Airbnb Can Force Hosts into Role as “The Insurer of Last Resort”

Created by: Pablow

On a recent trip to Barcelona I met with Miguel, a vacation rental property manager. This past year, Miguel rented out a luxury beachside villa for two weeks during peak summer season to a British guest via Airbnb.

Just days before the guest’s stay, she informed Miguel that she could not travel due to an illness in the family citing legitimate medical evidence. Miguel informed the guest that per the super strict cancellation conditions no refund was due, as he was unable to replace the last-minute cancellation.

Unbeknownst to Miguel, the guest took the matter directly to Airbnb who enforced the Force Majeure clause (i.e. valid extenuating circumstance) in their terms and conditions, resulting in the guest receiving a refund and Miguel dealing with the hefty bill. Unfortunately for Miguel he became what we’ve termed “The Insurer of Last Resort”!

To My Surprise …

After hearing Miguel’s story, I decided to do some of my own investigating and … his story checks out.

The Airbnb terms and conditions (i.e. reasons that allow a guest to avoid cancellation fees) are intriguingly similar to the coverage of a travel insurance policy. Essentially Airbnb is using hosts as their insurance, rather than allowing hosts to offer travel insurance to their guests.

See the below table which compares what Airbnb says could allow a guest to avoid cancellation fees and what a travel insurance policy covers.

Comparison Sources: Airbnb of covered reasons and travel insurance covered reasons.

To add additional context to the similarities between Airbnb’s Force Majeure and a vacation rental travel insurance policy, we surveyed 500 vacation rental property managers and asked about the top three reasons guests cancel. Unsurprisingly, the top reason they gave matched the top loophole in Airbnb’s Force Majeure terms. Our other findings revealed that employment related ccancellationsand weather or natural disaster related cancellations were also a very popular reason guests cancelled their trips.

Reversing the Backwards System

Speaking from my experience as an Airbnb guest, if I cancel and don’t have travel insurance, I would not expect the host to be “The Insurer of Last Resort”. It’s simply unfair to hosts who depend on Airbnb to help them earn additional revenue. There has to be another, more equitable solution!

Our solution to this problem is Pablow Pronto, a simple process to enable Airbnb hosts and property managers to offer their guests a travel cancellation option and avoid the role of “The Insurer of Last Resort”.

In our earlier example, if the client had taken out travel insurance with Pablow, both the host and the guest could’ve transferred their risk to the insurance company, and both would’ve been able to keep their money. Instead, the Airbnb Force Majeure terms transfer all of the risk (and eventual loss) to the host, despite the “super strict” cancellation conditions.

Introducing Pablow Pronto has allowed us to look after Airbnb hosts and smaller property managers in the vacation rental market. Our approach is to allow hosts of all sizes to offer vacation rental travel insurance to their guests as a way to protect their reservation payments and earn additional revenue in the process. The reason we are so passionate about travel insurance technology is because we know the pain that comes with insurance and anything we can do to alleviate the suffering interests us.

Therefore with Pablow Pronto, if a guest declines the insurance, cancels their reservation and doesn’t want to honor the cancellation conditions, the host has a stronger case to make to credit card companies and Airbnb to avoid the chargebacks. Even better, if the guest buys coverage and needs to cancel their reservation, then everyone wins and hosts avoid being “The Insurer of Last Resort”.

About the Author

Steve Sherlock is the co-founder and CEO of Pablow, a travel insurance technology company that helps Airbnb hosts and property managers offer travel insurance to their guests hassle-free. Simply create a customized travel insurance website in just a few minutes and begin offering vacation rental travel insurance to your guests in a matter of minutes without worrying about licensing, contracts or building technology.


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