Airbnb 🏘️ refunding host directed payouts but, issuing a credit for their fees retaining the cash 💰

It’s been one hell of a month. From the first case in the Americas to almost full lock down. Airbnb has updated their extenuating circumstances policy to accommodate for the COVID-19 pandemic. As of now guests can cancel their reservation with a full refund globally if their check in date is on or before April 14th. So what does this mean for this months Airbnb host’s income? Well it’s safe to say that most of the hosts can potentially kiss goodbye this month, and What about Airbnb? That’s another story…

An Airbnb host/guest had to cancel their trip and shared the following screenshot 👇

Judging from this it certainly seems that Airbnb has been refunding the bulk of the payment in cash and their service fees (maybe even the taxes part) are being offered as a credit for the next trip. This is one of a few people in the Airbnb groups that a multiplicity of hosts belong that have come forward with this information. There being not many more hosts/travelers showing this same scenario could be a sign of an isolated event.

BUT!

Let’s play with the idea that Airbnb is doing this, what could the reasons be and what it could mean for them in the aftermath. Of course, Airbnb “the business” needs to maintain a healthy amount of cash on hand for rainy days as do hosts. So this practice is not much more than a way to retain that cash and maintain their reserves. It could also mean that Airbnb has no cash on hand to give in the immediacy… With the global travel industry on a more or less halt OTAs, hoteliers and alternative accommodations providers are feeling the pressure and this is one of the reasons why Airbnb could be doing this. Remember they’re entertaining the idea of an IPO in 2020 and making sure they can survive unscathed or with minimal damage, their valuation is paramount.

The supply can always be replaced

Sounds pretty harsh, but, it’s how the market works. In the infinite game within game theory, it always continues and players shift around the positions. Players will decide not to continue or will be forced to not continue with other players will take their place. It is not a happy thing to think about, but, it’s always something in the back of the minds of every two sided marketplace. If they manage to retain the demand side of their marketplace (keeping them happy) then the supply will naturally gravitate towards it because that’s where the money is. Think about it like, if Airbnb were to lose a significant chunk of market share, Would you “the host” be inclined to list on it? or Would you look to wherever or whomever that market share was distributed too?

So at the moment, if this is Airbnb’s response to this incident I won’t agree with them (mainly because this situation affected hostpitality since Airbnb is one of our channels) but, I could at least understand them. Assuming that this is where their intentions and priorities lie should tell us a very clearly that our businesses should not depend of others to make it’s income.

In our model we have the fortune to have had incorporated other forms of income to be able to start diversifying, but, for those hosts out there solely dependent on Airbnb or solely dependent on only one OTA start considering expanding to other channels or other revenue streams that complement your core model.

-Gian from Hostpitality