Chesky
Airbnb CEO Brian Chesky made an impromptu video call last week [Credit: Airbnb]

Reaction to Brian Chesky announcements: what may the future hold for Airbnb?

US: In response to the ire of hosts and guests alike since it first started implementing its Covid-19 support measures, Airbnb CEO Brian Chesky recorded an impromptu video call last week, which generated a mixed response from the global short-term rental community.

In the call, Chesky apologised to its host community and suppliers for abruptly cancelling bookings in March with little or no notice provided to consult with either set of partners and promised to “fix” the situation.

The first step to soothe tensions was announcing that Airbnb was extended its extenuating circumstances policy to offer full refunds to guests for any trips taking place on or before 31 May, as long as they were booked prior to 14 March. While Chesky said this was a matter of public health to protect both its hosts and guest communities, it is true to say that the policy has been at the heart of much of the resentment on the hosts’ behalf as this has been used to outweigh existing cancellation policies.

Chesky also mentioned that the last few weeks had been a “wake up call” and that the company had not planned for such a globally-reaching phenomenon like the coronavirus.

The CEO also made four key announcements in his call:

  • Airbnb is to pay out $250 million in cancellations back to hosts
    • Hosts will receive 25 per cent of what they would normally get back from their existing cancellation policies
    • It applies to bookings made prior to 14 March
  • The company is laying on a $10 million Super Host relief fund
    • Airbnb is providing grants totalling up to $5,000 that do not need to be paid back
    • Airbnb’s employees and co-CEOs have contributed to the relief fund
  • From this month, previous guests can send hosts a note and attach a personal financial contribution as a token of appreciation for their hospitality during a stay 
  • Airbnb is lobbying for hosts in the United States to be able to benefit from small business loans and grants, with Chesky adding that Airbnb is “building a number of new programs to drive demand” and implement this around the world

Since the announcements were made, professionals from across the short-term rental industry have given their reactions to ShortTermRentalz:

Richard Vaughton, a rental advisor at VR Consulting Ltd and co-founder of Rentivo, said: “This industry is littered with examples of how not to manage difficult times and transitions.

“I’m afraid the announcement last week demonstrated the under appreciation of the thousands of small businesses which work feverishly day in day out and has allowed Airbnb to thrive as a platform. Through their handling of this crisis Airbnb have lost a lot of supply chain love and the pending economic crisis will see a significant drop in their urban inventory.

“Almost certainly the competition, who over the last few years have re-modeled their supply approach will also see this as an opportunity. In addition, guests are witnessing more negative press and along with hosts, seeing even more confusing cancellation terms which can only create more damage.

“There will be tough times ahead,” warned Vaughton.

Eleanor Nesic, head of revenue and performance at Sloane Collection, defended Airbnb’s stance over the extenuating circumstances policy, saying that “it has not actually done anything that is outside of its policy”:

“Airbnb has for years had an extenuating circumstances policy that hosts agree to when they sign up that does cover this. We are not happy that they have done what they have en masse, but they have.

“However they have also brought in help for hosts. Yes it may seem like little – just 25 per cent of cancellation fees we would have normally received – but it is more than they were obliged to do.  Yes, it is not very much, but it is something.  It is more than other OTAs have done [at least for now].

“Airbnb also states that bookings that are made after 14 March are not subject to their extenuating circumstances policy unless the host / guest has the virus. So basically any guest booking now takes all the risk on themselves.

“Booking.com, however, has taken a different approach. Booking.com’s forced circumstances policy [previously] makes no reference to booking dates in it’s policy for bookings to UK properties. Right now, the only UK bookings covered are for arrivals between 23 March and 13 April – if the government extends the restrictions to after 13 April, then any arrivals will be covered irrespective of when they booked [even if they booked during 23 March to 13 April].
“For example: A guest books today for an arrival date that is outside of the window of current restrictions, but the official government policy changes before they actually arrive.
“On Airbnb, as hosts we would be protected as the booking was made after 14 March. But, as Booking.com takes its cue from official government advice, if a travel ban comes into force due to the virus, they will find in the guest’s favour and insist on full refunds / free cancellation policy.
“Booking.com as of yet has not done anything to help hosts financially, but has insisted that they issue refunds for any pre-payments taken for affected bookings – at least with Airbnb you don’t have the pain of actually issuing the refund as they hold the money until guest arrival,” added Nesic.
However, after this quote was taken, Booking.com announced on Friday that it would no longer apply Force Majeure conditions for guests seeking to cancel or modify bookings due to the Covid-19 outbreak, concerning all new reservations made as of today [6 April]. The company says “these reservations will be treated like any standard booking, according to our policies and procedures”, meaning customers will be able to control whether, when, and how to refund guest cancellations made on or after 6 April 2020 due to the virus, based on the policy chosen by the guest, the individual, legal and governmental situation, and mandatory consumer law. View the latest changes to Booking.com’s cancellations policy here.
Richard Fertig, STR University founder and Airbnb Superhost, said: “It’s a start. Does it fix everything? No. Are we going to have the best experience through this terrible, tragic time? No. But is he doing what he can at a difficult time to assist hosts? I would say the answer is yes.”
Meanwhile, Forbes contributor Jennifer Leigh Parker painted a positive outlook for Airbnb in the wake of the company’s announcements in recent weeks, stating that the company should “thrive” in a post-coved-19 world:
“Private vacation rental companies stand to benefit in a post-Covid world, compared to large chain hotels with hundreds of rooms and shared communal spaces built to encourage large gatherings. Consumers will re-enter the travel market with caution and social distancing still top-of-mind or at least, this is the argument Airbnb is making to investors.”With a private market valuation of $31 billion, according to data provider PitchBook, the company has received inquiries from venture capitalists and sovereign wealth funds who choose to see past the near-term coronavirus risk, and assume Airbnb will recover in the wake of the outbreak.

“Logic holds that the world’s biggest home-sharing company’s listings in more than 220 countries and regions will meet pent-up travel demand.

“Airbnb CEO Brian Chesky also quickly positioned  his company during the Covid-19 crises as a pro-consumer brand by offering guest refunds on a global basis. An inevitable backlash from hosts forced to pick up the slack ensued, leading Chesky to earmark $250 million for their troubles and publicly address their concerns in this letter.

“There is an inherent optimism to the hospitality industry in general, and Airbnb has managed to both capture and hang on to it,” added Parker.

For all of the latest news and updates from Airbnb, visit the website here.

Be in the know.

Subscribe to our newsletter »