Why won’t Airbnb refund our rental? It promised it would.
QA: You should have received a full refund from Airbnb. Why? Because it promised one. Check out the company’s extenuating circumstances policy published on its website, which covers your stay. Airbnb says for reservations made for stays between March 14 and June 30, 2020, “Airbnb will either refund, or issue travel credit that includes, all service fees for covered cancellations. In order to cancel under the policy, you will be required to attest to the facts of and/or provide supporting documentation for your extenuating circumstance.”
It looks as if the host was trying to persuade you to keep your reservation. That’s perfectly understandable, since allowing you to cancel would have been a total loss to your host. But Airbnb should have stepped in and processed a refund as promised.
My husband, son and I were scheduled to stay in an Airbnb in New York City. In March, we had to cancel the rental because of the coronavirus outbreak. I had concerns about our health, including my asthmatic husband and 2-year-old son.
Our dates fall under the Airbnb refund policy. However, Airbnb seems to be leaving our cancellation to the host, who has ignored our messages and request for a refund. Airbnb is not standing by its policy of offering a refund. We have lost $497, the first half of the payment we made when booking, and have received zero help from Airbnb. Can you help us?
I’ve been dealing with this issue repeatedly during the outbreak. The travel industry has its back against a wall and doesn’t want to refund tickets, rental reservations or hotel stays, even when it’s required to. And even when it promises to refund.
I’ve said it before and I’ll say it again: If you offer a refund, hand over the money. If you’re required by law to do so, as airlines are, then you should not waste any time. Because the only thing worse than someone like me asking for a prompt refund is a government regulator breathing down your neck.
I publish the names, numbers and email addresses for the Airbnb managers on my consumer advocacy site, elliott.org. Before getting involved, I asked you to reach out to Airbnb in writing to give them one last chance to do the right thing. You did. An Airbnb representative contacted you and explained that you failed to follow the correct procedure to cancel your rental and required more documentation. “However, I understand there was some confusion over the initial cancellation messages, which added delays to your communications with us,” the representative said. Airbnb offered a refund of $378 and a $119 coupon to cover its service fees, which you accepted.
Instead, what people are thinking about now is the Chapter 11 variety of bankruptcy. That’s the kind where the company involved continues to operate — often as usual — while it restructures. “Restructure,” in turn, means that the bankrupt company sheds much if not all of the debt that is draining its cash. Stockholders generally lose their investment, and bondholders and maybe even big lenders have to exchange loans for equity. It isn’t pretty if you’re an investor, but it’s close to transparent if you’re a consumer.
2. Since deregulation, most of the current biggies — American, Delta, Hawaiian and United — went through Chapter 11 at least once. But each time, they kept flying their usual flights, honoring tickets and even honoring frequent flyer miles. Of today’s important lines, only Alaska, Allegiant, JetBlue and Southwest have avoided Chapter 11. survivors. In those cases, what was left of the failing company was valuable enough to encourage a buyout or acquisition. Thus, American acquired what was left of TWA, Continental merged with United, Delta and United divided the corpse of PanAm, Northwest and Western merged into Delta, and USAir morphed into today’s American. For their customers, it was pretty much business as usual.
It has been a while since a goodsize U.S. airline has failed and shut down completely, but several foreign lines went under recently — notably Iceland’s WOW — and passengers holding tickets were left with nothing. Other airlines offered low-fare options for travelers stranded in Iceland to get home, but the only travelers who came out whole were those who had bought trip-cancellation insurance coverage that included carrier default.
As a consumer, you need to make sure you don’t lose out in a big travel industry bankruptcy. In most Chapter 11 bankruptcies, giant companies continue to operate. You’re unlikely to lose the cost of any tickets or frequent flyer benefits with one of the giant airlines. But buying in advance with a small Asian or European low-fare line other than EasyJet or Ryanair might be riskier.
Here’s how to minimize your risk.
■ To the extent practical, wait as long as you can before departure to pay for any travel service, and check the financial situation of any airline or cruise line you’re considering.
■ Pay as little upfront as you can. Even refundable payments are at risk if the supplier runs out of cash.
■ Make sure you pay by credit card. That way, you can initiate a charge back if the supplier fails.
■ Buy trip-cancellation insurance that specifies “default” as a covered reason, not just “bankruptcy,” and buy it from a third-party insurance agency. Companies often default without ever filing for bankruptcy.
Bankruptcy or failure risk isn’t confined to airlines. Cruise lines are also in a financial pinch. The big hotel chains generally do not own their properties, but some hotel ownership groups are hurting. The financial crunch is an equal-opportunity threat, and you can expect some failures in all sectors. Use the same low-risk strategies with any travel service.