By Elaine Glusac
Airbnb, born in 2008, famously disrupted the hotel industry. It stole market share, put pressure on hotel rates, inspired the creation of affordable brands and saw hotels across the spectrum create restaurants, bars and lobbies that channeled the local vibe. Airbnb’s recent layoff of a quarter of its workforce indicates the financial strain the company is under. Now the question is: Has COVID-19 disrupted the disrupter?
“I do think hotels may have a near-term advantage,” said Henry Harteveldt, a lodging industry analyst and the founder of Atmosphere Research Group, predicting that hotels will have the edge on hygiene and standardized social distancing policies.
As the industry seeks to recover, the contest between hotels and home shares finds both struggling to convince the public that their rooms are virus-free, their terms are fair and their offerings are social distancing-appropriate.
Nonstandardized Terms
The tidal wave of cancellations that came along with COVID-19 suddenly made travelers aware of the wide range of terms in bookings — from no-penalty, last-minute cancellations to full liability even months in advance of a trip.
Most hotels have generous cancellation policies that allow travelers to make changes to their reservations without penalty 24 to 48 hours in advance of arrival.
The exception is for prepaid, nonrefundable hotel rates, which tend to be the lowest — a good deal unless you have to cancel. But even in those cases, most major hotel companies, including Marriott, Hilton and Hyatt, came through, offering refunds on nonrefundable rates in spring. Some extended the grace period to the end of June.
Given the public health and economic crises, “job No. 1 for travel brand managers is to be kind,” said Chekitan Dev, a marketing and management communication professor in the hotel school at Cornell University, who believes the industry’s recovery begins with being as lenient as possible with refunds and providing more incentives to book, such as adding upgrades.
Vacation home renters especially learned the importance of reading the fine print, which it turned out was anything but standard.
In December, Jessica Bradford, a South Pasadena, California-based publicist, booked a four-bedroom home in southern Maine on Airbnb for a week with friends in July. In late April, after the state of Maine issued plans to require all arrivals to self-quarantine for 14 days through August, she tried to cancel the reservation and realized the cancellation policy on the $7,000-a-week property covered only the first 48 hours after booking. Thereafter, the policy allowed 50% back if canceled a week or more before the reservation date.
“It’s on me for not looking, but the cancellation policy is draconian,” said Bradford, who is still trying to get the deposit of about $3,500 back.
Airbnb declined to comment directly on rentals in Maine but pointed to the company’s extension of its extenuating circumstances policy that provides refunds on bookings made before March 14 through June 15, the third time it has extended the grace period. Because her reservation is for July, Bradford is left hoping the policy is extended again.
The episode underscores the variability of home rental terms. In Airbnb’s case, hosts have the option to choose their own cancellation policy, which ranges from “flexible,” or up to 24 hours before check-in, to “strict,” which is what Bradford experienced. Airbnb, which said over 60% of hosts offer flexible or moderately flexible cancellation policies, is introducing a search filter to help travelers find listings with flexible terms.
The winner on cancellation terms: hotels.
The Fight for Refunds
Among vacation rental companies, Airbnb took the side of its guests when it came to cancellations for bookings made before March 14, directing owners to issue refunds even if they were in the penalty window. (What travelers cheered, some hosts jeered, prompting Airbnb to set up a $250 million fund to partially compensate those affected hosts, some of whom have launched their own direct booking sites.)
Vacation rental company VRBO did the opposite, urging homeowners to make 50% refunds or allow guests to postpone for up to a year but ultimately staying out of disputes.
For her bachelorette party, Ashley Gordon, an event planner based in New York, along with her sister and several friends, rented a house in Scottsdale, Arizona, for April 2 to 5. In February, they put down $3,100 on the $5,700 fee. On March 11, worried about traveling during a pandemic, they reached out to the owner to cancel. Messages back from the homeowner, shared by Gordon, insisted on the contract terms requiring a 30-day advance notice, which would make them liable for the additional $2,600 payment.
“When the airlines offer refunds, we will consider doing the same,” the owner wrote. “Until such time, you and I have a contract, again, the one you agreed to via VRBO when you booked.”
Finding the owner intractable, Gordon persisted and said she convinced a VRBO customer service representative to call the owner (she said VRBO told her only the owner could make the cancellation or change the terms). The owner allowed them to change their dates within the next 12 months and canceled the second $2,600 payment. But based on hostile exchanges with the owner and the uncertainty about the pandemic, she does not intend to rebook.
