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.  

[Linda108]

Well stated, @Tom-And-Rene0.  I don't have other platform experience to compare, so I don't know if there are platforms that handle these issues better.  

I really agree with you about travel insurance, although I wonder what the coverage is for cancellations of accommodations such as Air BNB.  That is, hotels usually allow cancellations up to 24 hours in advance with no cost.  I wonder if for your type of accommodation if you could require proof of travel insurance and an agreement to file a claim with the insurance should there be extenuating circumstances.  Again, just thinking.

I have never experienced the payment suspension and don't have any idea what triggers the review.  With all the hacking going on, I have found it is so annoying when the credit card company cancels my card and sends me a new one.  Meanwhile I am without the card.  Still it has to be done, I suppose.

[Jessica-and-Henry0]

@Tom-And-Rene0

I'm still a new host but agree the points you make are a serious problem, especially regarding extenuating circumstances!!!! Although I haven't been at the recieving end of either problems yet, based on posts from other hosts I am worried that it may just be a matter of time.

Airbnb is a great platform and I am really enjoying hosting but despite all the talk about sharing and trust and nondiscrimination, Airbnb should practice what they preach and not dump all the risk onto the hosts.

Totally agree that travellers should be buying TRAVEL INSURANCE instead of expecting the host to shoulder the entire burden. If it's an extenuating circumstance for the guest..... and it's not their fault so they shouldn't have to pay, then what did the host do to deserve a last minute cancellation or no-show AND no payment or compensation for the effort put into getting the place ready or loss of income?????

[Ljupka0]

Hi Tom and Rene

Excellent points and I'm so sorry you've had to deal with these unfortunate circumstances. I only want to add the fact that there is an "Extenuating Circumstance" policy for a host cancelling as well. My Airbnb was broken into last year. I had two reservations back to back and provided proof to Airbnb of the breakin. They immediately responded, worked with the guests and rehomed them in other places. The only catch here is that there is no way for you as a host to get any sort of relief when a guest cancels on you. Whereas in the host cancellation process, the guest can always find another place, or, at miminum gets a full refund. 

[Tom-And-Rene0]

While we appreciate that AirBnB can help to find other properties if hosts have their own "Extenuating Circumstances", there is a difference in that if the guest cancels due to Extenuating Circumstances, then the guests get refunded 100%, whereas if the host cancels then the guest also gets refunded 100%.  AirBnB will waive cancellation penalties on the host - but either way the host is left with no income.  

This is a business for us, and so losing a week of income is exactly that, a week of lost income, while still carrying the costs. Also our properties are in Bali, which means unlike hotels or listings in cities where there is no local demand and almost all potential guests fly in, so a last minute cancellation essentially means negligible possibility of getting another booking.

Maybe AirBnB should be looking at offering an Extenuating Circumstances insurance for hosts?!

[Cynthia43]

YES--this just happened to us! I've been on 4 phone calls so far, so can confirm EVERY point made here.

1) At the guest request, Airbnb cancelled a 1-week reservation due to guest claim of "extenuating circumstances" even though it does NOT meet Airbnb's definition of "too ill to travel."

2) Guest claims that she "might get ill" from smoke in the air due to forrest fires across the state right now even though the air is rated "good" and is better than where she lives.

3) She stated in detail in Airbnb's messaging that she's been traveling acround the state, so she missed our 14-day prior cancellation--not realizing that smoke would bother her. She  needs the refund and is trying to find a place to book on the coast! She admitted in writing to living in a city with very bad air quality.

4) Airbnb kept our calendar blocked up to only 4 days prior to her reservation, claiming they were waiting for guest's doctor's note and will give the guest up to 14 days from the first day of the reservation to provide a doctor's note!  That's too long!

6) Contrary to what the Agent JUST told me over the phone, they emailed me stating that they cancelled the reservation and refunded 100% even though they have NOT yet received the guest's doctor's letter and that they would still honor our cancellation policy if they judged the case in our favor.

7) We agreed to refund back some of  guest's money if she immediately cancelled her reservation so we could try to re-booked those dates and recover some revenue. She did not cancel. And Airbnb over-rode us, anyway without bothering to tell us.

