Online vacation-rental broker Airbnb is dedicating $250 million to cover some of the losses property owners incurred as a result of cancellations amid the global coronavirus crisis.

Airbnb founder and CEO Brian Chesky has apologised to property owners for the way his company communicated its decision to offer full refunds to travellers affected by the COVID-19 pandemic.

Airbnb amended its extenuating-circumstances policy to offer refunds or travel credit to every booking made before 14 March for reservations beginning any time before 31 May.

This overrode the personal cancellation policies of individual hosts, delivering a severe economic blow to property owners using the short-term rental service.

In a letter to hosts, Chesky said the decision was made to protect public health.

He wrote, “If we allowed guests to cancel and receive a refund, we knew it could have significant consequences on your livelihood. But, we couldn’t have guests and hosts feel pressured to put themselves into unsafe situations and create an additional public health hazard.”

Huge losses

Michael Skiles, CEO and co-founder of HostGPO, which represents vacation-rental operators, said Airbnb’s decision was “a disaster” for hosts.

In an interview with USA Today earlier in March, he said, “Spring is when many hosts count on earning enough to support themselves through slower months, but now we have hosts who are reporting huge losses of up to 80% of their monthly revenue and who are struggling to keep their homes. Many have started to lay off employees and cleaning teams, with no other options.”

Skiles said, “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.”

In his message, Chesky said offering full refunds was still the right decision. But he apologised for communicating it to guests without consulting hosts first. “We have heard from you and we know we could have been better partners,” he said.

‘Generous’ payment appreciated

To help hosts cover some of the cost of COVID-19 cancellations, Airbnb is setting up a $250 million fund.

It will retroactively pay hosts 25% of what they would normally receive through their cancellation policies. Payments will begin in April.

Terry Delaney, who manages his own Cayman property and another part-time property on Airbnb, said he received news of the “generous” fund “with massive relief and appreciation”.

His properties were fully booked until everybody cancelled through to mid-May. Delaney said even before Airbnb had changed its extenuating-circumstances policy, he told prospective visitors that he had no intention of taking money from anyone who had no control over the situation. “I have to bite the bullet.”

At the same time, Delaney said, he will have no choice but to make use of Airbnb’s offer, because short-term rental revenue is more than a casual side income. Others would also benefit. “This is going to help society, not just individuals,” he said, adding that he intends to pay the cleaners, who normally clean after a group leaves, half of what they would have received under full bookings.

Additional funds help offset rent, mortgage

Airbnb is also creating a $10 million Superhost Relief Fund.

“This is designed for Superhosts who rent out their own home and need help paying their rent or mortgage, plus long-tenured Experience hosts trying to make ends meet,” the Airbnb CEO said.

The superhost fund was started with $1 million in employee donations and topped up to $10 million by the Airbnb founders.

In April, hosts will be able to apply for grants of up to $5,000 that do not have to be paid back.

The vacation-rental service is further creating a way for guests, who want to help, to make a financial contribution to any of the hosts they have previously stayed with.

The US government’s COVID-19 Stimulus Bill will allow US-based holiday rental-property owners to apply for small business grants, small business loans and unemployment assistance.

Chesky announced additional initiatives for the coming weeks, including programmes to drive demand to help rebuild short-term rental businesses.

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