As COVID-19 spreads, online travel sites face challenges as bookings slump; Airbnb launches “More Flexible Reservations” to refund guests more easily
find long-term renters. 🙄 https://www.nytimes.com/... https://twitter.com/... Jimmy Thomson / @jwsthomson : The Airbnb hosts who will feel this the most are those who have taken multiple properties off the long term rental market in order to make huge profits at the expense of locals. https://www.nytimes.com/... @dealbook : “All we're trying to do is separate what we absolutely believe is the effect of the virus from our ongoing business, so we can prepare ourselves and make that ongoing business as strong as possible when this thing is over,” Expedia's chairman said. https://www.nytimes.com/... @nytimesbusiness : With travel screeching to a halt in many places to limit spread of the coronavirus, the problems facing Airbnb and other online travel sites, such as http://booking.com/ and VRBO, have rapidly escalated. The pain is already widespread. https://www.nytimes.com/... Shira Ovide / @shiraovide : One couple in Tokyo saw their occupancy rate go from 80% to zero. Great @eringriffith story on what's happening in the first real strain on the economy for home rentals. https://www.nytimes.com/...
Context & Ripple Effects
This story lands at the start of the pandemic's travel collapse: a Tokyo couple's occupancy has gone from 80% to zero, and the same demand shock is hitting every online travel site at once. Airbnb's answer is 'More Flexible Reservations' — moving refund friction off guests and onto the platform and its hosts — days after reporting a $276.4M Q4 loss that predates the virus but leaves it entering the crisis unprofitable, albeit with more than $2B in cash.
Expedia is taking the opposite tack publicly: its chairman frames the moment as an accounting exercise, separating virus effects from ongoing business so the core operation emerges stronger. The policy choice matters because hosts — especially those who pulled units out of long-term rental stock — are the ones left holding empty calendars.
First-order effects
- Guests on Airbnb can now cancel and get refunded far more easily, which immediately transfers the cost of collapsed bookings from travelers to hosts and to Airbnb's own refund obligations.
- Expedia begins carving virus-driven cancellations out of its reported business so management and investors can see the underlying operation during the slump.
Second-order effects
- Hosts who converted long-term rentals into short-term lets — the group Jimmy Thomson flags as profiting at locals' expense — face the sharpest squeeze and pressure to return units to local housing markets.
- Absorbing refunds sets up a platform-versus-supplier conflict: by early 2021 some aggrieved hosts are trying to cut Airbnb out of bookings or pursuing legal action over the full-refund policy.
Third-order effects
- The episode forces booking platforms to decide where cancellation risk structurally sits — guest, host, or balance sheet — a question that resurfaces every time demand shocks hit two-sided travel marketplaces.
- Demand reroutes rather than vanishes: once borders close, domestic reservations carry the recovery, with Airbnb's US bookings exceeding 2019 levels by late spring 2020 ahead of a much larger rebound in 2021.
The trend: COVID-19 is pushing online travel platforms to reprice cancellation risk in real time, shifting it from guests onto hosts and corporate balance sheets until demand returns.