COVID-19 Managing Your Vacation Rental

Cancellation policy options for vacation rental homeowners

Written by Joan Talmadge
Cancellation policy options for vacation rental homeowners
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***NOTE 5/4/20: For any non-essential stays during the short-term rental ban, which currently runs until May 18th, we are recommending that homeowners provide a full refund.  Cancellation policies for any bookings for stays AFTER May 18th are at the homeowner’s discretion, but we urge you to relax your policy as much as possible.***

As you know, the WeNeedaVacation platform provides homeowners with full control of the booking process, allowing you the benefit of defining your own cancellation policies. Not surprisingly, though, we have received many calls and emails from homeowners and vacationers alike asking about OUR cancellation policy. Naturally, the answer is that it’s completely up to the homeowner.

We do, however, have some thoughts for you to consider.

Some recommendations

Regardless of your cancellation policy, we urge you to be communicative and sympathetic with your guests. These are difficult and stressful times for all, and your actions dictate the tone and future of your relationship with your guests. Take this opportunity to avoid antagonism and conflict, and instead position yourself on the same team with them – both parties working together to resolve the situation amicably.

  • Let them know that you are concerned about THEIR health as well as that of your other guests and your own.
  • Even if you choose not to make a decision right now regarding either committed guests or prospective ones, be prepared to respond to questions.
  • Consider distinguishing between guests who would need to travel great distances and by air from those who would be driving.
  • Keep in mind that it’s easier to hold on to a booked reservation than get a new booking. So, consider relaxing your cancellation policy to NEW inquirers in order to seal the deal, even if you may have to eventually cancel, as they’ll be more apt to commit now.

The importance of empathy

Sometimes it’s difficult to see things from another’s perspective. Like most of you, my family is totally dependent on the income from our rental in order to pay for its taxes and upkeep. But listening to the stories we’ve been hearing from vacationers this past week has really opened my eyes.

There are folks who have already been laid off work or are facing the possibility of losing their jobs or having them cut back. Some are elderly or have members of their party who are elderly or have health issues. The status of flight travel is totally uncertain at this point, and it’s possible that any events drawing them to the Cape or Islands have already been cancelled. Although none of these issues are your fault or responsibility, they are certainly worth consideration.

We’ve been hearing a lot lately about how “we’re all in this together.” Well, we are. And if each of us makes a concerted effort to show compassion, we will all be in a better place in the long run.

Some cancellation options

Regardless of which cancellation policy you choose, we strongly urge you to be proactive. Reach out to your currently committed guests right away, and at least start the conversation. Let them know you care and would like to work WITH them to lessen their concerns, and engender mutual sensitivity to each other’s circumstances.

Every one of your situations is different – and we are not here to judge you. These are merely some options for you to consider and, below, some ideas about how to articulate them.

  • If you’re willing, offer them a full refund if they cancel now.  Giving your guests the opportunity to opt out now may give you ample time to rebook your home.
  • Offer to allow them to cancel at a later date, but only if you are able to rebook your home.
  • Move out the date of their final payment so that your guests don’t have to pay until the picture becomes clearer.
  • Tell your guests that you are adopting a wait-and-see approach (see below).
  • Offer to move the vacation date to sometime later (e.g., June to end of August or even next year).
  • Offer a percentage refund depending on the timing of the cancellation vis-à-vis the date of occupancy.
  • Stick to the usual cancellation policy (see the “Fairly strict” policy below).
  • For prospective guests/inquirers, suggest they look into CFAR (Cancel for Any Reason) trip insurance, although it can be more expensive than other insurance and doesn’t provide a complete refund.

The wait-and-see approach

Things are changing by the day, it seems, and who knows what the situation will be like in a few months. So perhaps you might adopt a wait-and-see policy. It’s possible, for example, that travel restrictions, shelter-in-place recommendations, and social distancing will no longer be deemed necessary. If so, you might be less willing to refund a cancellation. If, however, things are the same or worse than now, you might be more willing to then refund all or part of your deposits.  But either way, delaying would give both you and your guests some breathing room to make a decision.  And if you communicate to your committed guests this wait-and-see approach, it removes some worry and sense of urgency from them as well.

Examples of emails from some homeowners to their guests

Whatever policy you choose to adopt going forward, here are some examples of language you can use, starting with the clause from our regular sample lease:

Fairly strict approach – taken from our Sample Lease

If the TENANT cancels his/her reservation, all funds received will be refunded ONLY if premises are re-rented by LANDLORD for the reservation period. LANDLORD will make every effort to find a replacement TENANT. If LANDLORD is successful in securing a replacement for the entire term of the lease, at the same rate and terms, the TENANT will receive a refund of the deposit paid less 5% of the total rent due for this lease. If re-rented for a lesser amount, the difference between this rental and the lesser rental amount shall not be refunded.  There is no guarantee that a replacement TENANT will be secured and there is no guarantee the TENANT will receive a refund if a replacement TENANT is not secured.

