Crazy times we are living in!
As everyone by now knows, unless you are living under a rock (which apparently the CDC recommends these days), the Coronavirus has affected pretty much all of us in some way shape or form. No one could have predicted such a catastrophic event interrupting so many of our lives in so many different ways. No longer can one enjoy life’s common pleasures of going to the movies or out to eat. Shopaholics must accept the online method as their only way to get a true retail therapy fix.
Likewise, Airbnb has been negatively affected and reservations have dropped to historically low rates. With travel restrictions being put in place and stay-at-home orders for much of the country, there are very few guests looking to rent out Airbnbs and the hosts are feeling this consequence right in their pocketbooks. For many hosts, their Airbnb reservations disappeared.
COVID began during the busy season
For any beach destination in the northern hemisphere, March kicks off the busy season. If your property happens to be located in an area popular for Spring Breakers, this time of year may bring in the bulk of your income. Many events also start up due to the weather getting warmer. This heats up the reservations and reflects positively on your occupancy rate.
I happen to offer rooms for rent in one of the main Spring Break destinations of the United States. The beginning of March was no different than any other March. My listings were on fire going for quadruple the regular rate. A huge event occurs every March in my town that brings in over 500,000 people annually. Beachside Airbnb hosts look forward to this time of year for they see a surge in profits.
This year the beginning of March went off without a hitch. Occupancy rates were at 100% and as stated above, the rental rates were very favorable for hosts. As the date creeped into mid-March the tides began to turn. The Corona situation started to grow within the United States. At first many of the regular activities continued and people were still renting. Many people had a laissez-faire attitude about Corona coming their direction.
Listen to the direct quote from the clip shown below, “It’s a bunch of boo-haha.” This video was shot March 8, 2020 and this was the general attitude of many in Florida. People were not taking the threat of the virus too seriously and so the rentals continued.
The general attitude of many people during the beginning of the COVID crisis
Overnight my listings quickly went from being profitable and robust… to nonexistent.
By the following weekend, the tides had completely turned. More and more stories of people contracting the disease within the United States were popping up. The situation in both Italy and Wuhan China magnified the number of deaths soared. Many Americans were no longer viewing this virus as casually as they had in the beginning of March.
Cancellation policies out the window
On March 10th, Airbnb sent out the policy that included “Extenuating Circumstances” to allow cancellations for properties that were located in areas around the world that were experiencing extreme effects of the virus. At this point in time, only areas around Wuhan China, South Korea, and Italy were included. Even though the policy spoke to so few areas, cancellation requests started rolling in. Fear had been put in motion and people no longer wanted to risk their health for a trip away from home.
At this point, Airbnb suddenly my Airbnb reservations disappeared. No longer was my 100% occupancy rate intact. In fact, my Airbnb reservations ceased all together.
Extenuating Circumstances Affects all Hosts
On March 31st, Airbnb updated the extenuating circumstances policy to include all Airbnb reservations made anywhere. This was a huge hit to many Airbnb hosts. Most hosts open their calendars in advance to allow for maximum bookings. These poor hosts thought they had a profitable month ahead. No dice! This update also negatively affected those with no bookings since many many bookings come in last minute. Not a good situation all around. At this point, most hosts worldwide witnessed their Airbnb reservations disappearing.
What about hosts that use a “strict” cancellation policy?
Airbnb offers 3 distinct cancellation options for hosts. Its policies show labels for flexible, moderate, and strict. Flexible reservations allow cancellation up to the day before check-in. This policy offers the most flexible option available for the guest. The moderate cancellation policy allows guests to cancel their current reservation within 5 days of booking. After the 5 days is up, the reservation becomes set in stone. Typically this means no exceptions. The guests are expected to pay in full. Normally the moderate cancellation policy would have protected any Airbnb host who received advance notice about their bookings. Strict reservation policy commits guests and hosts to the reservation upon booking. No cancellations allowed – period.
This update to extenuating circumstances threw these cancellation policies right out the window. All guests received their money back regardless of cancellation policy chosen by the host. This was absolutely great to limit the spread of disease and to aid in keeping guests as future customers. However, this change in policy completely disregarded hosts. Zero consideration was given to the fact that because all guests were able to get their reservation costs back that this also meant that hosts were suddenly out of the money they had been promised; totally a one-sided conversation. The hosts were late to the party and in turn were completely screwed by this decision.
What does this mean for the future?
Obviously with hosts taking such a hard hit during this time many are feeling discouraged. Moving forward hosts must consider cleanliness standards at an even higher rate. The current pandemic issue is no joke and unfortunately it’s surely not to be the last. As an Airbnb host, it is important to be as flexible as much as possible for such catastrophic things that could arise.
It is also an important note that regardless of your chosen cancellation policy, one must not count their reservations as guaranteed income. Airbnb does not submit payment until after the guest has checked in. In other words, until that money hits your bank account do not assume that you will be paid everything that your reservations show is coming to you. No one could have predicted a few months ago that we would all be going through such an ordeal that would affect so many of our finances. This is a good reminder to grow from this experience and attempt to prepare for random catastrophic future events.
Is there a bright side to any of this?
Some good news for Airbnb hosts is that because so many of us have been heavily restricted from leaving home and been put on lockdown, when all this is set and done people will be extremely eager to get out! In many places people are only permitted to leave the house for essential issues. When all of these new age restrictions are finally lifted and we can finally go back to life to being as normal as possible, I predict many people will have ants in their pants. Many will want to break free from being in their home after such a long unprecedented lockdown. This in turn may potentially shoot Airbnb rental occupancy rates through the roof in that initial stage.
Now is the time to take advantage and prepare and be ready for those guests coming through. Use the checklist to see what items you need. Get started now! It is best to take advantage of this time in prepping your place so that when all restrictions are lifted, you are able to greet those guests at the door and be on your way to being an experienced host.