Airbnb refuses to pay refunds for getaways cancelled by Covid

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Before the second lockdown in October, NHS worker Lex Karlin and his wife Annie decided to treat themselves to a Christmas break. They booked an Airbnb house in Suffolk and paid £4,709. Four days before they were due to travel, tier 4 restrictions were imposed on London, where they live, and overnight trips were banned. Suffolk went into tier 4 on Boxing Day.

The couple cancelled the booking to comply with the rules, but were told that they would not get their money back because the host operated a no-refund policy. They were also required to forfeit the £185 cleaning charge, included in the booking cost, and the £625 service fee retained by Airbnb. “If it had been allowable to travel we would have done so, but it wasn’t,” said Karlin. “It seems that Airbnb is trying to penalise us for not breaking the rules.”

Travellers the world over have been left out of pocket after coronavirus restrictions forced them to cancel Airbnb reservations. Last March, the online booking platform introduced an “extenuating circumstances” policy in response to the pandemic. It promises “coverage for Covid-19 to help protect our community and provide peace of mind”.

What it means, however, is that there’s no coverage for customers who booked accommodation after 15 March, unless the host’s terms and conditions include a refund clause.

These terms and conditions were designed in pre-pandemic days for cancellations for personal reasons, but Airbnb is insisting they apply to those forced to cancel to comply with new laws, and government guidance, unless they test positive for Covid-19.

Government lockdowns and tier restrictions are not considered “extenuating circumstances” because, Airbnb argues, Covid-19 is no longer an unforeseen event.

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It takes a different stance with hosts who cancel because of government rules. They can do so without incurring the usual cancellation fee demanded by Airbnb, or compromising their coveted “superhost” status.

Yet, crucially, the company stops short of requiring hosts to cancel trips that fall foul of the rules. Under contract law, if the holiday provider does the cancelling, it must refund customers, so many hosts are relying on customers to take the initiative. Guests like the Karlins, who are scrupulous about the rules, are then left to foot the bill.

Magda Saunders’s* vigilance cost her £2,180 when her Christmas getaway was scuppered. The Londoner had booked a week in Oxfordshire and cancelled it when London went into tier 4 the day before check-in. Oxfordshire followed on Boxing Day, halfway through her planned stay, but she was refused a refund.

“I cancelled to obey the rules,” she said. “Airbnb says that I am not eligible because the host’s policy only allows refunds for cancellations within 48 hours of a reservation. The host argues that since they were still able to provide the service, and it was me who was prevented from using it, they were open and willing to honour the contract.”

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Even when hosts with no-refund policies do agree to reimburse guests who cancel, Airbnb still retains its service fee, which is usually 14% of the total booking. Meanwhile, the host may retain the cleaning charge in these circumstances.

Kaye Tyler, also from London, had booked a house in Devon for Christmas week back in October before the tier system had been introduced. She, too, cancelled it when London entered tier 4. The host’s policy allowed a 50% refund, but she offered to return 64%. Airbnb refused to return the £711 service charge, however.

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“I understand booking a holiday during a pandemic was always a risk and that we have been lucky to afford to go away, but for us to be punished as responsible travellers feels a kick in the teeth,” said Tyler.

Airbnb refunded the fee after the Observer questioned it, but it refused to do the same for the Karlins and Saunderses.
Contract law is not clear-cut when it comes to the restrictions imposed by the tier system because these count as government “guidance and compliance”, which is not legally binding. However, the Competitions and Markets Authority (CMA), which regulates trade, states that businesses have a duty to follow the guidance and those who pressure customers not to comply may infringe consumer protection law.

Lockdowns are enshrined in law and the CMA is adamant that customers should be refunded if the legislation scuppers their holiday.

Airbnb’s policy also refuses to recognise lockdown as an “extenuating circumstance”. Last year, the CMA forced holiday lettings firms Sykes Holiday Cottages and Vacation Rentals to abandon their no-refunds policy for bookings affected by the pandemic. It refused to comment on whether it would apply similar pressure to Airbnb, which last month floated on the Nasdaq stock market with a value of more than $100bn.

Airbnb told the Observer that it was a marketplace rather than a travel agent or accommodation provider, and hosts were therefore responsible for defining and fulfilling contracts. It declined to address why it did not insist that all hosts should cancel and refund bookings affected by Covid restrictions.

“We want to make it as easy as possible for hosts and guests to follow the rules and stay safe,” it said. “That is why current government restrictions, and host cancellation policies, are made clear to guests on the platform before they book. Hosts set their own cancellation terms that are right for their personal circumstances, with the majority having policies that allow guests to cancel without penalties.”
Consumer organisation Which? told the Observer that it planned to work with Airbnb to change its stance. “Airbnb and its hosts should do right by its customers and ensure that anyone unable to travel because of the lockdown is given the option of a full refund,” said Rory Boland, editor of Which? Travel.

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He said: “While hosts’ cancellation policies are clearly set out and customers can choose hosts that offer flexible cancellation, Airbnb should consider updating its policy for extenuating circumstances’.”

* Name has been changed

This article was amended on 21 January 2021. An earlier version said that Airbnb retains its service fee even when hosts offer a refund; to be clear, the company keeps the fee in cases where the guest cancels but it does offer a refund when the host initiates a cancellation. We also said the booking fee includes cleaning charges, when in fact this charge is set and managed by the host.