When Hosts Grudgingly Serve as Quasi-Travel Insurance
06.12.2023 - 04:28
/ skift.com
/ Dennis Schaal
Few issues are as divisive among short-term rental hosts, property managers, online travel agencies and guests as refund policies following hurricanes, wildfires, and pandemics. The issue will only get more heated as the earth does likewise.
Consider what recently happened in Maui when Airbnb and Vrbo overrode hosts refund policies, and mandated that guests get refunds, denying hosts in untouched locations their expected income.
We queried hospitality execs about the issue on LinkedIn and elsewhere.
“In Maui, most travel insurance policies would not refund reservations outside of West Maui because there was nothing wrong with the property, the airport was open, and the roads were open,” said Amber Carpenter, vice president of product at Vtrips. “But the big platforms were refunding everyone causing a mess. It does make hosts — but mostly homeowners — act as pseudo travel insurance but worse.”
Part of the issue is that U.S. travelers seldom consider buying travel insurance for a stay (although surveys say their willingness is increasing), while in Europe the purchase, including cancel for any reason coverage, is much more common.
“Think of two owners,” said one vacation rental exec who declined to be identified. “One has a booking from a guest who bought insurance. The other has a guest who opted out. Both owners have a no-refund policy. Hurricane comes, and the home sits empty during the storm. Owner one keeps their revenue because the guests gets a refund from insurance. Owner two is forced to give up his revenue to the guest because the OTAs override the no refund policy so he loses it.”
Bryan Leblang, co-founder of RentWise and LuxGive and former chief operating officer of onefinestay, said it is “simply unfair” to hosts when travelers don’t buy travel insurance, “and it’s irresponsible of the platforms providing the bookings.”
Onefinestay and its Travel Keys brand advised guests to purchase cancellation insurance because most reservations were non-refundable, he said, adding that this was most relevant when natural disasters affected “their ability to travel, but not the home’s ability to host i.e. not a force majeure.”
But Fritz Oberhummer, vice president, travel and hospitality, at Intellius, thinks the issue calls for a level playing field between hotels and short-term rentals.
“Well, if you would reduce it to the basics: It’s a service that is offered, but if it’s not consumable, the traveler has the right to withdraw,” Oberhummer said. “Every business owner needs to be insured so why shall homeowners be an exception? After all, they are playing ‘hotel’ now and that simply does not come without risks and downsides. Hotels need to play along, why should their competitors be exempt?”
Of course,