The Serious Hidden Risks of Hosting with AirBnB

[Tom-And-Rene0]

We have been with AirBnB for several years now with our dozen or so properties, and for the first few years we felt they were a real improvement on other similar companies.  In the past few months though, we have been hit by unexpected actions by AirBnB, and it is important that other hosts realise there are actually real risks in hosting through AirBnB that they may not be aware of:

1) AirBnB  can cancel any booking, at any time, even after the date of check-in, and return 100% of the money to the guests irrespective of whatever cancellation policy you have on AirBnB and with no discussion with you as the host. 

2) AirBnB can just stop paying out money to you, even after guests have checked out and you as a host have incurred all the costs of having had them stay.  

In the past few months AirBnB has carried out both of these actions against us, so let me explain more how AirBnB justifies this.

The first action is able to be taken by AirBnB under the "Extenuating Circumstances" policy which allows AirBnB to cancel any booking with zero notice and zero discussion with hosts for a legitimate reason.  The first that hosts will know about an "Extenuating Circumstances" claim is when they receive an email from AirBnB saying the booking has been cancelled and the guests repaid.   

For us we only found out after the guests had physically failed to turn up at the property and after we had already purchased food for the guests and hired staff (the booking included breakfast and housekeeping/cook).  This was on a high season week that we could have filled several times over.  While the guests did have a fully legitimate and unfortunate reason to cancel (a death of an elderly family relative, although not one of the party travelling) there was no notice to us by either the guests, or AirBnB, and no willingness to even consider other options such as claiming on travel insurance, or deferring the stay to a later date - just an obligation for the full 100% refund from us as the host.  

The issue for us is a process whereby AirBnB sets itself up as both judge and jury; does not allow the hosts to provide any counter-evidence; and does not even inform the hosts that a claim has been made until after it has decided its ruling.  

This process is just wrong, and that is before you even consider whether it is right for a host to have to pay all the costs preparing a property, but then, through no fault of their own, receive none of the expected income . 

This policy also fuels moral hazard as well.  Why should a guest ever purchase travel insurance for a booking through AirBnB?  Instead they can call up AirBnB and get their money refunded anyway and avoid the hassle of an actual insurance claim.  AirBnB's Extenuating Circumstances policy essentially means that every Host is (whether they know it or not) providing free travel insurance to guests, and is obligated to repay them if the guests have a legitimate claim that guests would normally have had to make through their holiday insurance company, and bizarrely the host has zero rights to even question such claims.  

The second action is able to be taken by AirBnB under no policy at all it seems, but instead under the guise of something called "routine security checks".  Apparently AirBnB gives itself the right to suspend payouts to hosts, even after guests have checked out, in order to carry out a "routine security check" that is supposed "to preserve the integrity of your account and your funds". 

However the moment we complained that AirBnB had stopped making any payments to us, they cleared and sent all the outstanding payments immediately, but it is worrying that AirBnB feels that it can do this, and that if we had not spotted it, AirBnb could potentially still be holding onto the money paid by guests and owed to us.

Also it does raise the question, despite us having been a host on AirBnB for over 7 years now, and having achieved SuperHost status - What would have happened if we had somehow failed this so called "routine security check"?  Could AirBnB have kept this money or returned it to the guests?  If not - then why were they carrying out "security checks" anyway? And if they did have concerns on the account, why not contact us to discuss them, rather than just stopping payments and not informing us that they had?   It is also worth considering that stopping payouts benefits AirBnB financially, through enhanced cash flow, and interest earned on the funds retained, and so AirBnB has a clear financial incentive to do take this action.

At the heart of this is communication - AirBnB is losing its ability to communicate personally with hosts, and increasingly losing the trust of seasoned long term hosts such as ourselves.  This is not good for AirBnB, just as it is not good for hosts.

So beware - on AirBnB a confirmed booking is not actually confirmed, and your guarantee that AirBnB will pay you if guests do stay, is not actually guaranteed either.  

[Brian281]

Hi Tom and Rene,

I definitely see what you mean, and I think that increased communication from Airbnb would make a huge difference here. However, I have to admit that I know extenuating circumstances claims can go both ways. My wife and I have guests in our home virtually every day, and a few weeks ago our baby son was attacked and mauled by a dog (the dog did not belong to a guest). We found ourselves suddenly in the emergency room, and after surgery we needed a couple of days to calm down and recover as a family.

At the time, we had a guest in one of our rooms who was halfway through a 4-day reservation, and another who was to arrive later that day. I called Airbnb and explained, and they cancelled both reservations and assisted the guests in finding alternative accommodations. We were able to have the next 2 days alone to deal with what had happened, and while we obviously didn't get paid for the reservations that were canceled, we weren't penalized in any other way. I felt really bad about inconveniencing the two guests, but my kid comes first, and Airbnb was very understanding about that.