Wait-and-see Approach

Dear renters,

We hope you, your family, and your friends remain well. We just wanted to touch base with you regarding your plans for renting our house this summer. Of course, none of us really knows how things will evolve over the next few weeks, much less what will happen by July or August.  But we want to do what we can to plan our summer and help you plan yours.  Our first priority is the safety of our families, both yours and ours.

 If you decide to cancel your rental before XX/XX/XXXX, we will refund your full rental deposit. But if you cancel by XX/XX/XXX, we will refund half of your deposit.

 All summer, we will have our cleaning crew pay extra special attention to disinfect and sanitize our home.

Lenient

In consideration of the uncertain and unprecedented circumstances we are all facing, cancellations will now be accepted on bookings made up to X weeks in advance of the rental start date with money fully refunded. Cancellations made up to X month(s) prior to the rental start date will be refunded X%, and cancellations made X weeks prior will be refunded X%. I am hopeful that this added flexibility in policy will enable you to make the best decision for you and your family. 

Also lenient

Dear Guests,

 I hope you and your family are safe, hopefully together or at least connected virtually. I’m guessing that many of us wish we could be sitting on the deck overlooking Wellfleet Harbor, enjoying the peace and beauty of the Cape, with all of this behind us. I’m hopeful that we will be there soon, but we aren’t there quite yet.

 It is not my intention to be insensitive by discussing vacation during this time of crisis and ambiguity. I want to instead express my understanding that the future is uncertain, and as your host, I want you to feel assured that I have your back. To help us all deal with the fluidity of the COVID-19 situation, we have modified several of our rental policies.

  • Your balance of payments will be due 3 weeks before arrival this year, rather than the usual 6 weeks advance, to facilitate last-minute decision making.
  • We’ve relaxed our cancellation policy to allow for cancellations as late as 3 weeks before arrival, with a full refund of your lock-in deposit.
  • If you would like to postpone your stay and move your lock-in deposit to reserve a week in 2021, we’re happy to do that – but please let me know as soon as possible.

For those of you who will be vacationing at our home this summer, we have arranged with our cleaning company to do an additional disinfectant sweep through at the end of every changeover cleaning to help keep you all extra safe.

Many thanks for your patience and understanding during this unsettling time. If you have any questions or concerns, please feel free to contact me.

View our previous Blog post about how to address vacationer concerns about COVID-19.

Looking to share ideas with other homeowners? Join the Vacation Rental Community – Cape and Islands Facebook group. It’s a great way to pose ideas or questions and read about what other homeowners are thinking and doing – about cancellations or anything else related to managing a rental property on the Cape and Islands.

Vacation Rental Owners Community – Cape Cod and Islands
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A community for vacation rental homeowners on Cape Cod, Martha’s Vineyard and Nantucket. Share your questions, knowledge and experience with other vacation rental owners.

 

 

About the author

Joan Talmadge

Joan Talmadge - My husband Jeff and I created WeNeedaVacation.com in 1997, shortly after buying our Cape home. My background includes teaching fifth grade for 8 years and writing and editing educational publications for 15. I get great joy from helping fellow homeowners successfully rent their homes. Jeff and I are proud to have two of our three grown children working for WeNeedaVacation.com, truly a family-run business. For me, the Cape and Islands are magical all times of the year -- whether it's walking on Nauset Beach, playing golf, or enjoying family and friends. Email Joan

4 Comments

  • Thank you for the good advice, Joan. We have already contacted our scheduled renters, telling them to not send any more scheduled payments until we see where this pandemic is going.

    We have not yet advertised it (because we don’t want to precipitate cancellations), but we will refund all monies received from our renters to date, almost all of whom are repeat clients. Gotta treat them right!

    • Good for you, John and Caroline. That wait-and-see attitude makes sense for a lot of us. Let’s just hope that your guests will be able to return as usual, for their and your sakes!

  • Thank you so much for this. We have, of course, been discussing what options we see that we have, including full refunds. We currently have in the lease that we take 10% out for cancellations and return the rest if we can rent for that time. We have an onsite manager/realtor who does our contracts, gives the key to renters, and respond if problems arise. I’m wondering how much we should pay her for the work she’s done so far when/if renters cancel. Any ideas?

    • Hi, Emily. Yes, our regular sample lease has a similar cancellation policy (except that it states that only 5% will be retained rather than 10%). And under normal circumstances, we feel that it’s fair. But in this situation, where huge numbers of people have lost their jobs or have had their incomes drastically reduced, we encourage homeowners to relax their normal policies as much as possible.

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