How Does COVID-19 Affect Airbnb Short Stay Rentals and the Tourism Industry

The spread of the coronavirus (COVID-19) to more than 100 countries is prompting people around the globe to reconsider their travel plans, many have chosen to stay home and not go out in order to avoid infection.

The knock-on effects are being felt around the globe. To contain the virus, millions of people are hunkering down, flights have been cancelled and countries are imposing travel bans on people coming from severely impacted areas such as China, South Korea, Italy and Iran.

The spread of the Covid-19 virus has hit the tourism industry of Malaysia hard as the number of confirmed cases and deaths continues to rise. Occupancies of hotels are down by estimated 40%, mass gatherings have been cancelled and tourist arrivals have dropped. To mitigate the impact brought by the COVID-19 coronavirus outbreak, Malaysian government has introduced the 2020 Economic Stimulus Package. As part of the package, the government will introduce several incentives that could potentially boost the demand for local tourism among Malaysians.

This includes a personal income tax relief of up to RM1,000 on expenditure related to domestic tourism, as well as a RM100 digital voucher per person for domestic flights, rail and hotel accommodations for all Malaysians. Travelers who have upcoming unavoidable trips can also find great bargains from airlines, accommodation and tours. 

However, these stimulus and great deals became ineffective as Malaysian government announced the Movement Restriction Order from 18th to 31st of March 2020, restricting the public from leaving their home. Most of all, travel and hospitality industries are dealing with a sharp decline in revenue because travelers are cancelling bookings and avoiding unnecessary trips. Find out what happens if you have to cancel your trip due to COVID-19 here. Despite the COVID-19 outbreak, there is a silver lining for some Airbnb hosts. There are cases where guests decided to extend their stay in Malaysia as they are unable to return to their home country due to flights being cancelled, or perhaps prefer not to go to the airport to avoid infection. Sleepy Bear, a pioneer short stay operator in Malaysia, has seen their average length of stay (ALOS) increased to 10 days since January 2020. 

There is a lot of uncertainty around the coronavirus and it certainly affects both hosts and guests that use Airbnb’s services. Hosts lose earnings that they rely on to make ends meet where guests are losing hard earned vacation savings. Hence, Airbnb has also introduced “More Flexible Reservations” policies to give guests and hosts the option to cancel reservations without any charges until 1 June 2020 if they’re affected by COVID-19. Airbnb will not just waive the 3% fee for hosts who offer refunds on cancellations that would have otherwise been subject to charges, but will also increase visibility of listings for hosts who take advantage of its new “More Flexible Reservations” policies.

One thing is for sure: COVID-19 is not the first (eg. SARS & H1N1 outbreak) and will not be the last crisis facing the industry. Ignoring the crisis won't do any good, and neither will panicking. Hence, it is important to carefully consider what needs to be done to maintain some level of confidence and preserve competitiveness when the market recovers from COVID-19.