As you well know, the corona virus is significantly impacting the travel and tourism industry. Although we are in uncharted territory, we believe it’s important for vacation rental homeowners to get out in front of the situation: be prepared to handle both your committed guests for this rental season and prospective ones. And be pro-active in raising the subject with them.
Cape and Islands rentals may be less impacted
At this point, it’s impossible to predict the impact the virus will have on travel to the Cape and Islands this summer. But although fears of the virus could escalate, many vacationers will likely choose local/regional travel over international or long-distance this summer. Rather than fly to a distant vacation destination, they could opt to drive to the Cape or ferry to the Islands. In fact, 96% of all visitors to the Cape arrive by car, and virtually half the country can drive here in a day.
And, of course, there are advantages to staying in a private home rather than a hotel, inn, or resort, which have common areas where many convene.
But with so much uncertainty about whether the virus will continue to spread or be contained in the summer months, it’s understandable that some vacationers will be hesitant about booking a home. And those who have already booked a rental may wonder what their cancellation options are.
Are you prepared to respond to vacationers’ concerns?
We are surprised to learn that HomeAway/VRBO is encouraging homeowners to give their guests full refunds. (VRBO President Jeff Hurst wrote, “In the spirit of good hospitality, we strongly encourage you to offer a full refund. When you do, Vrbo will also refund our Traveler Service Fee in full.”
Instead, we feel that every situation is different, and every homeowner should make the decision that works best for them, including the option to not provide a full refund.
Here are some options to consider:
- Especially if you have a smaller rental, you might offer prospective guests the opportunity to cancel up to a month or two prior to their occupancy. This might attract renters now who might otherwise procrastinate in booking a home.
- Allow them to put their deposit towards a future stay.
- Consider splitting the refund with them.
- In any case, as most of your leases state, provide a full refund if you are able to rebook your home.
Some practical steps and some psychology
A key thing to keep in mind is that there are two facets to address:
- the specific measures you can take to adapt to the situation caused by the virus, and
- the psychological impact of the virus on vacationers and how you can manage that.
The importance of addressing vacationers’ concerns
Whether well-founded or not, vacationers are going to be anxious about the virus and the risks of travelling. It’s therefore vital for you to be sympathetic to their concerns and to convey a willingness to compromise and work together to arrive at a mutually acceptable arrangement.
Practical steps you can take:
- As already discussed, consider relaxing your cancellation policy.
- Edit your lease to reflect any changes in your cancellation policy.
- Provide vacationers assurances that your home will be extraordinarily and professionally cleaned before their arrival.
- Provide your guests with ample disinfectant cleaning supplies.
- Update your listing with this information to better market your home.
- Suggest to your guests that they buy travel insurance (See below for more information.)
For most of us, the idea of providing a full refund is very unappealing. We work hard for our bookings, may well have turned down other opportunities to fill that week, and simply cannot afford to lose the entire week’s income.
The problem is that, if you still have any vacancies, the current conditions could make it more challenging to fill them. By offering a more lenient cancellation policy, you may well increase your odds of filling your home. Wouldn’t you prefer to book your home with the possibility of some cancellations rather than not booking it at all?
For more information about cancellation policies and approaches, read our post about Cancellation Policy Options for Vacation Rental Homeowners.
Be prepared for pent-up demand
Because of the virus and the uncertain economy, we suspect that a fair number of vacationers may hold off for a while before booking a vacation rental. So, don’t give up because you have uncharacteristic vacancies – even into June and July. There could, in fact, be a lot of pent-up demand by then. Be ready to offer a special of some kind. And take advantage of our free Owner Special to promote the offer.
Travel Insurance
If you sense some hesitation from prospective guests due to the virus, you can suggest they purchase travel insurance. Many insurance companies, however, may not honor cancellations due to virus-related issues. One insurance company states that “Trip cancellations and trip interruptions due to known, foreseeable, or expected events, epidemics, or fear of travel are generally not covered.”
If so, it may be possible for vacationers to obtain a “cancel for any reason” (“CFAR”) insurance policy. CFAR coverage is usually an add-on to a regular trip insurance package and often only refunds up to 50-75%. Every insurance company, policy, and situation is different, though, so vacationers must contact the insurance company directly for a specific quote. Here are a few reputable travel insurance companies: SqureMouth, Allianz, Travel Guard, InsureMyTrip.
Conclusion
At WeNeedaVacation.com, we are not proposing any hard-and-fast cancellation policy. Every homeowner’s situation is unique, and we feel strongly that it is your prerogative to manage your rentals as you see fit. We do, however, urge everyone to be prepared for questions from vacationers about their cancellation policies. And if you make any changes to yours, be sure to update your lease accordingly. Be proactive and communicative with your guests.
