Since nearly the beginning, Airbnb has had a policy called “Extenuating Circumstances“, whereby guests who would not normally be eligible for a refund when cancelling a reservation (the contract they enterered into has a cancellation policy that doesn’t allow that), are issued a full refund, at the expense of the host, when the guest’s situation fits within a list of approved “extenuating circumstances.” As most hosts are now aware, Airbnb has now expanded this policy to cover virtually all Airbnb reservations, anywhere in the world, from mid-March to mid-April, and perhaps longer, as the pandemic could last until August or beyond.
Even worse, Airbnb has now actually begun to go back to past, completed reservations, those which ended in February or January, and override hosts’ cancellation policies for those and issue unwarranted refunds for those past cancellations. See these videos for info about that:
My argument from the get-go, for many years, has been that this policy is wrong and unfair to the host, and that Airbnb should be selling Travel Insurance to guests, rather than essentially coercing hosts into being unpaid travel insurers.
During this Global Pandemic caused by the coronavirus, which is causing travel and tourism to come to a complete halt, many hosts who feel obliged to fully refund their guests who have to cancel their stays, are saying “If this isn’t extenuating circumstances, then what is?”
Of course it’s true that if there is any Extenuating Circumstances policy, then this situation most assuredly fits within that policy! However, this is the wrong argument. Rather than saying that coronavirus fits Extenuating Circumstances, and that therefore it is correct for Airbnb to fully refund every Airbnb reservation, anywhere in the world, that was set to begin during mid March to mid April, and perhaps for many months beyond mid April, we should be aware that what’s happening now with the devastating tsunami of Airbnb clawbacks of all hosts’ income for a month or more, exposes more clearly than ever before the fundamental unfairness and illogic of the Extenuating Circumstances policy.
The application of Extenuating Circumstances policy has completely destroyed many hosts’ businesses already. It has placed the entire economic burden of the global pandemic on hosts, while completely protecting guests so that they dont’ have one penny of loss. Further, it’s made it virtually impossible for Airbnb hosts to have confidence in keeping any reservation that is on their calendar for the next few months, as all those may end up being fully refunded as well.
These posts on Airbnb’s own Community Center highlight hosts’ great anger with Airbnb’s approach to this pandemic
And their concern about whether future reservations still on the books represent illusory income:
Anger expressed by a host on Twitter — this one seems rather overdramatic — perhaps it’s really satire:
The Extenuating Circumstances policy was already unfair in “normal times”, and has become exponentially unfair in these unprecedented times. Airbnb has in essence taken the types of situations for which Travel Insurance is designed — flight cancellation, needing to cancel a trip due to illness or a death in the family, even in many cases disasters like hurricanes, earthquakes, fire and floods, acts of God — and has, through coercion and rhetoric, forced hosts to financially cover such situations in guests’ personal life, all without being paid any of the premiums that travel insurers are paid.
The rhetoric from Airbnb, which ripples through the host community as well as hosts berate other hosts they view as not “hospitable” enough, is that if hosts really cared about their guests they would have no problem providing these full refunds for guest in the instance of a death in the family, an illness, a sudden gust of wind, a hangnail. So, hosts are being set up to be seen as “haters” if they are not on board with supplying full refunds for what, in practice, has at times been a policy abused by guests enabled by Airbnb to come up with a fiction that they need to cancel for health reasons, when in fact they are cancelling because they found a cheaper place to stay.
Many guests and observers will argue that “Hotels allow a full refund for a cancellation within 48 hrs of arrival.” But hosts are not hotels, which is a concept that many guests, the general public and Airbnb may have trouble comprehending, or in fact not wish to accept. With the exception of a highly unusual situation like a pandemic, hotels could easily get replacement guests. They have high occupancy levels and walk-by business. Hosts in private homes are not in the same situation. A guest who’s been holding a spot in the calendar for many months, has prevented that host from getting other bookings, should not be allowed to cancel at the last minute and get a full refund, depriving that host of needed income. Again, travel insurance could protect both the guest and the host in this situation.
Doing the Math
The situation arising now in the global pandemic, readily exposes the unfair math of this policy of Extenuating Circumstances.
Take the hypothetical host who runs one standalone vacation rental property which brings in $8000 a month in income, and which involves $5000 a month in operating expenses for mortgage, property taxes, insurance, utilities, maintenance, cleaning, and supplies, and for which the average guest stay costs about $1000. Let’s assume the host has about 8 guest stays per month averaging 3 days each.
During this pandemic, which began for the US in mid-March, and is estimated to last until mid-August, this would involve 5 months of lost income for this host, which means $40,000 lost. During this time, his expenses would be $25,000 for the property, perhaps a bit less such as $22,000 if no utilities or supplies are used and no cleaning is needed. Some of those expenses may be deferred as the government sets up economic relief plans for the nation, but they will not be forgiven: these are costs that one way or another, will eventually have to be paid. At the same time, consider that this host likely cannot live on the profit from one vacation rental, and has another job, and that he may have been laid off from that job during this time, for instance a job in retail or the restaurant business.
