Consumers denied holiday refunds while companies hold fees

Ross Mathieson and Zaita Oldfield weren’t expecting another winter of rolling lockdowns. 

So when they booked a night at a Victorian country home for a getaway with friends, the Melbourne-based couple didn’t pay too much attention to their Airbnb host’s cancellation policy.

“I just wanted to book a nice holiday and I didn’t want to be going over the terms and conditions,” Ross says.

“I just thought, things will be fine.”

As it turned out, the couple made the Airbnb booking just one day before a surprise snap lockdown was announced for Melbourne on 5 August.

They hoped the lockdown would be lifted by the time of their trip on 14 August. But it ended up dragging on for months.

As their booking loomed, Ross assumed they’d get a refund due to being under lockdown in Melbourne, and wrote to their Airbnb host asking for their money back.

“My natural feeling is that a refund would have been most appropriate in that situation. We had no prior warning that a lockdown was going to happen.”

The couple were “disgusted” by their host’s response.

The message from Ross' Airbnb host
The message from Ross’s Airbnb host where they were told to travel to the accommodation despite Melbourne’s lockdown. (ABC News: Emilia Terzon)

“Ross,” the reply cited by the ABC reads, “people are still coming up to the cottage.”

“No need to cancel. We travel to (Melbourne) all the time. It’s a bit rudiculous (sic) to impose a 5km limit on people.”

Ross says that message left them “furious”.

“I’d rather took exception to that suggestion that we break the law just to keep our booking,” he says.

Airbnb has no policy on COVID refunds
Ross and Zaita never got a refund for their $350 booking.

And the reason why they can’t do much about this all comes down to the booking terms they signed.

The Airbnb they paid for had a ‘firm’ cancellation policy, which stipulates that they weren’t entitled to any refund at all when cancelling less than 7 days before they were due to arrive at the accommodation.

“I hadn’t realised that the host’s cancellation policy was what you get, and there’s no consumer law to over override that,” Ross says.

The couple has since cancelled their Airbnb account.

Computer screen
The cancellation policy that Ross and Zaita booked their Airbnb under in August 2021. (ABC News: Emilia Terzon)

Airbnb – a US company worth more than $150 billion – doesn’t own the short-term rentals on its website. Instead, individuals or home management companies list their own properties.

Airbnb lets these ‘hosts’ pick from various cancellation policies when listing a property for rent.

The choices that hosts can pick range from giving people a full refund if they cancel within 24 hours of their expected arrival through to only giving all the money back if somebody cancels 30 days in advance.

Airbnb declined an interview with the ABC and didn’t directly respond to questions.

Airbnb did offer full refunds to people impacted by COVID lockdowns and border closures at the very start of the pandemic. But by March 2020, it reverted to letting hosts implement their own cancellation policies again.

In a generic statement, Airbnb said this policy was “designed to appropriately balance the needs of hosts and guests”.

“We remind everyone that prior to booking, guests can view the cancellation policy selected for that particular listing by its individual host,” the company said.

It’s understood that Airbnb hosts with tight policies can use their discretion to ask the company to refund money. But again, this area is not regulated and the company wouldn’t be interviewed about it.

Lack of clarity means it’s ‘buyer beware’
There are no set laws governing what companies should do with refunding consumers in the event of COVID lockdowns or border closures. This is not just an issue that is impacting short-term rental providers but also airlines, hotels and travel agents.

Consumer watchdog, the ACCC, has ‘guidelines’ for third-party booking sites, which includes companies like Stayz and Airbnb.

These guidelines say consumers “need to seek a remedy from the third-party booking site” in the event of a cancelled service due to government restrictions.

That essentially means that consumers are at the behest of whatever terms and conditions they bought a product under, and that consumers may be able to negotiate for a credit or refund.

In a statement, Stayz – which is owned by Expedia – said it agrees with these guidelines “in principle”.

But ultimately, it says, it’s just an “online marketplace” that “isn’t involved in the rental transaction”.

The cancellation policies that Stayz allows its hosts to choose from are less flexible than Airbnb. They range from a blanket ‘strict’ no refund policy through to a ‘relaxed’ policy where a refund is granted in full if somebody cancels a fortnight out.

“If a strict cancellation policy is in place and a refund is being requested, the guest can appeal to the host to ask for a refund outside of the policy,” Stayz says in its statement.

“The host does have the ability to override their policy, but it is their discretion if they wish to do so. At Stayz we do not mediate these requests.

“In the event that the traveller who is entitled to a refund due to a more flexible cancellation policy and has not heard from the host, we encourage the traveller to contact our customer service team to help mediate.”

Companies hold onto fees despite COVID cancellations
Stayz also confirmed that it holds onto its service fees when somebody is not granted a refund, even during COVID.

“At the beginning of the pandemic, where guests had made bookings before there was widespread knowledge of COVID-19 and the potential disruption to travel, Stayz refunded all traveller service fees by default.

“We do not refund the traveller service fee by default now, but consider on a case-by-case basis.”

Airbnb also takes a cut of each listing in the form of “service fees”.

It declined to reveal to the ABC what financial net it has taken in Australia since the start of the pandemic in the form of unrefunded COVID cancellations.

Airbnb does have avenues for people to claw back service fees – but there are tight rules.

“The situation at the moment is that (these short-term rental companies) do tend to leave people in the lurch a bit,” Jodi Bird from consumer advocacy group CHOICE says.

“What we find tricky in this situation is that Airbnb might take money for making the booking itself. But when it comes to actually mediating in the cancellation they tend to take a step back.

