The impact of Airbnb's COVID-19 cancellation policy

Recently, Airbnb escalated their cancellation policy to allow guests checking in before 14 April 2020 to receive full refunds on their bookings, overriding existing policies put in place by hosts to protect themselves in such situations. I am sure the majority of you reading this have had a similar experience to me, witnessing nearly 100% of your upcoming bookings getting cancelled. If you haven’t, expect it shortly as an international travel ban hits Australia and other parts of the world.

On 17 March, Airbnb sent an email to all hosts explaining the reasoning behind this decision., the key point being that Airbnb “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."

An open letter published on HostGPO, an organisation representing vacation rental operators, called the unilateral decision "absolutely devastating to hosts". Michael Skiles, CEO of HostGPO, told USA Today "now we have hosts who are reporting huge losses of up to 80% of their monthly revenue and who are struggling to keep their home."

"Since Airbnb has given away so much of hosts' money without their consent and hosts are struggling, I hope they'll do something substantial to share in the costs that, so far, hosts have borne alone." Michael Skiles, HostGPO

To a large degree, I do agree with the action Airbnb has taken. It admittedly came about much later than it should have and has created an awful situation for hosts everywhere, but amid a global health crisis this is the only step they could take, and it will now be up to the governments of the world to decide what kind of safety net or welfare short-term rental hosts and those in the tourism and accommodation sector will be given.

But how will this affect hosts in the future? More so, how will Airbnb's reputation be affected after this is all over?

The answers to that stem from the last 2-3 years of how hosts have been treated by Airbnb. The service Airbnb has offered hosts has deteriorated rapidly. What was once brilliant customer service, has turned into a wasteland of long call waits, difficulty in finding support lines, and endless unresolved cases. I myself have had an ongoing 9-month-long issue relating to all my listings not displaying in the platform for a reason no one can answer. Whenever I send a support request about the situation, around every 2 weeks or so, the case simply gets "closed" or marked as “solved” - even though it's nowhere near that.

I can see from Airbnb's point of view how the quality of service for hosts fell over time. For Airbnb’s economic model, the guest always comes first (charging them 10-18% in booking fees) followed by the host (about 3% in service fees). In saying that though, hosts should still be getting something for their 3% - right?

It is because of this lack of quality customer service and company regulation that given rise to alternative holiday rental management companies, and much like individual hosts these companies work on the slimmest of margins and rely heavily on a constant cash flow. I have personally witnessed first-hand companies in the middle of mass redundancies, or even shutting up shop 3 weeks into this crisis. This will remove large amounts of hosts from Airbnb as companies continue to spiral globally.

In all honesty, apart from an economic loss for Airbnb, a lot of these companies have created pretty average listings which have lowered customer satisfaction in the Airbnb platform. Due to their cookie-cutter operational models, and their race to global or country domination, the guest satisfaction and overall home standards have dramatically dropped since the introduction of management companies. It would be interesting to see if these companies have added any value to Airbnb as a company, or create more harm than good.

In my opinion, despite the terrible situation, Airbnb will survive through this. Unlike most of these modern day super companies that seem to be losing billions of dollars even when the economy is cracking along, the Airbnb economic model is a fruitful one. Their planned IPO will definitely not happen yet, which is bad for the company but I think will be great for hosts as they stop tightening the belt on services.

Airbnb should and will learn from this. As CEO Brian Chesky implied, Airbnb's success is dependent on the hosts and they need to treat hosts like they are “partners.” Although Airbnb has a dominant market share, the competition is fierce and will get stronger after this crisis as Online Travel Agencies (OTA), Global Distributions Systems (GDS) providers, and particularly hotels wrestle for every guest they can find.

Out of all the OTAs, Airbnb has a chance to come back. Companies like and have announced a 100% refund for all cancellation requests regardless of the hotels' or short-stay providers' policy and regardless of what the guest might already have agreed on. When everything goes back to normal, these OTAs may cop a mass exodus as those in the industry band together through mutual hatred - or things might go back to the usual passive-aggressive relationship we have with OTAs. Only time will tell.

Unlike the taxi industry which arrogantly sat on its hands when Uber arrived, the hotel and tourism industry is competitive, smart, and not taking a backwards step to Airbnb. The quality, service and price point most hotels offer these days have come leaps and bounds since Airbnb started moving into established markets. If I could suggest to our mates at Airbnb one thing, is to really let the hosts know how much they mean to you at this time - they might be surprised how many of us remember the good times and will forgive them without even batting an eye.