Short-term rentals had government restrictions during the toughest period of COVID in the USA. They were under a brief ban and it caused a rental crisis. A lot of cancellations happened in some months because there were many stay-at-home orders in place.
What are you doing in light of COVID-19 to make sure that your cleaning standards are such that it will keep families safe and healthy? It was an opportunity to pivot the business model into some of these long-term stays.
Let’s talk about short-term rentals and everything that’s going on with Airbnb. COVID-19 turned the world upside down for our lives and pretty much every business industry. There was a lot of panic from consumers and travelers because of the uncertainty in the world. A rental crisis has been going on and we need to analyze what’s coming next.
For example, the entire State of Florida was one of the states that was banned from short-term rentals. It was a perfect opportunity to pivot the business model into some of these long-term stays. Those are becoming a lot more popular. The long-term stays, anywhere from a month or longer. We’re starting to see that is one of the results of what COVID-19 and this rental crisis has caused.
Airbnb is a very popular platform, it’s a household name now that we’re all familiar with. It’s just one platform that we list our houses on.
Another one is HomeAway which used to be called Vrbo but now it’s pronounced Verbo. HomeAway and Vrbo are the same company now and they’re owned by the Expedia Group.
Oftentimes, you’ll hear people use Airbnb is almost like a noun like, “I rent an Airbnb,” or, “I went here and got an Airbnb,” but there are many other platforms where people list their vacation homes. Airbnb made some very interesting decisions during this COVID-19 global pandemic which made it extremely hard for hosts to manage their business.
One of the pivots that they did make is this whole long-term stay concept. Now prominently on the homepage of their website, they have a call-out or a window where you can specifically click if you’re looking for long-term stays.
The long-term stay trend is going to be driven by a number of different things, and those are:
1. People have been quarantined in their houses, they’re looking for any kind of change of scenery as a way to get out and experience something new.
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2. Work from home. People are working from home or wherever they want to be.
You have large companies like Facebook, Nationwide, Twitter, Google that are allowing their employees to work from home throughout the entire year, and a lot of companies such as Facebook recently said they want 50% of their workforce to work from home over the next 5 to 10 years.
This trend is definitely here to stay. When you think about long-term, if you can work from New York or Iowa or Idaho or Chicago, why work from somewhere for the entire year, when you can literally spend one month here, two months here, three months there, six months there.
Perhaps the standard 12-month apartment lease is going to come to an end. Shorter apartment leases are going to come with power into the market. People will have to choose to work from wherever they want, whether it’s the Poconos or Martha’s Vineyard or Hilton Head.
Definition of short-term rentals
It has become more popular. The legal definition of short-term rental is typically anything less than either 28 or 30 days. Pretty much anything less than a month is a short-term rental. Then also when it’s longer than that, there’s some different tenant-landlord laws that come into place. The legal definition is pretty much less than a month.
Depending on the market, the length of stays vary. Where traditional vacation markets like Martha’s Vineyard or Florida or Hilton Head, Gatlinburg a lot of times people go on vacation, they’ll stay the whole week, whereas other markets like the Poconos or people are going on a weekend vacation in Chicago or Miami is typically a weekend or an extended weekend.
Short Term Rental Crisis: Airbnb measures
Airbnb made the controversial decision to override host cancellation policy and decided to give guests full refunds. As a host, as the business owner, you see how your bookings are coming in March, April, May, June, July, throughout the year. All of a sudden you see these cancellations just totally evaporating your revenue for the entire year.
You could say that at this point the short-term rental crisis began. It can be pretty daunting. If you’re managing one property or if you’re managing 10, 20, a hundred properties, that’s a big deal.
It’s certainly not a perfect solution but what they offered was out of this $250 million fund, from reservations that were canceled when the global pandemic was declared to the end of May 2020, you would get 25% of whatever you are owed per your typical cancellation policy.
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For example, if you had a cancellation policy where if a guest canceled, you typically would have received a thousand dollars because they canceled past the deadline, whatever your cancellation policy was. If you were owed a thousand dollars then Airbnb was going to give you $250 of that, 25% of that.
It did show that they heard the outcry of the hosts and they were trying to soften the blow. It’s certainly nowhere near as much as quite frankly you’re entitled to. They refunded the money that you had earned. There was no way to re-book your house obviously with everything going on
HomeAway/Vrbo
The other main platform is HomeAway or Vrbo. They have left it up to the host to decide. It was totally up to you to enforce or to waive your cancellation policy. They highly encouraged you to either offer a full credit for a future stay or 50% refund. If you did either of the two, they incentivized you. They would give you higher rankings on their platform.
They incentivized you to do what they wanted you to do but they didn’t force you. The reason why business owners have these cancellation policies is it allows them to plan their business.
Their business, their livelihood, their employees. If all of a sudden 60,000 of your revenue evaporates, you had plans for that money and then when it evaporates, it causes a lot more difficulty than would need to happen.
People are driving from North Carolina, South Carolina, Virginia. Travel has rebounded. People are looking to get away. They’re going to be in the home, enjoying the house and the amenities it has and cooking at home and taking out deliveries. It’s going to be a different experience.
COVID-19 has made pretty much any and all industries really take a close look at their cleaning protocols and what safe and comfortable environment they are ensuring for their guests and their consumers. Whether it’s the hospitality industry, whether it’s the airline industry, or whether it’s everyday retail and restaurants, everyone is really taking a closer look at how they’re ensuring a safe, clean environment for their guests.
With all that being said, there are fantastic resources like the CDC, the Center for Disease Control, the World Health Organization, John Hopkins, Mayo Clinic.
There’s so much attention on COVID-19 that there are so many resources and ready-made protocols for small business owners to adopt cleaning standards for our properties.
Work from everywhere: Now, you can work pretty much from anywhere in the world or in the States if you choose to stay within the states. You can just simply travel by car and still enjoy being quarantined in a much nicer environment.
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