As many of you have been aware, the coronavirus has spread globally and is an imminent threat. So far, there have been over 90,000 cases of coronavirus, but 51,058 of those infected have been recovered.
Since the outbreak of the coronavirus, there has been an immediate effect on the travel industry. Many events have been canceled worldwide, and the airline industry has seen a decline in ticket sales. As there’s been a drop in travel, it’s also resulted in a reduction of bookings in the hospitality sector, with many hotels and vacation rentals seeing empty calendars.
DISCLAIMER: These tips are simply recommendations and should not be regarded as official guidelines. We recommend to listen to local announcements and visit the World Health Organization’s website to stay updated on the necessary precautions you should take to protect your business.
In this article, we’ll discuss how to manage possible cancellations. Plus, we’ve included a bonus: a precaution checklist for your guests that you can place in your rental property:
Policies on How to Manage Coronavirus Cancellations
Coronavirus has resulted in many cancelations across the hospitality industry. In the vacation rental business, both hosts and guests alike have been subject to cancelations. Whilst there is little you can do to prevent cancellations, there is a lot you can do in terms of the consequences.
1. Cancellations on Airbnb
Airbnb has activated several policies to offer impacted hosts and guests the option of canceling eligible reservations without charge. There are several policies that can apply for this situation:
Airbnb’s standard cancellation policies
If you’re listing on Airbnb, the online platform has 3 different types of cancellation policies: flexible, moderate and strict. Whilst the flexible and moderate policies include a free cancellation policy 14 days before check-in, the guests are still charged a service fee. The strict policy means that the host will receive a 50% refund if the guest cancels up to 7 days before check-in.
Airbnb’s Extenuating Circumstance Policy
Following the outbreak, Airbnb has issued an extenuating circumstance policy for both hosts and guests to cancel without any penalties.
Bookings for stays and Airbnb Experiences made on or before March 14, 2020, and with a check-in date between March 14 and May 31, 2020, are covered by this policy and may be canceled before check-in. The host’s standard cancellation policy will apply as usual to reservations made after March 14, 2020.
What does this policy mean for hosts?
Eligible reservations can be canceled without charges, including:
Hosts who are hosting in—or welcoming guests from—severely impacted areas
Guests who are traveling to or from severely impacted areas
Anyone who can’t complete their trip due to travel restrictions
What happens after a reservation like this is canceled?
The guest will receive a full refund (including any fees)
Hosts won’t incur any cancellation fees
Hosts will receive 25% of what they would’ve received for a cancellation based on their standard cancellation policy
Hosts can accept new reservations for those dates
Superhost status will not be affected
If a reservation has already begun (the check-in has passed) this extenuating circumstance does not apply.
Airbnb released a series of tools to help owners and guests with canceling and postponing their hosting and travel plans.
Hosts will be able to directly authorize extra refunds through Airbnb. They will also provide promotions that increase visibility for listings with flexible cancellation policies to drive new bookings. Lastly, they will waive their standard 3% host fee on new reservations for these listings through June 1, 2020.
As the situation evolves, Airbnb will continue to update coverage of their extenuating circumstances policy (including eligible dates and locations). Check out their Help Center article and their Coronavirus Resource Center to stay informed.
2. Cancellations on Booking.com
Booking.com has also modified its cancellation plans and has issued a policy for Forced Circumstances (FC). Just like Airbnb, hosts are able to cancel reservations without any penalties depending on the location of both properties and travelers.
On April 3, they updated their policy and will start treating reservations made as of April 6, 2020 as standard bookings, according to their policies and procedures. They will no longer apply Force Majeure conditions for guests seeking to cancel or modify their booking due to the current COVID-19 outbreak.
For active reservations made before April 6, 2020, regardless of future check-in date:
For reservations made on or after April 6, 2020:
The Force Majeure procedures still apply. There are no changes here.
The Force Majeure policies and procedures that they implemented due to COVID-19 no longer apply.
They applied these policies due to the binding regulations that restrict the movement of people. They apply the Force Majeure procedures as normal to all of the reservations made before April 6, 2020 for any future check-in date where government travel restrictions make it impossible, illegal, or prevent guests from traveling to or staying at the accommodation they booked.
Their regular and standard policies apply, including relating to Non-Refundable and Partially Refundable reservations.
Owners will be in control of whether, when, and how to refund COVID-19-related guest cancellations for reservations made on or after April 6, 2020, based on the policy chosen by guests, your individual, legal and governmental situation, as well as mandatory consumer law.
Booking.com will introduce new messaging across all of their channels to make guests aware of the risk they’re taking by booking Non-Refundable or Partially Refundable reservations on or after April 6, 2020.
For reservations booked before March 13, with check-in date between March 13 and April 30, Vrbo recommends owners to do two things:
Offer guests with “Credit for future booking”, full credit for the amount they’ve already paid if they’re outside of their cancellation window. This credit can be applied to future bookings within the next year.
Offer guests at least 50% refund. The more flexible owners and property managers are with their guests, the more Vrbo will reward them with additional visibility in traveler searches on their platform.
In addition, Vrbo is also:
Waiving their traveler service fees when someone must cancel a trip due to COVID-19, whether the cancellation is government-mandated or not. This applies to reservations made before March 13 and with a check-in date between March 13 and April 30.
Automatically waiving the cancellation so it does not impact ranking metrics or Premier Partner status. Hosts no longer have to call Customer Service to get the cancellation waived for cancellations issued from January 30, 2020, until further notice.
HomeAway also recommends following the same steps as Vrbo. HomeAway will waive all cancellation fees related to this event so they do not affect your ranking metrics and you can focus on what is important.
Expedia Partner Solutions has issued a “flex policy” to most bookings worldwide that were made prior to March 19, 2020, with stay dates between March 20, 2020 and April 30, 2020 or check-in dates after March 19, 2020 and before May 1, 2020. Most non-refundable lodging reservations with flexible cancellation policies are now cancellable and refundable. However, cancellation penalties 24 hours before check-in may still apply.
Agoda’s policies are similar to Booking.com’s. Their policies vary depending on the location of both properties and travelers. However, they will waive all charges & commissions for reservations due to force majeure.
If a guest decides to cancel your vacation rental, you can still recover your revenue depending on the policies you have in place. Now is a time to rethink your strategy and position yourself to your advantage.
Although you may be tempted to cancel reservations from regions that have been affected, we recommend staying calm and treating all guests as you always have. As mentioned earlier, if you take the necessary precautions to sanitize your property, you won’t have to worry about the virus. The high-risk areas are on lock-down anyway!
How to manage cancellations
If you have the opportunity to talk to guests that want to cancel their bookings, you can also do the following to secure those bookings:
Discounts and promotions
One of the most effective measures to secure a booking is to offer a discount as soon as the guest informs you that they want to cancel. Anywhere between 10%-30% will do, but that’s up to you. The guest will, therefore, be more likely to return in the future.
Offer to book on a later date
Another option is to allow guests to change their bookings to a later date. Guests will have a trip to look forward to and you’ll be able to secure that booking.
What to Take Away
OTAs, local governments and the World Health Organization (WHO) are actively working on managing and resolving this outbreak. We recommend vacation rental owners and property managers to monitor the latest news, take safety measures and stay positive.
Use this time to focus on improving your business and implementing measures that will help you sustain your business growth.
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