Vrbo recently overhauled its guest refund and host cancellation policies to benefit guests during significant travel disruptions. This new approach shifts the financial burden to hosts, who must now refund guests regardless of their own cancellation policies when Vrbo activates its Extenuating Circumstances Policy. Additionally, Vrbo will refund the service fee paid by the guest at booking.
This new policy is akin to Airbnb’s Major Disruptive Events Policy introduced in May, marking a departure from Vrbo’s previous stance during the pandemic when it did not mandate guest refunds, leaving the decision to hosts. This previous stance had gained strong support from hosts, unlike Airbnb, which faced criticism for requiring refunds irrespective of host policies.
Typically, hosts have their own cancellation policies, outlining the conditions under which a guest can receive a full, partial, or no refund. Under the new rules, Vrbo requires refunds during natural disasters like earthquakes, tsunamis, floods, and wildfires, as well as other abnormal weather events. However, it exempts hurricanes in the Caribbean during hurricane season unless they cause prolonged power outages in a major region. The policy also includes new government-declared pandemics but excludes Covid-19, now considered a known risk. The policy applies when government-imposed travel restrictions make it impossible or illegal to travel or for hosts to proceed with a stay.
This policy change has significant financial implications for hosts, who now bear the cost of mortgages, landscaping, and utilities without compensation. Unlike travelers who can purchase trip insurance to protect against disruptions, hosts are left to absorb these costs.
Travelers might simply choose another location and book again with Vrbo, making the impact on Vrbo neutral or potentially positive for its revenue. In contrast, hosts lose money on refunded stays due to non-recoverable credit card processing fees. For example, a canceled $5,000 booking could result in a $195 loss in fees for the host.
The shift in policy was hinted at during the Maui wildfires last summer when Vrbo mandated guest refunds but did not make an overall policy change at that time. A Vrbo spokesperson stated that the policy change was influenced by the response to the Maui wildfires and a shift in industry norms to better protect travelers during major weather events.
Vrbo has also been stricter with hosts who frequently cancel reservations for unacceptable reasons, including banning them from the platform. However, under the new policy, host cancellations will not incur penalties or downgrade their status, such as losing a premier host designation.
The spokesperson emphasized that the primary goal of the policy is to prioritize the safety and well-being of all involved, encouraging hosts to work closely with guests to ensure satisfaction and safety during disruptions.
This policy change reflects Vrbo’s commitment to protecting travelers while imposing greater financial responsibility on hosts, potentially altering the dynamics between guests, hosts, and the platform.
Barb is the president of NASTRA and has spent her professional career in hospitality and real estate. After acquiring her first short-term rental in 2018, Barb moved her focus to legal advocacy after she sued the city of Nashville over a permit issue. Over the last three years, she has mentored more than 2,800 new STR hosts and is the Community Leader for Airbnb in Nashville, as well as an Airbnb “Ask a Superhost” Ambassador. Barb has appeared on numerous radio broadcasts, television shows, and podcasts to talk about her love of hosting. She also manages and co-hosts a number of short term rentals across Tennessee and Arkansas. Barb and her husband Pat own a hotel brokerage, development and consulting company. Look for her upcoming podcast series, “Women of Airbnb.”