See my conversation with Jack Peak on LowerCape TV’s Peak Time as we discuss the impact of the coronavirus on the Cape and Islands vacation rental market this year.
Hi Joan,
Regarding the recent order 13 by Governor Baker, I have an upcoming stay starting April 25th booked, that is for 42 days in length. I believe the order is only aimed at future rentals (March 31st to May 4th) that are 31 days or less.
From the order:-
https://www.mass.gov/doc/march-31-2020-hotel-motel-guidance/download
“This guidance implements the terms of COVID-19 Order No. 13, updated as of March
31, 2020, COVID-19 Order No. 21, as the Order applies to hotels, motels, inns, bed and
breakfasts, and short-term residential rentals including those arranged through on-line hosting
platforms such as Airbnb or VRBO (collectively, as defined below, “lodgings”).”
…….
4. Lodging Definition
For the purposes of this Order, “lodging” shall mean the provision of overnight
accommodations by commercial transaction in any of the following categories, each as defined
or identified where specified below in the Massachusetts General Laws:
Section 1 of Chapter 64G
a. Bed and breakfast establishments
b. Bed and breakfast homes
c. Hotels
d. Motels
e. Lodging houses rented for a period of 31 days or fewer
f. Professionally-managed units rented for a period of 31 days or fewer
g. Short-term rentals (including Airbnb, VRBO and similar rental properties) rented
for a period of 31 days or fewer ”
I am not sure if you have heard this query from other renters yet or aware if I am reading this correctly ? I plan also to contact DPH to verify.
Thank you so much, Emma
Hi Emma,
That is our understanding, too, that the ban is for short-term rentals. According to the MA Department of Revenue, a short-term rental is any rental of 31 days or fewer. Please let us know if you learn differently.
Thank you Joan. You have also been so very helpful, I have only two comments:
1. Months ago when it was clear that my “middle class” renters were put off by the MA tax on short term rentals, on my site I indicated that I had reduced the rent to cover the tax of over $500 per week.
2. More recently I have put language in my lease that money received for weeks that continue to be restricted during their lease will be immediately refunded for that period of time.
What else can one say? Fair is fair. We are all in this together, renter and renters together.
Pat
I agree, Pat, and applaud your attitude and generosity for sure. We do, however, respect that every situation is different, and returning every deposit might be ruinous for some homeowners. If at all possible, even if not ideal, it’s often in the best interests of homeowners, too, to be lenient at a time like this. Not doing so can have difficult and unforeseen ramifications, and doing so can have surprising benefits (what goes around comes around).
Thank you for the info about CFAR. I will follow up with those insurance companies.
I am not only offering my 2020 renters a full refund should they decide not to come, I am on the cusp of ASKING them not to come and blocking others from coming. I believe we who live here owe it to ourselves, and all of our year round neighbors, to pay attention to what has been asked of us in terms of social distancing and all other measures being asked of us.
I don’t know how many owners actually live in their homes, but I do. That means I have to find a safe, clean place to live every summer, which could be a significant challenge this year.
However, the largest issue for me is anticipating the influx of summer visitors, knowing how much they tax our medical and emergency systems. I feel there are still too many unknowns about this virus.
As I was rationalizing meeting two friends for breakfast a couple of weeks ago, I heard a doctor who works in infectious diseases say (paraphrasing here), “if at the end of this we find that we have done more than we needed to do to stop this virus, that will upset some people. If at the end of this, we realize we did not do enough, that will be tragic.” That hit home with me.
My summer rentals are my biggest source of income, and that loss this year will hurt. But I believe that paying attention to the experts and doing the right thing is more important.
Every summer Cape hospitals and medical providers hire travel physicians and nurses to attempt to cover the influx of vacationers. I know that there are temporary medical providers already being hired in communities that are seeing or anticipating surges in medical needs.
We have a significant year round population of people over 65. So far it appears that this is the population most severely affected by this virus. I believe that taxing our medical services even further is not in anyone’s best interests.
We certainly share your concern, Susan. Our hope is that the Covid-19 situation will have abated by the summer and that people will be able to come to the Cape and Islands for a long-awaited vacation. We will have a clearer picture in a month or two. Like you, many homeowners are dependent on summer rentals in order to cover at least part of their mortgage and expenses. And the economy of the Cape and Islands in general depends on the influx of vacationers. A summer without this income will undoubtedly create real financial strain for all.
Hello Joan,
Is there anything that can be done for our monetary losses as a small business? I have had 2 cancellations, one a couple from Canada who book for a month.
I am beginning to doubt that this will be resolved by this summer … especially should restaurants be limited to take out and beaches closed.
This will be a huge financial strain for me to support my cottage completely out of my pocket.
