Airbnb’s home suppliers, or “hosts” using the Airbnb label, are beginning to use legal channels to hold Airbnb accountable for “unilaterally, and in violation of hosts cancellation policies, refunding guests who booked reservations” and for inciting travelers to cancel their reservations.
On March 13, Airbnb announced the company would be overriding its hosts’ cancellation policies by adjusting the terms of its Extenuating Circumstances policy and by issuing full refunds to guests for stays between March 14 and March 31. While the company refunded the cost of the rental, Airbnb did not initially refund its service fee. However, on March 14, after significant push back from its suppliers, Airbnb decided to also refund its service fee. Later, Airbnb extended the dates for refunds through May 31. The series of events led to significant hardship for its home suppliers who were working with guests directly to change stay dates before Airbnb stepped in an overturned their efforts.
As a result, hosts began discussing whether Airbnb had the legal right to take this action launching forums and groups such as Twitter’s Airbnb Host Class Action.
This week, Traverse Legal, led by managing partner, litigation attorney and Airbnb host, Enrico Schaefer, is taking things a step further by launching a fundraising campaign to pursue a collective action against the company, saying “collective action by Airbnb hosts is critical to effect change.”
“This fund is about bringing fragmented voices together,” Schaefer wrote. “It is about creating leverage and sending a collective message demanding change. Our attorneys are already working on the right legal strategy for group action. Our attorneys have dug deep into the terms of service, the extenuating circumstances policy, the arbitration mandate, the class action waiver and other contract issues.”
According to Shaefer, “There are hundreds of thousands of Airbnb hosts globally asking Airbnb to uphold their end of the bargain. Airbnb’s lack of transparency and lack of accountability are breaches of their contractual obligations to hosts. Now is a time for collective action. Hosts are making substantial capital investments directly tied to the Airbnb platform. They require predictability, follow through by Airbnb, transparency and accountability.”
The following text is taken from Traverse Legal’s website:
Airbnb unilaterally, and in violation of hosts cancellation policies, refunded guests who booked reservations between the dates March 14th and May 31st. Our analysis of the contract terms, relevant law and facts has led to the conclusion that Airbnb hosts have a viable breach of contract case against Airbnb:
- Why did Airbnb refund guests? Airbnb recently relied on the “extenuating circumstances clause” of its standard terms / agreement with property owners and guests to justify its first and second round of guest cancellations and refunds due. Airbnb concluded that the Covid-19 / coronavirus was an extenuating circumstance.
- Key Issue: Does a pandemic fall within the language of Airbnb’s extenuating circumstances clause?
- Do hosts have legal claims against Airbnb? As you will read below, our attorneys represent Airbnb hosts and have determined that Airbnb may be in breach of its platform agreement with hosts as a result of providing traveler refunds in response to coronavirus. Stated another way, guests were arguably NOT entitled to refunds under the rental agreement and Airbnb’s standard terms and policies.
- What can hosts do about the forced refund? Airbnb could be liable for money damages to hosts for allowing booking cancellations and providing refunds. The terms of service contain a mandated arbitration clause for all disputes. This arbitration clause may, or may not, be enforceable. A possible class action is being analyzed as the class action waiver clause could also be considered unreasonable under California law or if the class action waiver is determined a violation of public policy.
- What should you do if you are a Airbnb Host who was affected by the cancellation and refund decision? Contact one of our litigation attorneys representing hosts. We are on the front line of the factual and complicated legal analysis for hosts. While this virus has taken the world by surprise, unexpected circumstances are drafted into your hosting agreement with Airbnb. In short, a pandemic is one of the contingencies which was foreseen and the risk that was adjusted under the extenuating circumstances policy. Airbnb should follow those policies and terms. Instead, Airbnb has diverted what appears to be one billion dollars in host revenue by allowing cancellations for traveler reservations between April 1 and May 31. While Airbnb has pledged 250 million to hosts, that leaves hundreds of millions in damages to be pursued by property owners. As any hosts point out, travelers have the option of buying insurance against these types of events. Hosts do not.
Learn more about the legal fund.
I must disagree with Munro Murdock, especially this line:
Far too many Travelers are looking for someone to blame for why they aren’t getting their money back, instead of realizing that when they chose to book the travel, in so doing they assumed a certain level of risk, should their ability to travel be jeopardized.
We are able to travel. The restriction is not on travel into Florida. It is specifically on short-term rentals, or most guests / travelers would have made the trip. In fact, I have two friends in GA who traveled to FL for Airbnb rentals, only to find when they arrived that they were not allowed to occupy. Airbnb did not even give them the courtesy of informing them to reschedule.
