Key Highlights
- Airbnb announces $250 Relief Fund for Hosts
- New relief policy to help mitigate mass cancellations of bookings worldwide
Airbnb’s CEO Brian Chesky recently announced a complete turn-around policy to help mitigate losses for its hosts who have suffered from mass cancellations due to the coronavirus pandemic. Initially, Airbnb said it would do nothing and then on March 30, the Chesky announced a $250M relief fund for hosts being impacted with cancelled bookings worldwide.
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Chesky wrote to his hosts saying, “…We are partners. When your business suffers, our business suffers. We know that right now many of you are struggling, and what you need are actions from us to help, not just words.”
As of March 30, Airbnb committed the business to paying hosts 25% of what they would have normally received for a cancelled booking, based upon their individual cancellation policies. Airbnb is applying this policy for now cancelled check-ins that had been scheduled between March 14 – May 31. Payments to hosts will apply retroactively and will be sent out beginning this month.
Airbnb is also creating a $10M Superhost Relief Fund for its most experienced hosts. All hosts can apply for grants up to $5,000 beginning this month in addition to them now being eligible to apply for SBA loans and receive unemployment insurance benefits via the newly enacted federal CARES Act.
David Wachsmuth, a McGill University professor who studies the short-term rental market and Airbnb, said, “All the big Western city markets are seeing bookings just vanish.” This $1.1B revenue market in Q4 2019 alone has suffered crucial losses, not only for the hosts but also for the service staff and cleaners who provide maintenance and rental services to this short-term rental ecosystem. Wachsmuth added. “The main patterns are pretty clear now. There have been enormous, and, to the people relying on Airbnb to make money, catastrophic declines worldwide.”
Though this new relief fund policy for hosts may look generous, some hosts within the Airbnb ecosystem say the 25% cancellation payout won’t amount to much. Assuming that a cancellation policy is a 50% payout if a guest backs out within five days, most COVID-19 cancellations came more than five days out and therefore wouldn’t even be eligible for the payout. If the host were eligible for a payout, the host would get back only12.5% of what they would have earned.
Airbnb, of course, has its own financial problems due to the coronavirus. According to Guesty, a property management company that operates short-term rentals for Airbnb and other platforms, informed Curbed’s Patrick Sisson that new reservations are down -50% in urban markets while being up +70% in other markets.
Whichever way reservations are swinging in specific locations, Airbnb has suspended all marketing efforts for the remainder of this year while Wachsmuth says “he’s seen a ‘flood’ of fully furnished former Airbnb units hit rental markets in major cities over the last few weeks.”
Thanks to Curbed’s Patrick Sisson.
Also read: Could This Be the Mother of All Financial Crises?, Podcast: Your World Has Changed | Agents Guide How To Thrive Post Pandemic, SBA Economic Injury Disaster Loans