I guess my point is that Airbnb's policies can be arbitrary, and they certainly aren't communicated well, but they aren't always anti-host. They sometimes work in our favor.

Brian

[Kimberly54]

WOW, @Tom-And-Rene0 and all,

Deep subject(s).

First, I know this thread will be getting AirBnB's attention, and you've identified a number of places that really deserve attention, but the only one I'm going to comment on is Extenuating Circumstances:

This has gotten a bit of community press lately with all of the various disasters.  I know of people whose 'mothers' have died SO MANY TIMES to get out of a booking.  So while for the truly dead relative it sounds terrible to ask for PROOF, unfortunately there are a lot of fake-dead-people out there!  This is what most airlines do these days.  If you're in hospital, you really do have to have a note from your doctor.  (Even AirBnB requests these things.)  I recently had to cancel a guest... DID have the note from the doctor... and the guest politely bowed-out, so I actually never submitted the note.  Everyone was okay.  Guest never showed up, no one got paid, I was in hospital.  Bummer all the way around, but we were all cool.  (Haha! Except me, in hospital!) 😉

But as I understand it, PROOF IS the policy.  That said, there really should absolutely be some discussion; not the situation you described. 

I'm going to expand on this a little to natural disasters--kinda tough to provide proof in these cases, and as we (hosts) are the ones in 'the business,' there are just some business-things we have to accept, even if it's not 'fair.'   Life isn't always fair and sometimes someone just needs a hand.  Even if it's not spelled out specifically, I belive this is AirBnB's view.

I don't know anything about travelers insurance.  I used to travel a LOT for business... don't know a thing about it, so no comment there. 

What I am starting to understand is that AirBnB is trying to be SUPER protective of BOTH the hosts and the guests... and that can be a slippery slope. 

Best,

[Kyle28]

It sounds like you are trying to make a case for yourself. 

The guest was refunded because they had extenuating circumstances. 

Bad things happen to good people all the time. In this instance I would wager this happened to both of you.

One of the longest tenured superhosts.

Kyle **** - WI

[Carol-Lee1]

From reading the initial post, I got the impression that they were mostly complaining that they were not given any notice and only found out about the cancellation because the guest didn't show up.  There really isn't any excuse for that.  AirBnB should have notified the host at once as soon as the claim was made so at least they might try to re-book, or  (in my case at least) not have to wait around for someone who isn't going to show.  I understand there are extenuating circumstances but the host shouldn't be punished for it.  That was all on AirBnB.  

[Kenneth12]

Hmm.

I think the extenuating circumstances policy is clear.  It requires verified documentation.  Sometimes it may be inconvenient,  but, you are complaining about how many incidents among how many bookings?  1 in 500?

You appear to have had a payout issue.  It was resolved quickly.  I'm not sure the Strurm und Drang is necessary?

Otherwise,  I'm probably absolutely agreed with you that there's no personal connection with hosts,  and that Airbnb is tending towards an Uber-like mess of hyper 20-somethings in the Bay Area making weird,  arbitrary decisions over things they don't understand,   with insufficient controls,  little consistency,  and "no adults in charge."

That is what it is.

[Inna22]

In have had so far about 20 stays  at one of my properties and 3 extenuating circumstance cancellations. So no, not 1 in 500

[Tom-And-Rene0]

Hi Kenneth,

actually both issues are a little more serious than you make out. 

Three separate times last year AirBnB stopped making payments to us without any reason or justification.  We now monitor every single payment, and do not close a booking until the payment has physically reached our bank - a real hassle when you have 10 properties, and not something we have had to do with any other similar company such as Tripadvisor or Homeaway.

On "Extenuating Circumstances" the risk is even greater. 

Our properties are in Bali, which has an active volcano - but far where our villas are.  When the volcano started erupting (ash and smoke) in September 2017 AirBnB wrote to every guest  booked to stay at our properties, and told them they could cancel due to "Extenuating Circumstances", and AirBnB (i.e. meaning us as hosts) would give a 100% refund.  This was despite the Indonesian government declaring all Bali tourist areas safe, and despite no change in  travel advice for Bali from any country, except to tell people not to go within the 12km exclusion zone around the volcano (our villas are 80km away). 

So rather than 1 in 500, AirBnB offered cancellation and full refunds to 100% of all of our guests.  What is more AirBnB also offered guests discounts if they booked another trip through AirBnB after they cancelled.  Luckily the majority of our guests ignored AirBnB and continued to stay with us, but AirBnB's policy still cost us a significant amount financially.  It also destroyed any trust that we as a host ever had in AirBnB as a company.