Compare this $40,000 loss of necessary business income for the host, needed to pay their bills, to that of individual guests, each using the discretionary funds they had available for vacation, each losing about $1000.
Why is it viewed as more laudable and proper, for one host to assume one huge loss, rather than for 40 individual guests to have many smaller losses, particularly as these guests are using funds that are “extra” or discretionary, vacation money that is not necessary income they need in order to survive?
Even a 50/50 refund, where guests were refunded only 50% of their payment, would have been far more fair than refunding them fully.
One of the problems with the ways that Airbnb policy is formed, on this and many other issues, is that this whole business is viewed by the public and by news media, through a heavy bias towards the guest. It’s guest complaints about interpreting a decline as an instance of racial discrimination, not host complaints about guests using racist language, which are featured in the news media. It’s guest complaints about not getting a refund, which are given prominence in online blogs and media, not hosts’ complaints about being forced to accept guests whose real name and photo are being intentionally hidden from them. It’s guests’ complaints about having to pay a high cleaning fee, not host’s anger that they were not reimbursed for damages or vandalism by the guest, which the news media seems to prefer reporting. So the whole way the hosting business is perceived and represented to the general public, unfortunately plays into a bias towards guests, and supports Airbnb creating policy reflecting that bias.
That said, keep in mind that one focus of identity politics and the “social justice” movement, is to expose “unconscious bias” and various types of bias. Are some types of bias deemed acceptable, such that we’re not only not expected to question them, but we’re expected to support these biases?
Over the years I’ve observed many hosts making illogical arguments about this and other Airbnb policies. Their arguments do not come from an objective assessment of what seems right or wrong, but are arguments based on what these hosts think is reasonable to expect that Airbnb will do. Such arguments are wholly illogical, and are much like saying to Sally, who’s complaining that she’s been abused by her elementary school teacher, “Well you’re only a student and he’s the teacher and has more authority so what do you expect? Just shut up because it’s not reasonable to expect an adult to change their ways based on the complaint of a child.”
So here’s a clue for those who dont’ see the flaw in this argument: unethical acts are not automatically right and justifiable just because you think you don’t have any power to change them.
List of logical fallacies:
These are some of the illogical or fallacious arguments used to support Airbnb’s Extenuating Circumstances Policy
#12, Appeal to Tradition (“Extenuating Circumstances policy has been in place from the beginning therefore it must be right.” )
#14, the Argument from Consequences (“If we didn’t personally refund the guests, they might have a medical emergency and not get their money back, and that would be wrong” )
#17 Argument from Inertia (“It would be too hard to drop Extenuating Circumstances now, therefore it’s only logical to continue it”)
#19 Argument Ad Baculum (“You have to agree with our Unfair and Unethical Terms and Conditions, or you can’t use our platform” is an example of this illogical argument.
#23 Bandwagon Fallacy (“Most hospitality providers will issue full refund for last minute cancellations, therefore you should.”)
#27 Blind Loyalty (“Airbnb policy is that Extenuating Circumstances apply, therefore they apply!”)
Perhaps by examining the list of logical fallacies, you can find even more that pertain to this issue.
There is a strategic and likely quite intentional reason why Airbnb has a bias towards guests. This becomes more obvious when one listens to hosts wishing there were another Short Term Rental platform they could join and support, which was more fair and gave hosts more power to run their own business, develop their own policies, and not have their business contracts meddled with or overidden by a third party. Imagine there were another STR platform seeking to compete with Airbnb, which promised hosts a lot more power to run their own business. So that one was not as heavily biased towards the guest. Now, between that new platform and Airbnb, which one do you think most guests would prefer to use? And therein you see the problem. Unless there’s a real boycott of Airbnb and a move towards another viable platform, guests will tend to prefer the platform that gives them the most.
Yet with hosts’ businesses being destroyed around the globe by this pandemic, it just may be that one result is Airbnb ending up with less power over hosts than it had before, as hosts will be increasingly unlikely to want to fill their calendars with bookings that may well represent illusory income.
Airbnb Automated presents his thoughts that this pandemic could “very well be the end of Airbnb”
He thinks that if hosts take Airbnb to task for clawing back all our income for recent cancellations, this could bankrupt them if they are ordered to pay us back.
UPDATE: On March 30 2020, Brian Chesky, CEO Of Airbnb, addressed hosts and said that Airbnb would be giving hosts 25% back for their cancelled reservations which were cancelled in accordance to Extenuating Circumstances applied to the coronavirus pandemic from March 14 and later.
The problem for many hosts is that Airbnb did not even follow its own updated Extenuating circumstances policy, and gave full refunds to guests who cancelled BEFORE March 14 2020.