California Is Banning Short-Term Rentals. Why Can’t Travelers Get Refunds?
Travel and travel planning are being disrupted by the worldwide spread of the coronavirus. For the latest updates, read The New York Times’s Covid-19 coverage here.
California’s new travel restrictions, put in place to help prevent hospitals from being overwhelmed by the pandemic, have thrown vacation planning into reverse as travelers start canceling their lodging reservations. From now until at least Dec. 31, it is illegal for all hotel and short-term rental lodging owners in California to make or honor reservations for people coming from out of state unless they plan to quarantine in place for 14 days or are coming for essential purposes like health care, or infrastructure work. In much of the state, restrictions are even tighter, with only essential travel allowed.
There’s a big split when it comes to cancellation and refund policies, though. Hotel chains by and large are accommodating travelers with full refunds. Many small hotels are doing the same. But some large home-sharing companies, like Airbnb and Vrbo, are telling guests that there is no guarantee they’ll get their money back.
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Every aspect of the travel industry has taken a significant hit during the pandemic, but home-sharing companies have had an advantage over hotels — they are perceived as safer. It’s easier to practice social distancing when you have your own entrance and kitchen, and are away from other guests. Short-term rentals have been regarded as a pandemic getaway for those who are working or learning remotely and can still afford a trip.
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Airbnb, whose recent I.P.O. garnered the co-founder and chief executive, Brian Chesky, around $11 billion based on the company’s overall valuation, has one of the strictest lodging cancellation policies. While it granted refunds at the very start of the pandemic and then partially reimbursed hosts, since mid-March, the company has taken the stance that guests understand that travel may be disrupted by the pandemic, and has been using pre-pandemic rules that allow hosts to choose from one of three standard cancellation policies. Payment pages include information about the cancellation rules. Airbnb does have an “Extenuating Circumstances policy” but explicitly states it does not apply to reservations made after March 14 for Covid-related circumstances other than actual sickness. Individual hosts may agree to full or partial refunds.
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Vrbo, a vacation rental company owned by Expedia, follows policies similar to Airbnb. Its coronavirus resources page advises travelers to “Review the property’s cancellation policies. They apply even if your reservation is affected by COVID-19.” In the same vein, VRBO’s “Book With Confidence Guarantee” explanation on its website specifies that the guarantee was designed to protect guests “from fraudulent listings and property misrepresentation. It does not cover cancellations due to unforeseeable circumstances, such as COVID-19.” Customers who purchased travel insurance may be able to request a voucher for future dates.
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In essence, travelers could bear 100 percent of the financial impact of any local shutdown when booking with the companies.
Vrbo said in an email that it does not plan on changing its policies and that “travelers should work directly with the host on an alternative that works for both parties, such as rebooking the trip or a travel credit that can be used at a later date.” Hosts are not required to offer those alternatives.
Airbnb said in an email that “Our extenuating circumstances policy is intended to protect guests and hosts from unforeseen circumstances that arise after booking,” and that after the declaration of a global pandemic in March, “Covid-19 and its consequences were no longer unexpected, including the risk of continued or new travel and movement restrictions.” It noted that hosts choose a level of flexibility when they offer their homes for rent and that renters are informed of the policy when they make a reservation.
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Those policies aren’t sitting well with guests like A.J. Sheffield, a software engineer in Silicon Valley, who booked an Airbnb in Southern California with his girlfriend and children for December. When the Stay At Home order was declared and he requested a refund from Airbnb, the company cited its rule and the refund was denied. “I understand they created the policy based on previous lockdowns, but this is more severe,” said Mr. Sheffield, referring to the fact that Airbnb home rentals were able to stay open in earlier shutdowns. Under current rules, hosts are breaking the law by continuing to rent for nonessential travel.
“Should we just take the hit with every new situation?” he asked. “Should we just never book with them again until we can be assured the government won’t surprise us with any new restrictions?”
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The major hotel chains, in contrast, have tried to accommodate guests financially as the pandemic has unfolded. Hyatt hotels in California are proactively notifying guests of the new California travel restrictions before they arrive, according to the company. The more flexible cancellation policy the company put in place at the beginning of the pandemic remains in place. Hilton hotels will notify affected guests by email and cancel reservations from out-of-state guests with full refunds, according to the company. Marriott recently extended its cancellation policy through the end of March 2021. IHG continues to extend the dates for guests who had non-refundable pre-paid bookings to be able to cancel without penalty.
Some smaller hotels are also trying to accommodate travelers’ changing plans. Patty Baird owns the Cedar House Sport Hotel in Truckee, near two major ski resorts and in an area which is now limited to essential travelers. Predicting there would be travel disruptions, Ms. Baird has been taking reservations without requiring deposits since the late spring, so there is no negative financial impact to guests who cancel or reschedule. Much of her clientele returns year after year, she said. “We would never charge them if they couldn’t come,” she said. Those who do come are asked to sign a statement saying they are there for essential travel.
Ms. Baird is reaching out to people with reservations, but some are trying to game the system, she said. “If you are an essential worker taking a few days’ vacation, that is not considered essential travel,” she said. As a small hotel owner, she said she wishes the government would supply some financial assistance to make up for the closures which run through at least the end of the year. “This is our busiest time of year,” she said.
Travelers are getting the message to stop coming, though. California hotels and vacation rentals had 47 percent fewer reservations made in the first week of December in 2020 compared to the same week in 2019, according to Transparent, a firm which analyzes vacation rental information for 35 million listings worldwide.