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As you might have read in another post here on the forum, Airbnb is planning to introduce an update to the Cancellation Policies and a corresponding increase to the host service fees.
The change is for now planned for Italian hosts starting from October 18, but everything seems to hint at a future roll out to every host.
In short, what is going to happen is the following:
Each cancellation policy will have a grace period, i.e. a set period of time before a reservation when a guest can always cancel and receive a full refund
The Moderate and Strict policies (less favourable to the guests), will be accompanied by an increase in host service fees, from 3% to respectively 4% and 5% to keep into account the extra protection from cancellations
Guests that cancels pre-trip will not be charged the guest service fees, making cancellations truly 100% refundable
The rationale that Airbnb is putting behind this is that by having more relaxed terms, more guests will book, and that this will compensate a possible increase in cancellations.
However, while this logic is true on a global level, it will hardly be valid for a single host. Getting a reservation cancelled is always disrupting from a host point of view!
The Italian host community is on fire, as hosts deem these changes unacceptable and only favouring the guest side. They even created an online petition as Airbnb is not really addressing the matter in a direct way…
It’s interesting to know your opinion on this topic. It’s probably still possible to get Airbnb to change its mind and address this changes in a more considerate manner.
I know I’m going to get piled on for saying this; but I have no problem with Airbnb’s changes to the cancellation policy. Airbnb is now giving up their fee upon cancellation; which is appreciably more than 1% or 2% of the booking. This will entice more travelers to use Airbnb. As it is best for them if hosts have a flexible cancellation policy; it is good business to incentivize the flexible cancellation policy. What is the more considerate manner that you propose?
Yes, another example of how AirBnB shows it does not care about the hosts.
Imagine having your calendar blocked for half a year by a guest, and then canceled 31 days before booking, because the guest found a slightly cheaper option.
AirBnB does not care, they have had the guests money for 6 months making big profit with it on the financial market.
And a 80% chance the guest will rebook trough AirBnB for the same dates, only another listing.
The only one that is getting hurt is the host, as usual.
The worst thing is that a guests always gets 50%. Even if they are already on your doorstep.
50% loss of revenue, and no chance to rebook…
As soon as this policy start for me, I will start sending my guests a standard message with every booking request:
“Sorry, due to the change in the AirBnB cancelation policy, we do not take any bookings trough AirBnB with an arrival date more than 30 days in the future.”
If they want to book me, they will find me outside AirBnB. If not, there will be someone else booking within the 30 day timeframe.
Airbnb isn’t giving up anything. Airbnb is not a charity. Yes, they will now be refunding the service fee if guest cancels. But they have done the math to see if this decision will bring Air more bookings overall, and ultimately increase their bottom line. They have not implemented the refunding service fee to be nice. Plus, they will be raking in 2% more from many hosts.
Think about it - the properties that charge the most per night are more likely to be on the strict policy. So right now if Air takes 3% from a $1500 booking - they get $45. If they take 5% then they will get $75. So Air gets $30 more as they “claim” to do this because they are providing “strict” protection. Yet they allow guests to cancel with a doctor’s note. And they are relaxing the strict policy, not even keeping it the same.
This is just the beginning. Homeaway charges 5% commission, and 3% credit card processing fee. Plus, they charge the guest a service fee. For now, their service fee is lower than Air’s. But that will increase as they continue to A/B test what the traveler is willing to pay.
Do not be surprised that Air will come out and say they need to increase again due to credit card fee increases that they need to pass along. HA pulled this stunt. They started out with a 2.5% rate to get owners to use their payment system. They purposely set the rate lower than what the average person can get with PayPal. Then they said they needed to increase the rate to 2.9% because they decided to start accepting Amex. However, they increased the rate, but didn’t start accepting Amex till 6 months down the road. All of it was intentional. If you don’t use their payment system, then you get dropped to the bottom of search results.
All of these companies want a big piece of the pie. And it is a race to see who can get the biggest cut.
Exactly! The more guests they attract with their more lax candcellation policies, the more money they will earn in interest - I am sure they also calculated this before they decided they will return service fees if guest cancels.
Am I understanding this correctly? If guest cancels during the stay…then they can receive 50% of their money back. AND Airbnb WILL KEEP the service fee. They are not going to refund it back to the guest?? So instead of Air giving the service fee to the host who just lost 50% of their income…Air is going to keep the service fee for themselves…lololol!
I just read an article the other day that mentioned that Air’s head of vacation rental dept. is trying to attract more whole home rentals. lolol!!
