On March 11th, 2020, the World Health Organization (WHO) classified the COVID-19 outbreak as a global pandemic. The short term rental industry, especially Airbnb hosts, started to feel the effect of the pandemic as travel bans took effect and people canceled their bookings. In response to that, Airbnb announced several key initiatives and policies on March 30th including the Airbnb coronavirus cancellation policy and the $260M relief package. According to the company, this new policy will help lessen the impact of COVID-19-related cancellation on its community of Airbnb hosts and guests.
For more details, read: $260M Airbnb Relief Package for COVID-19 Losses
To summarize, Airbnb will make support payments for reservations booked on or before March 14th with check-in dates between March 14th and May 31st and were canceled by the guest for COVID-19-related reasons under the extenuating circumstances policy. Meaning, if a guest booked an Airbnb rental and had to cancel the booking due to the coronavirus, Airbnb will either refund or issue travel credit. Initially, reservations with check-in dates on or after June 1st were not eligible for support payments from the Airbnb relief package. On June 1st, however, Airbnb announced an extension to the coronavirus cancellation policy. Here’s all you need to know about this update.
Airbnb Coronavirus Cancellation Policy Extended
The extended Airbnb cancellation policy states that reservation for stays and Airbnb Experiences made on or before March 14th and with a check-in date between March 14th and July 15th, 2020 are now covered by the policy and may be canceled before check-in. So now, if guests can’t travel due to the coronavirus pandemic, they can still cancel and get full cash or travel credit refund if their reservations were between the above dates.
In addition, hosts of Airbnb vacation rentals can “cancel under the policy without charge or impact to their Superhost status, and Airbnb will either refund or issue travel credit in an amount that includes all service fees” according to the company’s statement. However, there are a number of situations where the host’s cancellation policy will apply as usual. Meaning, guests who cancel can’t expect to get a full cash refund.
According to the company, the Airbnb coronavirus cancellation policy doesn’t cover:
- Reservations for stays and Airbnb Experiences made on or before March 14th with check-in dates after July 15th
- Reservations for stays and Airbnb Experiences made after March 14th will not be covered, except where the guest or host is currently sick with COVID-19
- Reservations for stays and Airbnb Experiences that have already begun (the check-in has passed)
Moreover, COVID-19-related circumstances not covered in the extended cancellation policy are:
- Transportation disruptions and cancellations
- Travel advisories and restrictions
- Health advisories and quarantines
- Change to applicable law
- Other government mandates like evacuation orders, border closures, prohibitions on short-term rentals, and shelter-in-place requirements
In all these circumstances, the Airbnb host’s cancellation policy will apply as usual if guests cancel their reservation. According to a statement by Airbnb:
“Our extenuating circumstances policy is intended to protect guests and hosts from unforeseen circumstances that arise after booking. After the declaration of COVID-19 as a global pandemic by the World Health Organization, the extenuating circumstances policy no longer applies because COVID-19 and its consequences are no longer unforeseen or unexpected.”
What Does This Mean for Airbnb Hosts?
If you’re renting out a house on Airbnb, you might be wondering how the Airbnb coronavirus cancellation policy will benefit you. Well, recent data from AirDNA shows that new bookings for short-term rental properties have skyrocketed by 127% globally. Vacation rental bookings hit rock bottom during the week of April 5th. As of May 18th, however, they have remarkably rebounded close to pre-coronavirus levels. It seems that months of pent-up demand is causing a rush of summer bookings. As many in the industry predicted, this is a sign recovery.
Related: Will Airbnb Survive the COVID-19 Pandemic?
There are a couple of trends that lead to this increase in reservations for Airbnb rentals. First, Airbnb data reveals there’s a surge in domestic travel. International vacation (which are usually booked months in advance) are replaced with road trips to nearby vacation rentals booked a day before. This a direct response to the uncertainties caused by COVID-19, border closures, and travel restrictions. “People, after having been stuck in their homes for a few months, do want to get out of their houses; that’s really, really clear,” Airbnb CEO Brian Chesky said in an interview. “But they don’t necessarily want to get on an airplane and are not yet comfortable leaving their countries.”
Fortunately, the vacation rental market is uniquely positioned to adapt to this new trend. Most vacation rentals make it possible to distance from other travelers as they don’t have shared spaces like hotel chains. This is why domestic travel is giving Airbnb a boost. Airbnb saw more nights booked for its US listings between May 17th and June 3rd than it did during the same period in 2019.
The second trend that Airbnb reported is that weekend getaways are now turning into weeks-long stays, Chesky said. Meaning, Airbnb guests now prefer booking longer stays. For example, a New Yorker might have headed to Paris for a week in June. Now, they’re going to the Catskills in southeastern New York State for a month. Top destinations in the US for Airbnb rentals according to the company are almost exclusively traditional vacation rental markets like Big Bear Lake in southern California, the Smoky Mountains in Tennessee, and Port Aransas in Texas.
What does all of that have to do with the Airbnb coronavirus cancellation policy? Well, this first tells you that bookings and reservations are rebounding to their pre-COVD-19 levels. Naturally, this benefits hosts of vacation rentals as they can expect their Airbnb occupancy rates to go back to normal – depending on their location, of course. Hosts can also cancel eligible reservations with no charge or penalty. Plus, Airbnb will still compensate hosts for cancellations of reservations with check-in dates between March 14th and July 15th, as mentioned earlier.
Tips for Airbnb Hosts in 2020
Want to take advantage of the increase in domestic travel and attract potential guests to your Airbnb rental property? Here are some tips for hosting local and extended stays;
#1 Add monthly and weekly discounts
As mentioned, many guests are considering longer stays that are closer to home. You can attract these guests by adding weekly and monthly discounts. Hosting Airbnb long-term rentals also has benefits for you like experiencing better rental income security. Moreover, you won’t have to try as hard to seek out guests to book every day your property is unoccupied.
#2 Update your listing title and description
Now is more important than ever to be thoughtful about the words you choose to describe your Airbnb listing. For example, mention that your space is great for a staycation, as a work-from-home alternative, or for families. Also, make sure to highlight your enhanced cleaning routine in your listing description. Cleanliness has always been top of mind for Airbnb hosts and guests. But it’s even more important today as we all aim to reduce the spread of COVID-19.
#3 Allow last-minute bookings
With some travel restrictions still in place, it’s hard to plan right now. And while travel varies by region, Airbnb data shows that recently almost one-third of bookings have been made within a week of travel. Airbnb real estate investors can take advantage of this trend by ensuring that “Advance Notice” reservation preferences are set to the minimum notice they’re comfortable with. Now is also a good time to consider switching to “Instant Book” if you don’t have that setting activated.
#4 Switch your Airbnb cancellation policy
Those thinking about traveling during these uncertain times understandably want more flexibility. So, being able to modify or cancel a reservation may actually encourage guests to go ahead and book your listing. Hence, updating your Airbnb coronavirus cancellation policy will also help reduce the impact of COVID-19 on your short term rental business. If you have a strict policy in place, we recommend switching to a flexible or moderate one.
Related: What Airbnb Hosts Can Do with Their Rental Properties During the Coronavirus
For more information on how the coronavirus pandemic is affecting Airbnb rentals and the real estate market, keep reading our Coronavirus Real Estate Trends.