When Hosts Grudgingly Serve as Quasi-Travel Insurance

Few issues are as divisive among short-term rental hosts, property managers, online travel agencies and guests as refund policies following hurricanes, wildfires, and pandemics. The issue will only get more heated as the earth does likewise.

Consider what recently happened in Maui when Airbnb and Vrbo overrode hosts refund policies, and mandated that guests get refunds, denying hosts in untouched locations their expected income.

We queried hospitality execs about the issue on LinkedIn and elsewhere.

"In Maui, most travel insurance policies would not refund reservations outside of West Maui because there was nothing wrong with the property, the airport was open, and the roads were open," said Amber Carpenter, vice president of product at Vtrips. "But the big platforms were refunding everyone causing a mess. It does make hosts — but mostly homeowners — act as pseudo travel insurance but worse."

Part of the issue is that U.S. travelers seldom consider buying travel insurance for a stay (although surveys say their willingness is increasing), while in Europe the purchase, including cancel for any reason coverage, is much more common.

"Think of two owners," said one vacation rental exec who declined to be identified. "One has a booking from a guest who bought insurance. The other has a guest who opted out. Both owners have a no-refund policy. Hurricane comes, and the home sits empty during the storm. Owner one keeps their revenue because the guests gets a refund from insurance. Owner two is forced to give up his revenue to the guest because the OTAs override the no refund policy so he loses it."

Bryan Leblang, co-founder of RentWise and LuxGive and former chief operating officer of onefinestay, said it is "simply unfair" to hosts when travelers don't buy travel insurance, "and it's irresponsible of the platforms providing the bookings."

Onefinestay and its Travel Keys brand advised guests to purchase cancellation insurance because most reservations were non-refundable, he said, adding that this was most relevant when natural disasters affected "their ability to travel, but not the home's ability to host i.e. not a force majeure."

But Fritz Oberhummer, vice president, travel and hospitality, at Intellius, thinks the issue calls for a level playing field between hotels and short-term rentals.

"Well, if you would reduce it to the basics: It's a service that is offered, but if it's not consumable, the traveler has the right to withdraw," Oberhummer said. "Every business owner needs to be insured so why shall homeowners be an exception? After all, they are playing 'hotel' now and that simply does not come without risks and downsides. Hotels need to play along, why should their competitors be exempt?"

Of course, hotel chains with multiple brands and locations have many more options to make guests whole than does an individual vacation rental owner.

Rob Paterson, former CEO of BWH Hotel Group Great Britain, said the short-term rental sector should take a cue from the hotel industry "by selling flexibility for a premium."

"If the host feels a prepaid rate with strictly fenced terms, however, then that's on the traveler," Paterson said. "The key is to offer the choice. What Airbnb did by overriding the terms in Maui was wrong and will hurt them in the long term as hosts lose trust."

Zachary Tombley, founder of Lyric/Black Swan, similarly finds fault in online travel agencies overriding hosts' refund policies. "In dire situations where the operator might be more empathetic and willing to make exceptions, they won't because they know the OTAs will get them on the next one," he said.

It is "admirable on the one hand (for the OTAs to mandate that guests get refunds), but the benefit (PR) is usually solely for the OTA and at little cost."

Albuquerque To Distance Short-Term Rentals

The City of Albuquerque, New Mexico may have its own take on how to regulate short-term rentals to combat an affordable housing shortage: It's considering an ordinance that would bar owners/hosts from leasing multiple properties in a neighborhood or within 300 feet at a minimum, KOAT Action News reported.

The council is slated to discuss the ordinance on Monday.

Not So Fast on New Permit Rules, Say Short-Term Rental Owners in New Orleans

Short-Term rental owners in New Orleans are seeking a temporary restraining order to halt a new law that tightens restrictions on permits, Nola.com reported.

The plaintiffs went to U.S. District Court to seek the temporary restraining order to retain their ability to operate under existing permits while the judge considers a constitutional challenge to the new law. The new law, which took effect in July, mandates that license holders live in the property they are renting out, and there can be only one license per block.

Jo&Joe's Expansion

Jo&Joe, one of Ennismore's 16 brands, has 11 properties in the pipeline to supplement its current six hostels in four countries.

Skift Take: One of Ennismore’s newest brands, Jo&Joe offers a higher-end hostel experience focusing on design and city living. Its public spaces, such as its trendy bars, encourage guests to mingle — without forcing it.

Ennismore’s Brands, Explained

Dennis Schaal wrote this issue of the Short-Term Rental Report. Send him tips, comments and feedback at ds@skift.com