Airbnb is committing to pay $250 million to hosts who have been severely impacted by the Coronavirus pandemic situation. As per this policy, if a guest cancels a reservation for check-in between March 14 and May 31 because of the Coronavirus pandemic related reason, Airbnb will pay 25% of what the host usually receives through their cancellation policy. The hospitality company Airbnb stated that this would apply retroactively to any cancellations during that period. Airbnb informed that March 14 was chosen as the cut off date because the World Health Organisation (WHO) declared Coronavirus a global pandemic on the same day.
The policy is Airbnb’s way of providing partial relief after the earlier policy caused an outcry. Earlier, hosts felt blindsided by Airbnb’s theory that it would enable guests to cancel reservations and receive a full refund. That earlier policy, which is still active, allows guests who booked reservations on or before March 14 to before May 31 to cancel and receive a standard refund or travel credit.
Airbnb CEO Brian Chesky stated, ‘We determined that we had to allow your guests to cancel and receive a full refund—including all our fees. Please know this decision was not a business decision, but based on protecting public health. However, while I believe we did the right thing in prioritizing health and safety, I’m sorry that we communicated this decision to guests without consulting you—as partners should. We have heard from you and we know we could have been better partners. Airbnb will pay 25% of what you would’ve received for a cancellation based on your cancellation policy. For example, if you would generally receive USD 400 through your cancellation policy, we’ll pay you 25% of that—or USD 100. We’ll send an email with more details in early April to hosts who are getting a payout. Future payments from the fund will be made every month to hosts with qualifying cancellations’
Airbnb also reminded its hosts that it had successfully lobbied Congress to let its hosts apply for federal aid through small business relief programs and unemployment insurance, as part of the new economic stimulus package. The company is creating a $10 million fund for its super hosts and experience hosts. The employees contributed the first $1 million, and Airbnb co-founders Joe Gebbia, Brian Chesky, and Nate Blecharczyk are personally providing the other $9 million. Hosts can apply for grants up to $5,000 from April. As for the guests who want to show support to their hosts during this time, they will soon be able to make payments directly to hosts.
The home-sharing platform itself rarely owns its listed properties, but mostly acts as a middleman between guests and hosts. This model, which has turned Airbnb into one of the most highly valued private startups of all time, foists much of the risk on its hosts. Even before Coronavirus struck and sent the global travel industry downhill, Airbnb faced financial challenges. In the last three months of 2019, the company lost $276.4 million, excluding interest, taxes, depreciation, and amortization, compared with a loss of $143.7 million a year earlier, as per reports. Revenue increased 32% in the period to $1.1 billion. The company is also considering raising more money from investors.