What the coronavirus means for short-term rentals
- Mar 17, 2020 | MyLodgeTax
Draconian measures to contain and prevent the spread of the new coronavirus (COVID-19) seem to be working in China and South Korea. Hopefully they’ll prove successful for the United States and other countries, as well. One thing is certain: The restrictions are having an enormous impact on businesses, especially those in the hospitality, restaurant, and travel industries.
Government officials worldwide are asking or ordering people to stay home unless seeking groceries, medicine, or medical help. Here in the U.S., a growing number of states including California, Illinois, Massachusetts, and Washington have restricted gatherings and closed bars and restaurants (except for takeout service), as has New York City. Other states or cities will likely follow suit as needed. If needed.
Argentina, Canada, Chile, Denmark, Germany, Ghana, Guatemala, Jordan, Latvia, Peru, and Spain have largely closed their borders, while other nations have restricted travel in, out, and within their borders. Flights all over the globe have been canceled.
Tax relief for lodging businesses affected by COVID-19
With travel discouraged or even impossible, cancellations continue to pour in for short-term rental businesses and hotels. These businesses are understandably worried about how they’ll manage in the weeks and months to come.
To help bolster businesses and the economy in general, a handful of states are providing tax relief for individuals and businesses unable to fulfill tax obligations due to the impact of COVID-19. Relief includes filing and payment extensions and a waiver of penalties and interest payments. Congress is also working on a tax relief package.
State and federal programs are being tracked in Avalara’s Coronavirus tax relief roundup, which will be updated as more information becomes available.
Outside of the U.S., many countries are providing tax relief measures. For example:
- China cut value-added tax (VAT) on accommodations
- Cyprus is reducing its already-reduced VAT on tourism services
- Costa Rica is providing a three-month VAT payment holiday for all businesses
International tax news related to the coronavirus can be found on our VATlive blog, World turns to VAT cuts on coronavirus COVID-19 threat.
Avalara MyLodgeTax is monitoring changes to filing and/or remittance deadlines and responding accordingly.
Refund guidance from lodging marketplaces
Cancellations are affecting short-term rentals and the lodging marketplaces they book through. As guests seek refunds, hosts are turning to marketplaces for guidance. Here’s what they’re saying.
Vrbo
Vrbo offers a Book with Confidence Guarantee, which is designed to protect consumers from fraudulent listings and misrepresentation. Unfortunately, it doesn’t cover “cancellations due to events outside of our control such as disease or government action.”
However, Vrbo strongly encourages hosts “to offer a full refund due to the uncertainty of this evolving situation.” For those that do, the company will fully refund their Traveler Service Fee.
For travelers, Vrbo recommends:
- Contacting their financial institutions about travel insurance (if they booked with a credit card)
- Contacting their insurance companies (if they have travel insurance)
The company will happily help travelers book alternative accommodations.
Resources:
HomeAway
HomeAway is also encouraging hosts to offer a full refund for travelers who reach out to cancel. Hosts that do so may tell travelers they’ll automatically be refunded the Traveler Service Fee. Yet as with Vrbo, the company’s Book with Confidence Guarantee doesn’t cover “events outside of our control such as disease or government actions.”
Advice for HomeAway guests:
- Review the property’s cancellation policies
- Read through travel insurance policies if they have them
- Seek help from credit card companies if they booked through a credit card
Moving forward, HomeAway advises travelers to purchase travel insurance and review the coverage to see how it relates to COVID-19.
Resources:
- How the coronavirus impacts your rental
- What can I do if my reservation is affected by the novel coronavirus (COVID-19)?
Airbnb
Airbnb is taking a different approach. Its extenuating circumstances policy allows guests and hosts to cancel without charges when impacted by illness, natural disasters, or unforeseen events like the COVID-19 pandemic. The policy now covers reservations booked on or before March 14 that have a check-in date between March 14 and April 14, 2020 — except reservations in mainland China.
Hosts may also refund reservations not covered under the extenuating circumstances policy, though Airbnb fees may apply.
Airbnb is allowing hosts to cancel without charge eligible reservations for guests traveling from an impacted area, or guests they don’t feel safe hosting. Guests will receive a full refund. However, cancellations should be in line with Airbnb’s nondiscrimination policy.
Resources:
Vrbo, HomeAway, and Airbnb are assuring hosts that cancellations due to COVID-19 won’t impact their ranking metrics. However, they also caution hosts against discriminating against travelers based on their country of origin. See the resources listed above for additional details.
Take care.
