We have zero bookings until June,” Julianna said, “so this has affected us greatly. We use our Airbnb to pay our mortgage, and it allows me to spend more time with our 1-year-old.”
It’s not just that her business has run dry. For Julianna, Airbnb “dropped the ball” by not giving hosts a heads up about its planned COVID-19 cancellation policy, which initially went through mid-April before being extended this week.
“[Airbnb] should offer refunds with no penalty to the guest and possibly extend the policy when the time is right,” she said, speaking before Monday’s announcement. “As a host though, I feel left out and worried for the future. I wish they had tried to figure out something to help us all out … we’re not being really heard.”
On the evening of Monday, March 30, Airbnb pledged to pay $250 million to its hosts. For every reservation canceled due to the coronavirus with a check-in date between March 14 and May 31, hosts will be paid 25% of what they’d normally receive under their standard cancellation policy.
Hosts can also cancel reservations without risking their Superhost status, and all service fees are being refunded by Airbnb. Now, Superhosts who rent out their own home and need help paying their rent or mortgage, plus “long-tenured Experience hosts” can now apply for grants of up to $5,000, paid for by Airbnb’s $10 million Superhost Relief Fund.
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As of March 30, Airbnb is allowing travelers with reservations booked on or before March 14, for travel until May 31, to cancel before check-in for a full refund.
“I actually have a booking in May in Italy through Airbnb, so I see it from both sides,” Julianna said.
Forest had also rented an Airbnb for a trip to France in April that she had to cancel.
VRBO’s current policy, announced March 18, asks hosts to manage cancellations of reservations booked before March 13 and for travel until April 30 by either offering a travel credit with flexible stay dates for the next year, or at least a 50% refund on an outright cancellation. Hosts who offer a full refund will be “[rewarded] with additional visibility” in search results — more so than hosts who offer a 50% refund. Partners who don’t offer a refund of at least 50% will be “disadvantaged,” the company said. All service fees paid to VRBO are being refunded.
But not all hosts are being accommodating. Sally Robinson Kallianis tried to cancel a $2,775 VRBO reservation near Phoenix, Arizona booked for March 13 to March 16 for 10 guests. She was told to work directly with the owners. “They flat out refused to work with us,” Robinson Kallianis told TPG. “[They] said there was nothing they could do.”
Because the group had dwindled to four, she inquired about at least having an added guest charge refunded. But again, the owner refused. “VRBO is helping with their service fee,” she added, “but the actual rental cost is up to each owner. Airbnb seems to have a much better grip on this right now.”
Another traveler found herself in the same boat.
“[We] lost $5,500 on our booking because the property owner … is refusing to refund us and [is] sticking to their cancellation policy,” said Eden N. of the property in Palm Springs, California she had booked through VRBO from April 16 to April 20 for a group of 10. “I understand adhering to your cancellation policy (even if it is a bit questionable in times like this) but to completely ignore your customer who has spent almost $6,000 on a three-day booking is abhorrent.”
Eden said the owner initially offered an open credit until the end of the year, which was then restricted to a specific weekend in October. Now, communication has been limited to generic e-mails and unreturned calls. “We can’t take [that weekend], Eden said, so “the money is as good as lost.”
“[VRBO’s] policy has changed a lot over the last few weeks, but the whole time they’ve just deferred to the homeowner,” she added. “Only recently did they say they’ll try to incentivize homeowners, but [this owner] hasn’t budged.”
HomeAway, a sister brand of VRBO, is refunding service fees for all reservations booked before March 13 for travel until April 30 (the policy was last updated March 25). Hosts are being “strongly encouraged” to issue at least a partial refund if a flexible credit for a future trip at a later date within the next year can’t be negotiated.
Only travelers with covered reservations made through Airbnb for select dates are guaranteed to get full refunds for their stays right now — hosts with VRBO and HomeAway have more negotiating power. Other than Airbnb, none of the major vacation rental platforms are offering hosts anything in the way of monetary compensation, although VRBO is promising to boost the listings of the most accommodating hosts and giving them the authority to collect cancellation penalties.
“In this situation, there is no perfect solution,” Alison Kwong, VRBO’s public relations manager, told TPG. “This crisis has been tough for everyone, and we believe our policy strikes the best balance of protecting travelers; vacation homeowners and property managers; and the public. VRBO is a two-sided marketplace, so for every traveler who paid hard-earned money for a trip they cannot take, there is a homeowner or property manager who relies on clear cancellation policies and the associated money within those policies to pay their mortgage and hard-working employees.”
“Despite that,” Kwong said, “the vast majority (more than 95% in the past week) of our partners are rising to the occasion and giving credits for future travel or refunds to travelers given these extreme circumstances.”
“Automatically giving 100% refunds for all canceled vacation rental travel has downstream effects,” Kwong added. “Expecting owners and property managers to assume the full financial burden of refunds could lead to layoffs, missing payroll, defaulting on mortgages and foreclosures. Property managers must take the interests of their guests, the owners whose homes they manage and their employees into account. During this incredibly difficult time, we provided them with the flexibility to work with their stakeholders to reach solutions that work for all parties.”
This new tension between the travel provider and traveler isn’t limited to the home-sharing and vacation-rental space. Even luxury private home and villa rental companies like onefinestay (now owned by Accor) are being forced to negotiate between the two.
“When this crisis first appeared, we introduced new measures and policies to help support both impacted guests and homeowners,” onefinestay‘s chief brand officer, Amanda Dyjecinski, told TPG.
“Travel was impacted massively and, from the beginning, we encouraged postponements as alternatives to cancellations. We take a long-term view of partnering with our homeowners, and we want to help them retain the rental income that they’ve come to depend on. It is encouraging to see that local governments and more hospitality brands are sharing a similar ‘defer, don’t cancel’ message now. The travel industry truly depends on it.”
“If a postponement isn’t possible, we are offering eligible guests vouchers which are valid for 12 months and can be used toward a stay in any one of our 5,000 homes and villas worldwide. Most of our guests are happy to accept since they know they’ll be traveling again once this is over. It’s safe to say that we all look forward to that day, and when that time comes, we’ll do our very best to rebook our guests into the same home, if at all possible,” Dyjecinski said.
Julianna, the Vermont vacation home owner, agrees guests should try to rebook rather than cancel, if possible. “That’s what we’re hoping to do with our booking for Italy,” she told TPG. “Remember — especially now more than ever — that, in general, hosts are families, and some of us use this as [our] main source of income. We want to help you as guest, but we also want you to help us so we can continue being [a] host.”
Accepting a credit for future travel may be an easy way for some travelers to support travel companies, providers and property owners during these difficult times, while also keeping the wanderlust alive. But this form of compensation doesn’t take into consideration a traveler who has also lost his or her primary source of income during the crisis. For that person, having cash in hand now is far more important than having an IOU for a vacation property six months from now.
Forest told TPG that Airbnb was encouraging hosts to sign a petition that would require them to be included in any kind of relief package passed by Congress.
According to a statement from Airbnb CEO Brian Chesky on Monday, more than 105,000 calls and emails were sent to members of Congress, and support for hosts in the recent COVID-19 stimulus package was secured. U.S.-based hosts can take advantage of many relief measures, including small business grants, small business loans and unemployment assistance.
“Airbnb isn’t the cause of this crisis,” Forest said. “This is a public health emergency, and every industry and sector is having to navigate these waters.”
Featured photo courtesy of Airbnb.
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