Another concern I had originated in a vacation owners site I participate in… some of the cleaners want to wait 3 days before entering a property. This will not work. In Sonoma County, short term vacation owners are being requested to shut down as they are not an essential business.
Really concerned,
Sandy Swenson
Loss of summer income, Sandy, will definitely put a strain on homeowners who depend on this income to keep their homes afloat. Some mortgage companies are working on a way to defer or reduce payments for those impacted by the virus. Perhaps this might apply to rental homes as well.
We are currently consulting with some cleaning companies for a blog post we’re writing on the topic of cleaning, so look for it soon. Deep cleaning and disinfecting will be more important than ever this summer.
I just got a cancellation request today for a stay at my home on MV in May that has been booked for a while. At this time, there are no hard and fast guidelines coming from the state, the CDC etc. that would prevent travel to the Vineyard. My plan is to reply that I will refund her deposit if it comes to that (ie, if there are domestic travel restrictions, if travel to MV is restricted, etc.). I will also offer for her to use the deposit toward a stay at another time.
what decisions have others made?
Homeowners are handling cancellation questions in myriad ways, depending on the circumstances. A cancellation for a stay in May is different from one for a stay in August, which is still months away. Perhaps this guest might be interested in postponing her visit until August or September. Just this afternoon, we published a blog post that addresses this topic: https://blog.weneedavacation.com/cancellation-policy-options-for-vacation-rental-homeowners/
What if there is a travel restriction in place for unnecessary travel to/within MA at the time of the rental?
Hi Pam,
If your guests can’t access your home because of a travel ban in MA — or even one in their home state — then I would think you would return whatever monies you had already collected from them. Let’s hope it doesn’t come to that!
Are you recommending any “sanitizing” measures beyond what is normal change over cleaning?
Hi Tam,
We always recommend a thorough spring cleaning. The regular turnover should include sanitizing, especially the bathrooms and kitchen. Your guests are likely to be particularly concerned about cleanliness, especially after the Covid-19 pandemic (assuming that it has dissipated by summer). So it might be helpful to leave them some sanitizing products to use during their stay as well. Above all, guests like to walk into a clean home.
Joan
I have just had a cancellation for the week of June 20th as the family’s children’s school has been closed due to Coronavirus, and the school has indicated it will probably extend the school year to make up for the lost days. So the cancellation is due not to a fear of traveling but to a practical consequence of the epidemic.
Sorry to hear that you’ve had a cancellation, Liz. I hadn’t thought about the possibility that schools might be extended to the end of June. That would mean that families with school-age children would most likely opt to cancel a June vacation.
Joan
I really appreciate the links to travel insurance companies and the tip about “cancel for any reason” policies. If the tenant receives 60% and I am able to retain a portion of the rental if I re-book or if I do not re-book, the tenant should come close to receiving a 100% refund. That’s a Win-Win and easy to explain. I will reach out to the travel insurance companies to see what I can send to my tenants. Thanks again!
It’s nice of you to do some research on behalf of your guests, Nancy. You or they could compare rates on Travelinsurance.com. Insurance can be quite tricky, though, so most vacationers will have to do their own research.
Joan
Hi Joan
I was thinking of sending an email stating if they wanted to cancel and be refunded their deposit( if I can re book ) they would have to do before 4/1 as I would still be able to book within April – June ( I have rarely booked after May for summer and always fully booked by February)
With balances due 6 weeks out I still could have people cancel ( I get hurt as well ) but would keep their deposit unless I could re book but less likely
If they cancel after 6 weeks I would not give them anything back of I could not re book ( since I set the email giving them the option. )
This would at least give them the option now .
I agree – since most renters are local – it’s a private house – stated that immaculate; and better option for a vacation it may not be such an issue .
KBC
I suspect that this year we may be seeing a great many more last-minute bookings than in years past. Owners are often able to fill a last-minute cancellation if they lower the price a bit and add a Last-Minute Availability Alert.
Joan
This is great information! Thank you for being so proactive. I will be renewing my annual membership again this year. So grateful for your hard work.
Thank you, Mary. It’s important to us to keep homeowners informed. We don’t have all the answers, but we at least like to present the options. As we said, we’re all in uncharted waters.
Joan
Thank you, Joan. I have been considering the unusual circumstances, although I have not been contacted by any of our guests thus far. My guests are within the New England and tri-state area and all drive to our locale. This, as you state, may be the difference in deciding to proceed with their stay – they drive in their own vehicle to a private, meticulously cleaned home. I hope this proves true . . . Thank you for sharing your thoughts and advice.
You’re very welcome, Roselle. Our hope is that by summer, there will be a lot of pent up desire to escape to the Cape or Islands, stay in a lovely home, and breathe in the salt air!
Joan