[Marisa-And-Colin0]

Thank you for this heads up.  I have been with airbnb for 6 years now.  In the beginning they were relatively small and had really excellent customer service.  The last couple of years have been rocky though, and I am starting to seriously consider switching to a different hosting platform.  The two worst experiences I had (all within the last two years) were the following:

1. I was contacted by a guest who told me the apartment had been broken into.  This was obviously very alarming and through the course of investigating we learned that they had 3 extra guests staying than they were allowed (we allow a maximum of 4 and they had 7 people staying in our small Brooklyn apartment) and that they had then brought strangers home the night before to sleep over.  Because there were no physical signs of a break-in, we determined that the strangers they had brought home had robbed them. (They claimed they were missing a laptop and a pack of cigarettes.) There was no way to prove it, but because they had more people staying than we allowed, we asked Airbnb to remove them.  It then took 2 and a half days, and many many calls to customer service (when we called to follow up the second day, the person we spoke to was not even aware of our problem!) to get them out of our home.  When they finally left, they didn't return all of our keys so we had to have the locks changed and Airbnb only agreed to pay for half of the cost.  So we were out the money for the reservation AND half the cost to have all of our locks changed (around $350).

2.  A guest and his family broke off our toilet seat and did not tell us.  When our cleaning person discovered it, I tried to recoup the cost of the repair from the guest's damage deposit (the cost of a new seat plus the cost to have our handy man go over and install it--around $120).  The guest then lied and said the seat was already broken when they arrived.  Airbnb then arbitrated and decided that we only deserved $50 and claimed the seat was damaged due to "normal wear and tear" which meant I could not use their much touted "million dollar host insurance" policy to re-coup the remainder of my expense.  So basically, if they get to decide that any kind of damage is just "normal wear and tear" then their so-called "host insurance" is totally meaningless.  I mean, really, who breaks off an entire toilet seat from normal wear and tear?  

So far these have been expenses that we have been able to absorb, but the way these incidents were handled by Airbnb is very troubling.  I guess I am waiting for that third strike to finally change hosting platforms.

[Gerry-And-Rashid0]

@Marisa-And-Colin0

Well said - however extenuating circmstances works for both parties in equal measure. I am comfortable signing up for that as it was clear in their T&Cs. I am also comfortable that they do not need to share the reasons for the cancellation - it may be a very personal or upsettingi reason. It's sucks though when it happens.

[Marisa-And-Colin0]

@Gerry And Rashid

But I wonder if there isn't perhaps a better way to handle this circumstance than to ask the host to bear the full cost of a guest who cancels at the last minute.  The guest may indeed have had a personal situation that required them to cancel last minute and I don't need to know the details, but they could also just be lying to get out of paying for a reservation that they no longer want to honor.  There is no way to know.  It seems at the very least, that if Airbnb is going to arbitrate these situations and decide that the guest is entitled to a full refund with no input from the host, they should refund the host part or all of the cost of the cancelled reservation themselves.  They have certainly collected enough fees from me over the years to cover the rare last-minute cancellation many times over.

[Sheila146]

@Marisa-And-Colin0

Concerning anecdotes.  With story #1 do you mean these inconsiderate guests were REFUNDED by airbnb for their stay?  It seems rather they should have paid you extra for the additional guests at least.

Which hosting platforms would you be considering switching to?

best regards,

Sheila

[Marisa-And-Colin0]

@Shelia0

I probably should have said that I was out the money for the remainder of the reservation in that first anecdote.  The guests were supposed to stay for a month and they were only 3 days into their stay when that incident happened.  It then took me another 3 days to re-book the apartment after they left.  So I lost that income and part of the money to have the locks changed.  Airbnb never offered me any extra money for the extra guests.

I have considered VRBO--a platform that hosts have to pay for but otherwise works very much like airbnb.  Also Corporate Housing By Owner and Home Away.

[Ange2]

@Marisa-And-Colin0  "I have considered VRBO--a platform that hosts have to pay for"  

@Marisa-And-Colin0   Hosts do pay for Airbnb, it's just a different method, a % is taken out of the total cost of each reservation from the hosts payout.

[Canary0]

Hi

I totaly agree with you,even the guest and AirBnB should under stand once its Noshow from the guest or from the Airbnb business woner has to be paid if woner is not able to provide the place to stay in his room he has to do altranitive arragement to the guest.

Airbnd should has some policy are they should create one

Mukesh **

[Michelle-Larry0]

thank you for this insightful and accurate critique of airbnb. I have just experienced first hand their abusive cancellation policy here in Sonoma due to the fires we are having. They are over-riding host cancellation policies and giving guest full refunds for reservations a full two week into the future due to "extenuating circumstances," when the fires are already coming under control and life will be returning to normal for much of the area within the next 7 days. Basically, there will be no "extenuating circumstances" in two weeks. But we, the hosts, are suffering these unwarranted cancellations to serve airbnb's profits and public image.