- Property managers who list accommodations on Airbnb weren’t overly impressed with the plan the company announced Monday to help them out.
- The $250 million fund the company set up to reimburse hosts for cancelled reservations will only cover a portion of lost revenue, and some property managers may see no benefit at all.
- The separate $10 million pot that Airbnb set aside for its so-called superhosts will likely offer help to only a small number of property managers, because of the difficulty in achieving and maintaining superhost status and because only certain subgroup of superhosts are eligible for the grants.
- Some hosts told Business Insider that the plan doesn’t address the underlying problem — Airbnb’s policies are tilted too much in favor of travelers, to the detriment of property managers.
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Property managers whose businesses have been hit hard by the coronavirus crisis had a mixed reaction to CEO Brian Chesky’s apology Monday and his company’s decision to set aside $260 million to assist them.
Some hosts who were appreciative that Chesky acknowledged their collective furor over a sudden change to cancellation policies that hosts say had left them with the short end of the stick. But others criticized Airbnb’s $260 million peace offering as little more than a public-relations stunt that won’t do much to help most property managers and doesn’t address the underlying problems.
“I think people see it for what it is,” said Annie Switzer, who lives in Bethesda, Md., and manages three properties, two of which she lists on Airbnb. “It’s PR.”
Airbnb has been struggling for much of the last month to respond to the coronavirus crisis. It initially allowed property managers to decide on their own how to handle cancellations related to the outbreak. But earlier this month, it decided to supersede those policies and allow all guests to cancel reservations and get a full refund for bookings made on or before March 14, if the check-in date was before April 14.
That move infuriated many hosts. About 88% of the amount that guests pay for accommodations on Airbnb goes to property managers. So, hosts were forced to bear the vast majority of the cost of the policy change the company made. And Airbnb made the change without consulting them first.
Airbnb’s help for hosts has limitations
On Monday, Chesky tried to address their ire. In an open letter to hosts and in a video message, he apologized for the lack of consultation, and announced four steps the company was taking or had taken to help them. The company set up a $250 million fund to reimburse hosts for some of their booking revenue lost due to coronavirus cancellations. It’s offering another $10 million in grants to so-called superhosts — those with popular destinations and top ratings from travelers — to help them pay their mortgages and rent.
The company is also is setting up a way for guests to sent money directly to hosts of properties that they’ve booked in the past. And Chesky noted Airbnb and property managers had successfully lobbied Congress to include help for hosts — such as giving the access to small-business loans and to expanded unemployment insurance — in its recently passed stimulus package.
“Although it may not have felt like it, we are partners,” Chesky said in the letter. “When your business suffers, our business suffers. We know that right now many of you are struggling, and what you need are actions from us to help, not just words.”
But hosts were quick to note the limitations and shortcomings of the company’s moves. Airbnb is using the $250 million fund to pay property managers 25% of the revenue they lost due to cancellations. But in most cases, it’s not going to pay out a quarter of the lost booking revenue a host incurred. Instead, it’s offering to pay 25% of whatever a host would have been entitled to under their particular cancellation policies.
So, if a host’s policies would have allowed her to keep 50% of the booking revenue because of the timing of the cancellation, Airbnb will reimburse her a quarter of that 50% — or just 12.5% of the total booking amount.
“I appreciate the apology,” said Keith Dorsey, who lists a handful of properties on Airbnb with his wife. But, he added, “I believe more money should be given back.”
Hosts with guest-friendly policies might get nothing
In the past, Airbnb has encouraged hosts to offer more flexible policies that allow guests to get a full refund even when they cancel shortly ahead of their check-in dates, said Linda Misner, who rents out a house in Tampa, Fla., through Airbnb. But by basing its reimbursements on what hosts were due to receive under their own cancellation policies, it appears the company will be offering more monetary help to those who ignored that recommendation, she said. Those who had flexible terms might get nothing from Airbnb for their cancellations, while those that had ultra-strict policies, might get as much as 25% of their cancelled booking revenue.
“People who have flexible policies will be lucky if they get anything back,” Misner said.
The fund does nothing to replace revenue from bookings that likely would have been made but weren’t because of the crisis. Delia Gilligan rents out a private room in her house in Aptos, Calif., a coastal community south of San Francisco. Last year, it was booked out for nearly half the year, but guests often make reservations there at the last minute. Because of that she only had three bookings that were cancelled because of the crisis.
“So what am I going to get, a few hundred dollars?” Gilligan said, in reference to Airbnb’s reimbursement program. She continued: “It almost doesn’t matter.”
