Using Airbnb for bookings further increases the risk with the new refund policy

Hmm


Yesterday Airbnb Change to refund policy This can be confusing for professional vacation rental managers and homeowners, also known as “hosts”. Airbnb’s new policy will take effect for stays made after April 29, 2022, with “How to help rebook a reservation and if the host cancels the reservation or another travel issue. How to handle refunds if your stay is interrupted “is defined.

In addition to loosening the word about what constitutes a travel issue, the new policy states: “If Airbnb incurs costs to assist guests in finding or booking accommodation of equal or greater quality, the host is responsible and Airbnb reserves the right to pay the host or otherwise request a refund. In addition to these costs, we will refund you. “

Kleenex®, Post-it®, Uber, Airbnb

There are many things to unpack due to policy changes, but let’s take an important moment to consider the Airbnb brand through the eyes of consumers. It’s tempting for the general public to unknowingly collectively decide to call a product or service by brand name. The vacation rental industry was on the sidelines of consumers labeling private home rentals as “Airbnbs,” so comparisons were frequent. Kleenex®, Post-it®When Uber To understand the phenomenon. However, these comparisons are misleading to the general public.

Kleenex® and Post-its® are owned, standardized, manufactured, distributed and quality controlled products. Uber also has contracts with drivers who own and service the vehicle, but Uber Technologies ultimately manages and is responsible for that service. The company is responsible for standards, reviews, processes, and accountability for driver behavior in servicing Uber’s customers.

In contrast, Airbnb is a website that lists short-term rental properties and does not own, manage, service, or manage the rental properties listed on that website. And the list is fast and easy. According to CEO Brian Chesky, “You can be a host in less than 10 minutes.”

Instead of Kleenex®, Post-its®, Uber, Airbnb Amazon retail division.. Both models require a great deal of trust with the general public. Neither company controls the products they sell, so they both use key tools to earn consumer trust. Easy refund.

Airbnb was already dangerous

March 11, 2020, Airbnb notoriously uses the Extenuating Circumstances policy Override host cancellation policy A lump sum refund will be given for stays within the next 45 days. However, the vacation rental manager has long reported that Airbnb’s customer service representatives will be on the side of the guest and will promptly refund any problems that may occur during their stay, whether minor or unfounded. I have been doing it (around March 2020). There may be a problem.

In addition to refunds, Airbnb rewards hosts with the most flexible cancellation policy. However, for example, for vacation rentals with an average booking period of 80 days or more, a 48-hour cancellation policy is a loss of revenue. Industry expert Amber Carpenter said: But it’s really hard for homeowners and real estate managers who can’t replace their lost income with a 24-hour notice, like in an urban hotel. “

Besides refunds and cancellations, the Property Manager has reported multiple issues from Airbnb guests. Tort And guests renting a house for a large party can damage the house and cause problems with their neighbors.

Airbnb’s new refund and refund policy for “travel issues”

Yesterday’s policy announcement confirms that Airbnb intends to continue to buy consumer confidence with a refund.

And why? Airbnb is not refunding its money. The collected reservation fee will not be refunded. The cost of this trust is behind the host community.

There are three notable changes to the refund policy. First, guests can request a refund 72 hours after the travel problem is discovered, instead of 24 hours. In some cases, you can report a problem more than 72 hours after it is discovered. Second, the language that defines travel issues is more ambiguous. Third, for guests with travel problems, the host may have to pay for “equal or better accommodation”.

1.72 hours

According to the new policy, guests can request a refund within up to 72 hours after discovering a travel issue. “If a guest proves impossible to report a travel issue in a timely manner, we may allow delayed reporting of travel issues under this policy,” he added. increase.

Earlier policy stated that guests should report travel issues to Airbnb and request a refund within 24 hours of discovery.

2. Travel issues regarding the condition of the property

With historically subjective refund policies, property managers wanted Airbnb to be clearer and more rigorous in specifying the parameters and problem types for which guests would be refunded. Instead, the language remains ambiguous, and in some cases even more ambiguous.

The previous policy stated, “At the beginning of a guest’s booking, the property states: (i) Generally not clean and hygienic (including dirty bedding and bath towels). (Ii). Pets that contain safety or health hazards reasonably expected to adversely affect the guest’s stay at the property at Airbnb’s discretion, or (iii) have pests or are not disclosed on the list. It is included.”

The screenshot on the right is from the new policy. As you can see, the wording about safety has changed from “safety or health hazards reasonably expected to adversely affect a guest’s stay” to “contains safety or health hazards”. ..

Also, “Pests” has been changed to “Pests” and “Overall clean” has been changed to “Moderately clean”.

Although subtle, this change gives Airbnb more room for refunds.

3. Airbnb can now request a host to pay or refund “equal or better accommodation”.

The new policy adds a new component to the refund policy. “If Airbnb incurs costs to help guests find or book accommodation of equal or greater quality, the host will be responsible. Airbnb reserves the right to request the host to pay these fees or otherwise refund in addition to the refund amount.

Consider the fictional situation where a guest reserves a 6-bedroom beachfront home for a group in the week of July 4th. A few days after check-in, they find ants in the kitchen. They call Airbnb and say they want to move. Airbnb decided to refund the guest and move to the only vacant 6-bedroom or larger house on the beach. This is three times the fee they currently paid. Will Airbnb charge the host for the cost of the house in addition to a refund for an unused (currently unbookable) night?

Airbnb Average stayAverage length of stay, and Average booking period Below the other channels

In addition to the higher risk of booking on Airbnb compared to direct booking, the average stay (ASV) is 53 percent lowerAverage length of stay 31 percent smallerAnd the average booking window 63 percent shorter For bookings on Airbnb (See chart below).

In addition, Airbnb guests book just before guests who book on Vrbo or book directly with the Property Manager. The gap becomes more pronounced as the number of bedrooms increases. For example, for a house with 7-8 bedrooms, the booking window looks like this: 66-69% reduction with Airbnb From more than direct channel 50% shorter than above Vrbo ((((See chart below).

Buy trust with a refund

Looking back at the comparison between Airbnb and Amazon’s retail business, both companies are based on being a consumer-friendly and reliable market. Trust is the foundation of the model. Airbnb follows Amazon’s lead by relying heavily on refunds to ensure this trust. The difference is that Amazon retailers sell widgets. In contrast, if Airbnb makes a refund for a 7-night stay, individual hosts lose 2% to 14% of their annual revenue (2% to 14% of their annual revenue).Based on the average occupancy of the entire destination). If the host then has to pay an additional fee for the guest’s “equal or better accommodation”, the loss is unacceptable.

As a trustee, a professional vacation rental manager is responsible for managing risk to homeowners. That is, the risk to housing and the risk to profit. Risk management plays a more important role in determining success when assessing future distribution strategies.

If Airbnb’s strategy is to win consumer confidence by refunding supplier revenue, Airbnb will begin to see high quality supplies move elsewhere.

Average length of stay