“VRBO is deflecting responsibility and pitting homeowners against renters which I find appalling,” she wrote in an email. “Customers will not forget how they were treated, and I will be exclusively using Airbnb going forward. At a bare minimum, a 50% mandated refund is fair to both the renter and owner. We did not even receive our cleaning fee back for a property we did not stay in. I understand this is a terrible time for everyone (homeowners included), but VRBO had an opportunity to do the right thing, and instead they chose to absolve themselves of all responsibility.”
VRBO did not respond to requests for comment.
The winner: Hotels have the edge when it comes to refund policies.
The Case for Hygiene
When travel is widely permitted, assuming that’s before a vaccine or remedy for COVID-19 is found, every place offering overnight accommodations — from RVs and yachts to hotels and rental homes — is going to have to win back the confidence of travelers and encourage them to step outside of their zones of control. One way to do that: Promise you’ll clean like a hospital.
“Cleanliness and hygiene will be the new five-star restaurant or 800-thread-count sheets,” Harteveldt said. “Branded or well-run independent hotels may have a compelling advantage over home sharing because hotels are going to use professional or industrial-grade cleaning products. Their housekeeping staffs will be trained to clean to standards set by hotels. And hotels will have marketing budgets to promote this.”
Already, many hotel companies are coming out with new cleaning standards inspired by those set by the Centers for Disease Control and Prevention. Marriott’s includes using electrostatic spraying technology to spread disinfectants that broadly kill germs in rooms. Working with the Mayo Clinic and the makers of Lysol, Hilton plans to launch a new room seal in June that indicates no one has entered the room since it was cleaned and place disinfecting wipes at high-touch areas like elevators.
The American Hotel & Lodging Association, a trade group, has issued new “Stay Safe” guidelines for its members, including enhanced cleaning practices with germ-killing chemicals and social distancing practices like marking where guests should space themselves apart while waiting at the front desk.
Vacation rental companies, too, are championing new cleaning protocols. Airbnb’s new standards, launched this month, follow CDC guidelines, including using masks and gloves when cleaning and building in a 24-hour waiting period between guests. Hosts who follow them will be identified in Airbnb listings.
Vacation rental management companies that employ professional cleaning crews are also announcing enhanced procedures. Based in Austin, Texas, TurnKey Vacation Rentals, which manages more than 5,000 homes in the United States, schedules its housekeeping crews through an app that maintains custom cleaning checklists for each home and requires them to verify their work with photos.
So, who comes out ahead? While hotels might have the edge when it comes to state-of-the-art cleaning methods, the shared space endemic to hotels, such as elevators and lobbies, might give many travelers pause. “There may be some people who feel a home-share property is better for them from a health standpoint,” Harteveldt said. “Hotels don’t have this battle in the bag.”
The winner on hygiene: It’s a draw.
The Promise of Privacy
In the age of social distancing, home rentals are leaning on their promise of privacy.
“The vacation rental industry is positioning as social distancing-friendly,” said Joseph DiTomaso, co-founder and chief executive of AllTheRooms, a vacation rental search engine. “A lot of renters don’t even meet the owner. You get a security code instead.”
AllTheRooms Analytics, the data analysis division of the company, found that the fastest-growing areas for short-term rentals from mid-February to the end of March were small towns like Concan, Texas; Geyserville, California; and Bridgehampton, New York.
“This data shows that people are fleeing urban cities in favor of hideouts in hamlets, smaller cities or waterfront towns. The spread of coronavirus has essentially caused urban flight to small, rural STR markets,” according to the report (STR refers to short-term rentals).
Portland, Oregon-based Vacasa, which manages 26,000 rentals globally, said its most recent bookings average six days, versus the norm of three, and that some of its biggest growth areas were in remote locations.
Denser by design, hotels have to work harder on integrating social distancing requirements. Luxury hotels are talking about suspending turndown. Marriott guests will wheel their own room service cart into their rooms. Expect to see hotels take their cues from highly automated hotel concepts like Yotel, an affordable brand that has several locations, including New York City, where guests check in at a lobby terminal that dispenses a key card, and a robot will store your luggage.
“The contactless hotel stay may be considered the new luxury,” Harteveldt said.
That also means that some of the amenities that distinguish hotels and often draw local followings — including lively bars, celebrated restaurants, rooftop pools — may be a lot less convivial for the time being.
The winner on privacy: home sharing.
Leave a Reply