“So if they’re going to take the money, they really need to be helping consumers and the hosts more in mediating some kind of compensation when these incidences occur.”

Being a COVID host isn’t easy either
While CHOICE’s Jodi Bird says consumers have been left in a “buyer beware” situation, he appreciates that the current situation also isn’t easy for hosts dealing with rolling cancellations and lost revenue.

“So it would really help if people just only look for flexible cancellation policies. It would also help if the hosts who are willing to provide those policies [were] rewarded for taking that risk,” he adds.

Airbnb says almost two-thirds of its listings are set to offer “flexible” or “moderate” cancellation policies.

Glenys Bibby is one of the Airbnb hosts trying to do the right thing by her visitors.

A woman making bed.
Glenys Bibby owns a beach unit in Queenscliff that she rents out through Airbnb. (ABC News: Emilia Terzon)

Glenys and her husband are retired and operate an Airbnb out the back of their house in the coastal town Queenscliff as their only source of income.

Its listing has a ‘flexible’ policy that allows full refunds up to 24 hours before arrival.

Glenys prefers to negotiate with people impacted by COVID lockdowns to reschedule – which means she holds onto revenue – but she has also been going into bat with Airbnb for people who just want all their money back.

“I think it’s good for the reputation of the Airbnb. And it’s good for our reputation for (our accommodation),” she says.

“And I think it’s also good for the reputation for the town.”

But it’s a lot of work for little financial benefit.

A woman stands next to a jacuzzi.
Glenys Bibby has been overwhelmed by an extra workload due to COVID cancellations. (ABC News: Emilia Terzon)

Since COVID, the couple’s Airbnb has had 76 cancellations equating to 194 nights. They’ve had around a dozen people rereschedule their bookings up to 10 times.

Rescheduling bookings, contacting Airbnb for people’s full refunds, and replying to messages from confused travellers can take up “hours” of Glenys’ day.

“It’s gets a little annoying because we could go out for lunch, and then I’m sitting on my phone answering emails,” Glenys says.

She understands that consumers get agitated about being offered refunds – but also thinks they need to understand the stress that an unprecedented pandemic has put on hosts too.

“They’ve got no idea what it’s like for us. Absolutely no idea,” she says.

She doesn’t want Airbnb to bring in a set policy for cancellation during the pandemic. That’s because she believes her decision to offer refunds gives her an advantage over less flexible hosts.

“Hopefully they’ll book with us once they see our policy is fully flexible,” she says.

Why some providers are refusing refunds
Luxico is one of only seven accommodation companies in the world that’s officially partnered with Airbnb.

It manages around 300 high-end properties across the country on behalf of property owners. Listings are put both on Luxico’s website and indirectly on Airbnb.

A woman sits on a couch.
Alexandra Ormerod is the founder of Luxico, which rents out luxury holiday homes across Australia. (ABC News: Emilia Terzon)

“Our booking terms and conditions are strict under normal circumstances,” Luxico’s co-founder Alexandra Ormerod says.

“But a pandemic isn’t a normal circumstance.

“COVID isn’t anyone’s fault. Everyone’s doing their best to try and muddle through.”

Since the pandemic started, Luxico has had 551 cancellations worth $5.8 million.

It’s been mostly issuing credit notes for these cancellations. However, it has also given out $480,000 in direct refunds, largely to international bookings.

During the pandemic, bookings made directly via the Luxico website are only offered a credit note due to COVID issues. There’s also a booking fee of $280 when people use that credit to reschedule.

All of the funds are kept in a trust until they’re redeemed.

“We don’t permit refunds, unless there is very much special circumstances involved,” Alexandra says.

“The majority of people that are holding credits now, they booked knowing that COVID was a thing. And they booked knowing what the COVID cancellation terms were.

“So, there really aren’t many circumstances that should require that being reviewed.”

Only about 15 per cent of Luxico’s bookings come indirectly through Airbnb listings. Dealing with COVID cancellations through that website is even more complicated.

Alexandra says that’s because Airbnb doesn’t have a setting to allow credit notes to be issued. So Luxico simply sets mid-tier cancellation settings.

“That does make it difficult in some circumstances for guests to receive funds back because, more often than not, there’ll be a deposit that’s retained,” she says.

“If they want to try to recoup a deposit that’s been retained, they’d have to go through Airbnb and try and get that back.

“It is sometimes challenging for consumers to recoup the Airbnb service fees. That’s part of their model. They need to make money too.”

A woman stands in a sun room.
Luxico’s Alexandra Ormerod wants more regulation of how her industry handles COVID refunds. (ABC News: Emilia Terzon)

Alexandra says they’ve gone with these policies because managing rolling lockdowns was taking its toll on business operations. Luxico has actually taken on more staff during COVID.

“It was a really strange situation to be in because we actually needed more staff to deal with cancellations and sales inquiries, yet nobody was actually putting their credit card down to book a property,” she says.

“Whenever those borders change with a huge influx of cancellations, and often then re-booking them and then having to cancel them again, it’s really emotionally taxing.

“And in fact, the biggest issue that we face within the industry at the moment is burnout.”

Given all the complications the industry is facing, Alexandra would actually like to see more regulation of her industry and how it deals with refunds during ongoing lockdowns and border closures.

“I would definitely support a blanket policy,” she says.

“I think it’s really challenging for businesses to try to navigate these things themselves,” she says.

In a statement, the ACC said it is “aware of calls for law reform” to address concerns in the travel industry.

“Australian Consumer Law regulators are undertaking a review and any reform is ultimately a question for governments,” the statement said.

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