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Like every sector in the travel industry, the short-term rental industry confronts a struggle to survive because of the novel coronavirus crisis. But when it comes to guest cancellation and refund policies, companies such as Airbnb, Vrbo, Booking.com, Tripadvisor, property management companies, and local players face an acute quandary — generate outrage from guests, or alienate vacation rental owners, perhaps for years to come.
In broad stokes, the dilemma shakes out like this: Airbnb and Tripadvisor are basically allowing guests to cancel their stays for a full refund, and are angering vacation rental owners and property managers who need the funds to pay mortgages and survive. Airbnb states it is providing full cash refunds, including fees paid to Airbnb, while Tripadvisor states that travelers will not be charged fees, and will get a full refund, which turns out to be cash, as well, according to a Tripadvisor spokesperson. Here’s Airbnb’s extenuating circumstances policy, while Tripadvisor’s is here.
In the other camp are Expedia Group’s Vrbo, and Booking.com, both of which generally refer perplexed and exasperated guests to the property manager or vacation rental owner to see if they’ll charge a cancellation fee, provide a full or partial refund, or merely issue a credit toward a future stay. Vrbo’s Covid-19 Emergency Policy is here, while Booking.com has an FAQ here referencing cancellations, but also states: “Due to the current situation related to the coronavirus and the health concerns surrounding it, we understand if you want to change your travel plans. Sign in to get help with managing your travel based on regional travel restrictions.”
The latter point about regional laws is important because some countries or jurisdictions may mandate full refunds or other compensation, while others don’t.
Between a Rock and a Backlash
It’s not an enviable position for anyone involved — consumer, short-term rental site, property manager, or individual vacation rental owner — because there is so much real-world pain involved, and in some sense the online short-term rental players are damned if they do, and vilified if they don’t.
But we’ve seen companies innumerable times pay the price if they forget their end-customers, which in this case are guests. Airlines can often get away with gouging consumers with incessant fees because in some parts of the world consolidation has turned them into near-monopolies. If you live in New Jersey or in the Chicago vicinity, for example, frequent flyers are often stuck in some ways with United Airlines for the sake of convenience.
Similarly, hotel guests in Las Vegas, Miami, and New York City often have no choice but to pay hotel resort fees unless they want to book away from their preferred loyalty program.
But, in the case of alternative accommodations, where there is a considerable amount of choice for guests, the various players have to gauge whether they will do permanent damage to relations with consumers, or with their suppliers, namely property managers or hosts. The latter may decide when the coronavirus crisis fades to remove all their listings from Airbnb, or to a lesser extent Tripadvisor, and shift share, if feasible, to a rival because they are so angry about cancellation and refund policies.
If these hosts’ businesses survive the current crisis, that is.
When it comes to brand damage, who will have the longer memory? Will it be consumers turned off that you didn’t refund the money for their stays, or vacation rental owners forced into bankruptcy — or worse?
The backlash is everywhere.
For example, one tweeter, BillyAR expressed anguish about Vrbo’s refund policy, “Dennis, big story, no refund policy by Vrbo/Expedia, says landlord responsible. Please visit @Vrbo, anguish/pamnic/frustrated customers. 1 tweet by Vrbo in 4+ days on virus, no update since. Airbnb offering refunds. Out of touch, no sense of $’s customers out, outlier on refunds #boycottvrbo.”
Dennis BIG story no refund policy by Vrbo/Expedia>says landlord responsible pls visit @Vrbo the anguish/panic/frustrated customers. 1 Twit by Vrbo 4+days on virus no update since. Airbnb offering refunds. Out of touch>no sense on $’s customers out>outlier on refunds#boycottvrbo https://t.co/XoGoyG8UGX
— BillyAR (@billyclear) March 19, 2020
On the other hand, Airbnb led the way with a pro-consumer policy, and is risking having to cope with a backlash from aggrieved hosts and property managers.
Airbnb Set the Standard
“The biggest move in the space recently was Airbnb’s unilateral decision where they changed their Extenuating Circumstances cancellation policy without notice and overroad managers and hosts,” said Andrew McConnell, CEO of Rented.com, a property and revenue management specialist. “That has received a ton of backlash and ill will in the industry.”
Cliff Johnson, chief commercial offer at Rented and a Vacasa co-founder, noted aptly “how we treat people during this crisis will define us as an industry.
That’s true, but will companies such as Vrbo and Booking.com be defined as anti-consumer, or merely prudent for taking what some consider a more balanced approach to the issue?
Airbnb’s policy “didn’t consider the impact to the hosts and managers who have to scramble to get their owners to understand why they have no income and figure out how to cover their mortgages and other costs,” Johnson said.
Johnson agued the best policy is to provide credits to the consumer for a future stay, although he conceded that this won’t work for some guests who may have been traveling for a particular reason, and the trip is no longer relevant.
In the same camp is the UK’s Short Term Accommodation Association, who’s chair, Marilee Karr, acknowledged that cancellation policies are “a very serious and complex issue,” but favors vouchers for future use, not cash refunds to guests.
“Even if businesses survive the initial shock of cancellations, they may struggle for viability in the longer term due to reduced bookings,” Karr said, “if we don’t allow for bookings to be postponed, rather than cancelled.”
The UK’s Short Term Accommodation Association is calling on the European Union to amend its directive on packaged travel to permit vouchers for future trips, rather than the current policy of cash refunds to consumers.
Vrbo Balancing Act?
Vrbo, which is taking a lot of heat for its cancellation policy of leaving refunds or vouchers to the discretion of the properties, believes its policy “strike the best balance of protecting travelers, partners, and the public,” a spokesperson said.
Vrbo is refunding travelers any fees it charges, is barring hosts from bullying guests into traveling on previously booked dates, but in the end gives homeowners the choice of how to handle refunds if the cancellation is outside the parameters of the property’s cancellation policy. A Vrbo spokesperson said “more than 95 percent” of partners were giving credits or refunds to guests in the past week.
However, that’s a solution that may be off-putting, cruel, or totally impractical for many guests in what is truly a once-in-a-lifetime — so far — pandemic.
Airbnb Does the Right Thing for Consumers
In these circumstance, Airbnb is doing the right thing for consumers. Its global policy permits all guests and Airbnb Experiences customers to cancel reservations made on or before March 14 for check-ins March 14 to April 14 to get full cash refunds. That’s cash refunds, not vouchers or credits toward future travel.
Host with reservations during this window can cancel without penalty, will not see their Superhost status impacted, and will be refunded service fees.
Guests who made Airbnb reservations after March 14 — when the Covid-19 crisis was widely known — are not covered under Airbnb’s extenuating circumstances refund policy unless they or the host is infected with coronavirus.
Airbnb’s founders wrote a message saying many hosts have asked the company why it established the extenuating circumstances refund policy favoring consumers “when some other companies in our space have not.”
Citing the health of the public and “our communities,” the Airbnb founders wrote: “We did not want guests making the decision to put themselves in unsafe situations and creating a public health hazard because of a commitment to their bookings. We believe this is the responsible thing to do given the guidance of governments and health experts.”
Rhetoric aside, Airbnb can certainly be faulted at times for its adverse impact on communities when it comes to affordable housing or its guests wreaking havoc with other renters in a building. But in this instance, when it comes to its coronavirus-accented refund policy, Airbnb is largely doing the right thing for consumers, although property managers and vacation rental owners will shoulder the brunt of the damage.
On the other hand, when the relatively normal, post-coronavirus environment emerges, if it does, Airbnb likely will have the market power to withstand the ire of grudge-holding hosts with particularly long memories.