In response to the coronavirus pandemic, the home rental company is issuing refunds to customers as hosts are left with empty properties
One of the many sectors facing turbulent times during the coronavirus pandemic is the hospitality industry.
On March 19, the Hotel Association of Canada warned that the industry “has completely crashed over the past 10 days” with the national occupancy average falling to under 10 per cent as the country closes its borders to most international travellers and prepares to shut down non-essential traffic between Canada and the U.S. later this week.
Airbnb, a home rental company that serves as brokerage for those offering and searching for short-term stays, is feeling the brunt, too.
On March 13, the company, which has 7 million listings around the world, announced an “extenuating circumstances policy to help protect our community and provide peace of mind.”
The policy mandates that reservations made on or before March 14 for stays and experiences, with a check-in date between March 14 and April 14, can be cancelled before check-in. Guests who cancel will receive a full refund, and hosts can cancel without charge or impact on their “superhost” status, overriding previous policies that resulted in penalty fees.
While this bodes well for customers, hosts have flown into a furor. The Toronto Facebook group for Airbnb hosts has seen numerous people posting about their many cancellations throughout the coming months, many citing 100 per cent cancellations, which they say are also trickling down to cleaning and maintenance contractors.
Toronto-based host Andrea Orozco told NOW that her bookings are down “drastically” and an empty March and April is ahead.
“I quit my full-time job to do this full-time last May,” she said. “I have four units and they have always performed at 90 per cent occupancy or higher until now. I have four individual apartments within my bungalows. I might have to take in full-time tenants, but I really don’t want to.”
When asked why she wouldn’t consider renting long-term given the precarious times, Orozco says tenants are a hassle and less flexible.
“I’ve been there, done that,” she said. “Never again. It’s hard to find good quality tenants and it’s even harder to evict them. The landlord and tenant act is not on our side. I would rather sell.”
She’s not alone. While some are giving in and offering long-term housing to make up for the lost income, others are simply selling their Airbnb-approved properties.
Another local host, who asked to remain anonymous, said he wouldn’t consider converting to a long-term rental for privacy reasons. His Airbnb space is a room in a home that he shares with his partner.
“I’m facing zero per cent occupancy this week,” he said, exasperated. “Typically, we have bookings from abroad who, on average, stay for 10 to 15 days. Now we’re just seeing locals and kids looking for a place for the night and, at the most, a weekend. The hospitality industry is feeling the impact on travel quick. I’m feeling it. I think I’ll be okay when this is all over, but what happens to the people who run Airbnbs full-time who have bills to pay?”
“I know that some hosts are upset because Airbnb is offering everyone free cancellations with no penalty, but I do think this is great,” Orozco said, adding that it’s understandable why some would struggle to sympathize with hosts. “We’re all losing financially but we need to support each other. I think those hosts are not seeing the full picture and are only thinking of themselves. The entire globe is suffering.”
On Thursday, two days after sending a letter to Congress asking for new legislation that could offer tax relief or loans for their company, Airbnb founders Brian Chesky, Joe Gebbia and Nate Blecharczyk released a statement in response to the anguish.
“We know this decision has caused incredible hardship for many of you,” the statement reads. “In this crisis, our first priority is the health of the public and our communities. We 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. We believe this is the responsible thing to do given the guidance of governments and health experts.
“While it’s clear to all of us that the coronavirus has deeply impacted our community, we know that this moment will pass and travel will be back,” the statement continues.
On the same day, CNBC reported Airbnb is in “listening mode” with “significant” investors who are salivating at the prospect the company will come out of the economic downturn in a big way. Airbnb, which has $3 billion in cash and $1 billion in credit according to CNBC, was due to go public this year – with some analysts pegging its valuation at US$42 billion. The pandemic has now thrown that plan into question.
Meanwhile, several travellers have shared on social media that they’ve struggled to get refunds for future homestays despite the new cancellation policy.
According to Bloomberg, one Toronto family cancelled an upcoming trip to Japan. After receiving refunds from their hotels and airline, their refund request was declined by Airbnb, which clarified that the new policy would only apply to those travelling to China, Italy or South Korea – the countries bearing the brunt of the pandemic.
The company has yet to announce what kind of cleaning and sanitation measures it has mandated for its hosts’ properties.
Airbnb did not respond to requests for additional comment.
In Toronto, Airbnb has come under fire from housing advocates in recent years who say its business model is encouraging property owners to remove housing stock from the rental market at a time when the city’s vacancy rate is around one per cent.
In 2017, the city approved a new zoning bylaw amendment to clamp down on so-called “ghost hotels.” The new rules allow Torontonians to rent up to three bedrooms in a principal residence for fewer than 28 consecutive days or an entire house or apartment for up to 180 days a year. The city plans to implement the new bylaw sometime this spring.