At the same time that Airbnb announced the reimbursement plan, it also extended the period during which travelers could cancel reservations and get a full refund. Previously, that policy was only for reservations with a check-in date on or before April 14. Now guests can cancel reservations with check-in dates on or before May 31.
That extension is likely to trigger a whole new round of cancellations that, again, will largely come at property managers’ expense, Misner said. Airbnb’s announcements of the reimbursement and superhost funds seemed like a way to distract attention from that extension, Gilligan said.
“I think they offered this up to try and smooth it over with hosts in some way,” Misner said. “I think this is more of a public-relations effort,” she continued, “than it is to provide any monetary relief for the hosts.”
The superhost fund has limitations too
Property managers also weren’t super impressed by Airbnb’s $10 million fund for superhosts, in part because of how difficult it can be to get and maintain that status. To be designated a superhost, property managers need to have cancellations at fewer than 1% of their bookings, have a guest rating of 4.8 or higher, and operate a popular destination, with at least 10 individual bookings or 100 days worth of stays in the last year.
But even property managers that meet those requirements and have that designation, might not qualify for the grants. The fund is only available to those who have been a superhost for at least a year and offer just one or two properties through Airbnb.
Misner doesn’t qualify, because she’s been on Airbnb for less than a year. Dorsey was a superhost but said he lost the status after guests gave him bad reviews in retaliation for him complaining about them.
Airbnb’s decision to limit the $10 million fund to superhosts “sucks” said Dorsey, who makes about 80% of his income from his Airbnb listings and has helped other property managers get set up on the system. “We work really hard at Airbnb.”
Others property managers were dismissive of Airbnb’s planned guest-donation feature. People are losing their jobs. They’re worried about getting sick. Helping out Airbnb hosts is probably not at the top of their minds right now, Switzer said.
“I thought that was hilarious,” she said. “I’ve never had a guest donate money to me before.”
Regardless of how helpful the policies will be for property managers, they don’t fix what hosts see as Airbnb’s underlying problem. Airbnb operates a marketplace with two groups of customers — travelers and property managers — and it needs to balance the needs of both. But the company has consistently favored guests over hosts, property managers said.
Airbnb is enabling bad behavior by guests
Long before the coronavirus, the company made it far too easy for guests to cancel and get a full refund, overriding hosts’ cancellation policies and sticking property managers with the cost, they said. That’s enabled and encouraged people to game the system or to take advantage hosts, they said.
People complain about non-existent bedbugs or that a pool is unusable because the host hadn’t had a chance yet to clean up the leaves an overnight storm blew into it, and want a full refund, they said. Or they try to cancel a reservation at the last minute because one member of a large party is sick or because a flight is cancelled, even though they could fly out later in the day or the following day. And oftentimes Airbnb accommodates them, they said.
Some guests have even tried to take advantage of current crisis. They’ve used it as an excuse to cancel accommodations and rebook nearby for less money — or tried to pressure property managers to discount their stays by threatening to do just that, said one host who asked to remain anonymous for fear of retribution from Airbnb.
“Talk to almost any host on Airbnb. Someone has tried to play them or take advantage of them,” said Switzer. The company’s policy of putting guests’ needs before those of hosts, she continued, “encourages people who are dishonest or bad actors.”
Many hosts depend on their income from Airbnb, a fact that the company itself has promoted. But its policies before and during the pandemic have hurt those very same property managers whom it likes to showcase, said the unnamed host.
When travelers cancel reservations, the money at stake for them is typically discretionary income; losing it won’t make or break them, said the property manager, who lists several dozen properties in Southern California and the Caribbean on Airbnb. For many property managers, though, that money represents the funds they use to pay their mortgages, rent, utilities, and maintenance costs.
Every cancellation hurts. But getting hit with multiple cancellations at once and being forced to give full refunds on all of them — as has happened during this crisis — is “a game changer” for the lives of many hosts, said the host, who has lost some $200,000 in bookings due to coronavirus cancellations. While the $250 million fund will help somewhat, it would have been much more equitable if Airbnb and spread the pain around more evenly among guests, hosts and itself, the host said.
“I 100% appreciate ABB trying to rectify past wrongs,” the property manager said. “But in order to ever trust Airbnb again … they have to address their underlying [cancellation] policy.”
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SEE ALSO: The coronavirus crisis has exposed a crucial weakness in Airbnb’s business model and it’s likely to haunt the $31 billion company’s IPO plans
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