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New feature: make your stay non-refundable


#1

I was taking a look at my listing today and noticed what I believe is a new feature: making your reservation non-refundable for a discount.

Do you all see this option as well, or was it just rolled out in my city?

I clicked through to their description: https://www.airbnb.com/home/non_refundable_reservations

I wonder if AirBnB keeps all the money of a guest cancels, or if the host sees some of it. I also wonder if AirBnB is covering the cost of this discount, or if they take it out of our payout.


The Best Ideas I've Seen for the New Strict Cancellation Policy
#2

Wow! This is bizarre! Thanks for posting this!


#3

Looks like yet another move to make booking an airbnb just like booking a hotel. I haven’t seen this on Airbnb but I’ve seen it for hotels. If my trip is coming up soon I’ve opted to take the discount. Since I have flexible cancellation I wouldn’t see this on my listing anyway.

If you find out how it works let us know.


#4

I saw that for hotel sites as well. I think Agoda has that. Save blank blank to make it non refundable.
Just another bit of evidence to underscore that they intended to go tooth and nail with hotels.


#5

I just checked my listing and indeed (Tucson, AZ) has this feature… So does that mean if they cancel instead of the 50% per night they would get back, now the HOST gets to keep it?


#6

i would be surprised if they did … very surprised,


#7

@Xena Which cancellation policy do you currently have? Who is eating the $12, AirBnb?


#8

Wow, I have both a flexible and a strict listing…can’t wait to learn more. Thanks for sharing.


#9

Don’t see it on mine.


#10

From the blurp about guests from the EU, it looks like Airbnb is paying the discount amount to hosts, so if the guest does not cancel, the hosts gets the same amount whether guest takes advantage of this or not. In exchange, the guests assigns his/her refund rights to Airbnb. Hence if you have a flexible policy and the guest cancels, Airbnb will get the refund the guest was going to get, paid for by the host and the host won’t be the wiser. I am no lawyer and hope I am misinterpreting this…

Effectively, this would mean Airbnb is willing to pay money (to hosts) do financially profit from guest cancellations, while happily taking advantage of its power to force hosts to bear this financial risk of cancellations. Actually, even worse, I think, for giving the discount to the guests, Airbnb makes the guests bear financial risk of cancellations, thus financially benefitting every time a guest cancels such a discounted rental. Hosts might not even be aware of what’s going on behind the scenes.

In which case hosts like @K9KarmaCasa with flexible policies would end up ´paying’ the most to Airbnb (despite their cash flows remaining the same as in the case where guests would be reimbursed when they cancel).

If this is profitable, they sure will push hosts even harder towards more flexible cancellation policies. And since Airbnb effectively gets to set the discount, why would it not be profitable? The main thing that works against airbnb is that people tend to dislike risk, so the discounts that Airbnb would have to give to guests (and pay to hosts) might have to be larger on average than the inflows they can get from cancelled trips. Especially when guests who would have cancelled if they could have gotten their money back now prefer to travel grudgingly, because they already paid. And a new wave of disgruntled travelers has been created. Plus, there is selection bias, that is people who know they have a high risk of having to cancel will pay full price, while those that are less likely to cancel will go for the discount. I wonder if the discount is guest-specific, i.e. depending on guests’ cancellation history.

Why is the blurb only addressed to guests from the EU? Probably because the guests would otherwise be protected by European laws against this, while these (and many other protections) don’t exist in other jurisdictions.

Sorry for the long post, but writing this down sort of forced me to think about it. And the more I thought about it, the more absurd this all became. I really hope I misread or misunderstood this! First I thought Airbnb was insuring itself against cancellations, but they never carried that risk to begin with. So now it looks like a typical speculative monetary gamble on behalf of Airbnb. Maybe they can bundle and sell the cancellation payouts to third parties and make even more money? The possibilities. Yet so wrong!

Wish they would work on travel insurance for guests (or cancellation insurance for hosts) instead. UNLESS they are trying it out this way and ultimately will offer this to hosts…

I am going to stop now.


#11

@Kingi -
First, I saw the EU comment, too. I did not conclude the same as you - it’s probable that the legal team advised Air to have the guest assign the refund right to them instead of to the generic term “host”. Especially since Air is the one managing the transaction, I think the only option was to assign the refund rights to Air. Air can then choose to pocket or pass along the money.

However, working through the math, I think you are right. Air will pocket the forfeited rent and pay out according to the host policy.

This will get VERY interesting. Say you are a guest that rents a place and takes the non-refundable option. Now, you have to cancel because of an extenuating circumstance, and AirBnB has to fork over the whole amount. You think they will be happy about this? I’ll bet “extenuating circumstances” applications become really frequent on these. Now, AirBnB has a financial stake in accepting them or not - and I’ll bet they disallow a lot of them.

I don’t see this ending well for Air if they try to pocket the forfeited money.


#12

My cancellation policy is moderate.


#13

NO! Don’t stop! I was digging your assessment! You are so right!

At first I thought it would be good for hosts…now I know better. They will never implement anything that will be good for us. It’s a sad state of affairs. They do seem to be getting desperate.

Their ultimate goal is to push all of us toward offering free cancellations, with a totally flexible policy. Putting all of us on IB while they are at it.


#14

Hosts are like a herd of cattle being funneled toward one gate.


#15

The gate to the abattoir.


#16

Just had a guest ask for an exception to my cancellation policy, and it made me think: we’ll probably never know if guests checked the “wave cancellation policy” box, but they’ll probably still ask us to cancel their reservations for them and make exceptions regardless. I can see some new hosts even being convinced to cancel the reservation on their end without realizing they’ll take a hit to their account.


#17

What was the exception they wanted?


#18

Wanted to either add a day to their stay or cancel (the day they wanted was already booked), and a refund if they cancelled.


#19

This is interesting! That is essentially Air’s entire 3% fee they’re eating, so it must be a profitable gamble for them.


#20

here is the last sentence of the new “no refund” policy. The first phrase indicates that there will be no change for hosts…superseded why? What reason beyond extenuating circumstances such as death or weather or the house is not as described are there?

Cancellation policies may be superseded by the Guest Refund Policy, extenuating circumstances, or cancellations by Airbnb for any other reason permitted under the Terms of Service. Please review these exceptions.


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