As a short term rental business, before the pandemic, we got 100% of our bookings directly from a combination of Airbnb, Booking.com and VRBO, and it was a great experience. It provided an easy route to market, a large customer base, and payment and logistics. For the access to market and logistics, they charged 15% of our gross revenue and honestly, we can't complain. Without their platforms, we essentially have no business.
We were happy with this arrangement until the start of the pandemic, and for the service accommodation industries, this was our apocalypse. I had friends who engaged in rent to rent and had to default and handover the keys back to the landlord. The whole country was entering the first phases of lockdown, and international travel was suspended across the world.
For those of you not in the industry at the time. I can assure you, the nightmare was scary, and when Airbnb decided in its infinite wisdom to override all of our cancellation policies and offer a no question asked free cancellation policy for all bookings on their platform, the nightmare became real.
First, there was a shock, then there was pain, and then there was almighty anger. I have never hated an entity as much as I hated Airbnb in those days, and suffice to say that Brian Chesky was my least favourite person in all of human history. I knew people who lost a fortune and their livelihood. I lost close to £18,000 of secured booking through cancellations in a matter of days, and thinking back to those days, it hurts, but that is now ancient history, and to Airbnb's credit, they made some later restitution for lost earnings.
But the mass cancellation soon became the least of our problems when Airbnb announced that in response to covid and government guidelines, they will close their platform and accept no further bookings until the guidelines change.
At the time of this announcement, Airbnb accounted for 75% of my overall bookings, and with international travel now halted, I had properties across two cities that were empty, and all the processes I had painstakingly built to sustain them, was now in danger of complete collapse. It was at this point that I realised that the gravy train was over, and having stretched my finances, I knew that bankruptcy may soon follow if I can't find an alternative source of revenue quickly.
As the nation began to close its stores and everyone hunkered down, I made a phone call to my cleaning manager to gauge her response. I asked if she and her crew would be willing to continue to work throughout the lockdown, she said yes, they would, and right there, I made her a promise; that as long as they are willing to work, I will continue to provide the work. I knew that whatever happens, I couldn't afford to lose my setup, otherwise, it will truly be game over.
But honestly, when I got off the phone with her, I had no idea how I would do that: with the country on lockdown and Airbnb effectively closed for business. But this is one of those times when my stubborn single-mindedness will come to my rescue. I knew I must find a solution, and therefore I will find a solution.
The first glimmer of hope came when I got a phone call from one of my guests who had checked out that morning. He told me that he was at the airport, that his flight was cancelled, and he needed a place to stay. I told him that I had availability, but he would have to pay through PayPal as Airbnb was no longer working. He paid for a week. It wasn't much, but it was something. After I ended the call with him, I had a light bulb moment. I called everyone who had checked out that day and up to a week before, for what I called, a welfare check, but culminated in, do you need a room; I have a room. I also called the guests who were still at the property about the possibility of extending their stay or returning to the property in the event of flight cancellation. Through these telephone calls, I was able to get us to 30% occupancy, and the payment was all hastily done through PayPal.
With those done, I started scouring the internet for any booking channels that were still operational. I didn't care if they were breaking the rule or not; I just wanted to know if they were open.
I called everyone I could find to enquire, and in the midst of that, I distinctly remember calling booking.com, and I was extremely furious with their decision to automatically cancel a booking when the guest had not made the cancellation request. The guest had called me complaining that he was on his way to the property, and he had just received a notification from booking.com stating that his reservation has been cancelled, and he had nowhere else to stay. I told him to make his way to the property as agreed, and I will call booking.com to sort it out. I don't think I was polite on the phone because that guy had booked for nine days, and I was counting on every penny of that money. Even though they refused to reinstate the booking, I was able to make a personal arrangement with the guest so that I wasn't out of pocket and the guest had a place to stay.
By day two, I had my first miracle. Tripadvisor was open and operational. I hadn't used them before that point, but I was grateful! Extremely grateful that I could get new guests in from somewhere. That helped increase our occupancy to 50%, although the day rate had effectively halved.
To streamline and simplify our payment process, we hastily constructed a Wix website for our guests to use, and it helped. With the help of VRBO and trip advisor who were open, and soon booking.com joined the mix of available platforms; and, with our success in converting our short term guests into long time stayers, we staved off disaster and returned to profitability as the restrictions lifted. The suit of available government financial initiative also helped immensely, and we are grateful to the chancellor for his help.
Nowadays, 92% of our bookings come from the combined Airbnb, Booking.com and VRBO and 8% of our bookings comes from our website, and our target is to make this 20%. Our decision to increase the percentage of our direct booking is for cash flow reasons, and I will devote some time to explore that topic in the future.
The pandemic brought with it fears and uncertainties, but it also presented us with an opportunity to stress-test the survivability of our business model under difficult market conditions, and the actions we have taken since then has made us more resilient towards such an event.
We are immensely hopeful for the future and the continued growth of our business. Thank you for reading.
Kind regards
Franklin Folahan
Comments