The new strict is so bad, that they will be losing a lot of the existing vacation rentals, unless they allow them to move to the strict 60.
The vacation rental market is completely different from the short term hotel market. They will not accept these new rules, too much risk.
I will not risk taking any booking more than 30 days away with these new conditions, and even then they are a big risk.
I often have guests going home a day early, because of the weather. Now it is their choice, in the future I will loose money if they predict rain for the next day.
If the guest cancel during the stay, the guest service fees are not going to be refunded to the guest. But depending on the cancellation policy, further restrictions on the refunded amount will be applied (see below).
Nothing is said about the host service fees, but I’d assume they would still charge the corresponding % on the amount paid out to the host.
You’re right @EllenN, when you look at this from a macro perspective (i.e. Airbnb overall business). And that’s exactly what @cabinhost was also saying:
Less concerns over the possibility to have to cancel in the future → More guests booking on Airbnb (compensating the loss in revenues coming from more cancellations)
However, when you look at it from a micro perspective (i.e. single host) the situation is quite different.
Depending on when a guest cancels a reservation, the chances to get a new booking are different (and likely small if close to the check-in date).
Furthermore, the guest might end up booking again on Airbnb, thus still bringing revenues to the company… but you as a host, will not see a dime of that… you can only hope someone else books the same dates.
Thanks for posting the cancellation “during stay.”
I am not following the whole “Before 12 p.m. local time” versus “12 p.m. on any day after check-in” (for Strict policy)
For example: Guest is booking a week…checking in at 4 p.m. Saturday, and then checking out next Saturday at 11 a.m.
On Sunday guest decides (before 12 p.m.) at 11:45 a.m. they want to leave because the weather forecast says it will rain all week. Guests goes online to cancel, and walks out the door right before noon.
Is the policy that guest receives 50% back of remaining night, including Sunday (since he walked out before noon)???
I dont’ understand why some of the policies use the phrase “after 12 p.m. local time” and others say “12 p.m. on any day after check-in” - is it assumed that Air meant to include the word “after.”?
Been at the island a few days doing a string of little things and improvements, before the next wave of guests start again (October 1st) and it will be non-stop till June 2017. Came in to the mainland for supplies and just had to stop at the forums and see what is up with you all.
Just for future reference: The words ‘Strict’ and ‘Super Strict’ have been used interchangeably by everyone, including Airbnb; it appears that the consistent meaning of the two policies will soon settle down to is ‘Strict’ means 30 days IF the above is implemented worldwide, ‘Super Strict’ means 60 days. Many ‘Super Strict’ (60 day variety) existing hosts are already paying 5%, and do so gladly, for their situation needs such a warning on cancellations in order to realistically be able to re-book. Personally, I am pushing for ‘Super Duper Strict’ (90 day warning) or whatever they want to call it.
@EllenN re-iterated exactly the points what some of us made in the other thread on the same subject: Airbnb’s focus is on the guests and is facilitating their cancelling and thus encourage bookings in the first place; the guest knowing they have ‘nothing to loose’ till 30-days before having to show up (in the case of Strict), it may encourage more bookings, after all getting them to do book and commit (somewhat) is 90% of the ‘sale’.
How this plays out to each individual host (if implemented worldwide) is the million-dollar question.
The one consistency in life is change, but also is what keeps it interesting.
I would go further than that, and say that Airbnb’s focus is on $$$$$$$$. Of course giving consumers the ability to cancel whenever will encourage more guests to take the chance of booking. On the other hand - Air is very aware that if their policies don’t suit hosts, they will need to change them if they wish to retain those hosts. I’m sure a lot of their decisions are based on host supply versus guest demand.
At he moment they do not have to retain hosts.
They still have a huge momentum, and are adding new hosts every day.
People are still drawn by the huge amounts of money that supposedly can be made. Totally oblivious of the expenses involved and work involved.
I still wonder about the look on the faces of new hosts when they receive their first electrical or waterbill.
The $$ is implied, I doubt they are doing this just for kicks. If enough hosts don’t like it and leave, or gives an opportunity to a new competitor, they will shift again. Like the old adage says: “The squeakier and loudest wheel gets greased first”. Economics is really a constant wrestling match of counter-veiling, self-interest forces, based on - $$.
they want to offer a better experience to guests, and these updates are definitely are better for them.
hosts will complain, but will get over the increment in fees. the main issue is the lack of certainty over the upcoming bookings and payouts, that could be cancelled for any reason.