I’m sure that Munro will say “the burden of knowledge / research / awareness of government regulation, even if it’s local authority, is on the traveler. As a guest / traveler and not a “host”, I feel very differently.
Arbitration may work out best for the hosts, as the court of public opinion would likely favor the travelers / guests. At least Kimberly P. (see above) recognizes this.
Several thoughts and comments to share on this subject! It is a controversial topic that many Hosts and Travelers do not fully understand.
The moment I realized what Airbnb was doing to hosts in the midst off this global pandemic, one of my very next thoughts and assertions was that, they are going to be the target of a “class ation suit” collectively filed by hosts over this matter.
However, as I have since learned, this initiative now under way is NOT a class action…as Airbnb’s TOS do not allow for class actions to take place. It consists of separate arbitration filings and they (Traverse, in this case) are doing work on a contingency basis for qualifying parties (as I understand) AND providing education for ALL others (for free) who may want to file their own arbitration request direct for the standard fee which is about $200, if I am not mistaken. Dealing with potentially tens of thousands of arbitration filings from Hosts all over the world will certainly get Airbnb’s attention. I’m sure they are smart enough to know that it is coming.
For me, this is first and foremost a matter of principle. Even if my Clients never see a penny of the $75k some odd amount that Airbnb took from them in a short matter of days in an authorized manner, I cannot move forward professionally, with a clear conscience, unless I initiate the filing of the arbitration claims on behalf of the many property owners so affected, that I represent. To do so would be, I feel, a breach of my fiduciary duty to my Clients, as they have entrusted me and my Team to represent them and to protect their rights, as it pertains to their vacation rental property investment. Without question, their rights were clearly violated by Airbnb during this crisis.
When you watch the videos on Traverse Legal’s Youtube channel you will quickly see that they are also doing this out of principle, and out of a sincere interest to help hosts who suffered from Airbnb’s breach of contract and releasing funds back to Guests when they were not authorized to do so. I don’t think it is fair to just assume their sole motive is the profit one without doing more research on the matter.
Yes, IF the arbitrations are successful in favor of the complainant hosts, they (Traverse) will be in a position to earn legal fees for their involved efforts of representation, but until then, they (Traverse) will be investing significant amounts of money (probably in the high six to low seven figures) to represent hosts / managers in their arbitration claims, without any guarantee of being paid for their work. To me that is a fair approach given the circumstances we find ourselves in at this time, with little to no revenue being generated in the travel sectors of the economy. I think many hosts on their own would not know where to begin with a matter like this, but if educated and empowered by those in the know, may actually feel like they have a voice and could recoup some funds that were taken from them in an unauthorized manner.
Unfortunately, many Guests/Travelers mistakenly assume that all Hosts are all greedy and do not care about the impact COVID-19 has had upon the Guest populations throughout the world. Nothing could be further from the truth. Hosts and Managers DO care…they are in the HOSPITALITY business, after all…but they also care about contracts, terms and conditions. The vast majority of professional management firms throughout the world, are also bound by legal contracts with the property owners that do not allow them to simply refunded monies upon a Guest’s demands to do so. If they did it would be a breach of contract with the property owner and, as is the case with us in Hawaii where we are required to be licensed Realtors in order to conduct management activities, our very real estate licenses could be put in jeopardy by any action involving the disregarding of ANY legally binding agency contract with a real property owner.
As difficult as these times are, for everyone, I think THE most important thing, is for each and every person (and entity) to assume 100% responsibility for themselves, their actions, their contracts and what they agreed to or did not agree to. Far too many Travelers are looking for someone to blame for why they aren’t getting their money back, instead of realizing that when they chose to book the travel, in so doing they assumed a certain level of risk, should their ability to travel be jeopardized.
The issue at hand here, with Airbnb, is that the Company failed to remember that without the Hosts, they do not have a business nor a platform. They, without question, made a very calculated executive decision, to have the Hosts/Managers be the fall guys, if you will, and to carry the brunt of the costs of the COVID-19 pandemic…in order to insulate Airbnb, first and foremost. Certainly, without the Travelers there is no revenue for anyone, but for Airbnb to literally and blatantly turn their backs on their Host partners, in the manner in which they did, is truly mind-boggling! They demonstrated that they cannot be trusted to uphold their side of contractual obligations. The trust they once had with Hosts has been broken and will not be easy for them to restore. They will have hell to pay for that in the coming months and years, without question. It was truly a sad day for the Travel industry when a leader in the space (Airbnb) chose to forget their governing values in favor of the profit motive and trying to save face in the eyes of Travelers.