Be very careful about booking guests who start their inqury with a detailed explanation of surgery or health conditions they suffer are recovering from, as this can be used by the guest for last minute cancellations which Airbnb supports as "extenuating circumstances" and refunds your revenue. HOSTS BEWARE! Airbnb stated that we should submit a Feedback form as this is how they make changes. I'll try it, but I informed them that I would also warn other hosts of their unfair policy.

[Zappa0]

Do any of these extenuating circumstances require proof? Had a guest say they were deployed and wanted a refund. They even offered to documents saying they were on military duty...I said sure if you can send them id be happy to issue refund. Never heard another word. 

I think most people are honest but a lot of people will say anything to get a refund

[Linda108]

@Zappa0  My experience as host needing to cancel due to extenuating circumstances was that Air BNB levied all the penalties until I produced a medical document substantiating the medical issue.  Air BNB assisted the guest with relocation.  While guest cancellation due to extenuating circumstances can cause financial harm to the host, host cancellation can cause both financial harm and totally ruin a holiday for a guest.  I was well aware of this for my guests as they were travelling from another country and had planned their visit for months.

[Zappa0]

Shouldnt Airbnb pony up some of the cancellation cost then? It's their policy...they collect some pretty hefty fees to run this platform. 

This is the problem with shared economy. Airbnb is a business yet we are not technically employees so they can do what they want. 

This season will be my last with Airbnb or renting. Too much headache and stress amd guest expectations are just too high. 

[Victoria576]

 Hi Linda, I have had to do the same thing as a host due to an upcomming operation which will render me incapacitated for a few months and therefore not able to Host AirBnB guests. I cancelled the guests over with over 100 days notice and AirBnB have now charged me over $400 from my current payments for those cancellations. I have a medical certificate from my Surgeon. Do you know how long AirBnB takes to process the refund to me? Any info would be much appreciated. regards Victoria

[Ciara17]

I just had a cancellation of a travler from Europe after 3 weeks confirmed. I turned down several other rentals fro another platform. My apt rent is due & Im paying the price. The guest suffers no consequences whatsoever. Its all on the host.

[David126]

Undoubtedly these are risks, not sure they are hidden, seems many people dive into AirBnb without reading very much about how the system operates. Just read the many threads here.

The extenuating circumstances policy is much broader than cover provided by travel insurance so they are not directly comparable.

In the totality or risks I would have thought this is fairly minor, obviously there are Hosts that realise they are running a business with evrything that goes with it, many seem to be oblivious.

Has been said many times you should never assume that your cancellation policy will be enforced.

[Tom-And-Rene0]

Since we made this post, we have had a further "Extenuating Circumstances" case from AirBnB, and this time a full 100% refund was given due to the possible eruption of a volcano more than 90km from our property. As before, the first we knew of this was after AirBnB had ruled on the claim, and the refund had already been made. 

This means that every AirBnB booking, at every one of the properties we represent (which are all in Bali) can be cancelled at any time, even after the guests should have checked in, and we will have to give a 100% refund.  This is hardly a "fairly minor" impact on our business. Also from what we have seen, guests are increasingly using this policy as they become more aware of it, with fewer now getting travel insurance, despite repeated requests from us to do so. 

We wrote 6 emails to AirBnB in response to this particular ruling; provided government statements from Singapore (where the guests were from) and Indonesia (where the property is located) all stating that it was safe to travel to Bali (except to an exclusion zone within 12km of the volcano); and have called AirBnB almost every day since they announced the refund. 

We did not receive one reply, not by email, not by phone, nothing.  

This is the real issue.  AirBnB has got so large and powerful that it no longer needs to treat hosts fairly.  We are likely to remove our listings from AirBnB, and I suggest that other hosts seriously consider doing the same, but that will be but a pinprick to the large faceless behemoth that AirBnB has sadly become.  This is no longer a company that values or cares about hosts views or concerns, and so if you do continue to list with AirBnB, please bear that in mind.

[Ehukai0]

Tom and rene—- you said it BEST ——

[Cynthia43]

Update. Magically, while on the last call with Airbnb case manager, the guest's case manager supposedly received her doctor's note and issued 100% refund even though it contradicts the guest's own messages and only 4 days before the reservation start date! I told them if they were going to side with the guest, they could have at least unblocked my calendar, since the guest would NOT cancel her reservation--so I could try to re-book those dates.

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