- Mar 27, 2007
Airbnb likely pleased lots of travelers when it announced earlier this month that it would allow customers to cancel reservations anywhere around the globe for the time being due to the coronavirus pandemic and get a full refund.
But in making that guest-friendly move, it infuriated plenty of property managers who offer accommodations through its service.
Hosts told Business Insider their bookings have been almost entirely wiped out following the change, as travelers have cancelled reservations en masse. Many of the property managers are entrepreneurs or small business owners for whom their Airbnb rentals are their main source of income. With the move, they charge, they're having to pay the price of a policy they had no part in deciding; indeed Airbnb's change to its cancellation policy overrode their own cancellation policies, many of which were much stricter.
"This is a free travel insurance policy at our cost," said Evan Lohr, who manages three Airbnb properties in Santa Cruz, California. "It's much harder for us. It's not really equitable."
An Airbnb representative declined to offer an on-record statement. Last week, in an open letter to its hosts, Airbnb's founders said the company was working "day and night" to come up with a plan to help them.
"The last few days have been incredibly challenging and confusing for everyone," the founders said. "We are going to get through this crisis as partners," they continued, "our success is dependent on the success of you, our hosts."
Airbnb overrode hosts' cancellation policies
Airbnb acts as a kind of eBay for travel accommodations, pairing travelers with property managers offering apartments, houses, and other places to stay in particular areas. The company typically allows hosts to set their own prices and terms, including those covering cancellations.
But Airbnb's own terms include an "extenuating circumstances" clause that allows guests to cancel in certain situations — even when hosts' policies otherwise wouldn't allow it. Initially, the company allowed property managers to decide how to handle cancellations due to the coronavirus outbreak.
As the pandemic spread around the world, though, Airbnb repeatedly modified its extenuating circumstances policy, giving guests increasing latitude to cancel their reservations. A little more than a week ago, it announced that it would allow all guests to cancel reservations if they were made on or before March 14 and were for bookings that were set to begin on or before April 14.
The company was under pressure to make some kind of move to accommodate travelers. Even before the disease was officially declared a pandemic, many people were feeling that it was unwise or unsafe to travel. Since the pandemic declaration, the US Centers for Disease Control and Prevention has urged Americans to limit their social interactions to prevent the further spread of the disease, and a growing number of states have ordered their residents to stay at home.
The hosts who spoke with Business Insider understood the seriousness of the outbreak and the reasons why travelers were cancelling. Indeed, many of them had already started offering full refunds to guests who cancelled, despite their strict cancellation policies.
But they were unhappy that Airbnb hadn't talked with them about how to handle the crisis, and that it essentially acted unilaterally.
"Basically, they just cut our hands off," said Alba Jones, who manages Airbnb properties in Berkeley, Richmond, and El Cerrito, California, and another in Puerto Vallarta, Mexico. "We had no say in the matter."
Hosts are taking a big hit from cancellations
Airbnb takes about 12% of the amount that guests pay in the form of commissions and service fees. When guests cancel, the company is refunding those fees to them. But that means that about 88% of the money that's returned to travelers is coming out of property managers' pockets.
Many property managers have policies that only offer guests a partial refund if they cancel anytime after the first few days after they make a reservation. Given that Airbnb overrode those policies, many feel the company ought to absorb more of the cost of refunding the money to guests — or pass along some of those costs to guests.
"They just left hosts completely out to dry," said Linda Misner, who rents out a house in Tampa, Fla., on Airbnb. "There should have been some compensation for hosts that lost all this business."
Airbnb reportedly has some $3 billion in the bank. But given the sheer amount of bookings made through its service, and the fact that most of the revenue from them goes to hosts, its business model means it can't really afford to reimburse hosts for any sizable portion of their lost revenue without being in danger of running out of money itself in a matter of months.
Airbnb hosts are furious that the company is sticking them with the cost of letting guests cancel due to the coronavirus crisis
Airbnb overrode hosts' cancellation policies in response to the coronavirus. But hosts are having to pay the cost of refunds.