HOLIDAY RENTALS HORROR – Rentals sector in meltdown as online platforms say “pay all your guests back”

The full horror of Covid-19 has sent the Algarve holiday rentals sector into flat spin. In the middle of last month, bookings platform Airbnb unilaterally ‘extended its extenuating circumstances policy’ to ensure guests could cancel reservations without being charged. Hosts (meaning owners) were not consulted. The move has since been adopted by other ‘big companies’ in the field, leaving the ‘little people’ – many of whom have mortgages that need to be paid – up sh** creek without a paddle.

Those who have received deposits are now morally obliged to pay them back, those that haven’t are still looking at a season full of zeros.

Says one of the region’s long-term booking agents: “Everyone’s screwed, basically.”

It’s a predicament that can be viewed from multiple angles.

From a holidaymaker’s point of view, it makes perfect sense to be paid back in full for a holiday one cannot take.

But from an owner’s perspective, in many cases the money has already been spent.

As one told us weeks ago: “I use the money that comes in in deposits every year to get the properties ready. I will have to tell my clients that the money can go towards a holiday when we’ve been given the all-clear. But I can’t pay them back. I just can’t. I hope they will understand.”

In this case, she’s lucky: this is an owner who has a small selection of regular clients, almost all of whom she expects will indeed ‘understand’.

But others are not so fortunate. And many are people who went into the holiday rentals market as a way of financing a mortgage on a second property.

“This will all have huge financial repercussions,” said a source who deals with high-end rentals that see his clients receiving thousands of euros in their bank accounts 60-days before people arrive for their holidays.

“We have a very strict cancellations policy,” he explained. “Legally, the clients don’t have a leg to stand on if they want their money back ‘right now’; morally of course, we feel we have to do something.”

In this case, the owners with the agent have agreed to reschedule all bookings made for the next few months as soon as the region opens up again.

“This will satisfy some clients, but not all,” he told us.

“I can say to the ones that don’t like this option, “get the money from your insurance” but, of course, the insurance companies saw this coming and changed the terms of their policies when no one was looking – to include ‘pandemics’ in situations where they don’t pay up…”

It’s a massive, massive problem echoed in every single ‘touristic region’ of the country and beyond.

Social media is full of comments from people ‘trying to get answers from owners who don’t reply’, but the gist of reports appear to be that owners here are trying to meet their clients at least half-way by honouring bookings and agreeing to reschedule free of any extra charges.

Where is this all leading? That’s the terrifying question no-one wants to inspect too closely.

Bearing in mind the majority of holiday rentals are owned by people who have taken out mortgages, fears are that many won’t be able to sustain the hit of deposit repayments and decide to put them up for sale.

“I can see the market tanking, to be honest,” said one of our sources. Others were more circumspect and said they hoped owners forced to sell would be able to do so without seeing banks foreclose on them.

“This is a time when we all have to pull together, hold hands and help each other,” said Carvoeiro businessman Bart Hoogwerff Eikelenboom.

“We should also be positive and see this as a new start – a time to press the reset button. For example, look at Lisbon and what has been happening with Airbnb there. It has been over the top …”

In Bart Eikelenboom’s case, he has agreed to be “flexible” with clients booked for holidays in properties restored with wife Annelies. Either guests can reschedule, or he has agreed to refund monies already paid in full.

This is largely due to an experience he had with a booking through, made early this year for three nights this week in Amsterdam. “One would think that when it’s not possible to go to your travel destination, you get a refund or a voucher, but we did not get any compensation,” he explained. “This has encouraged us to be flexible as we know how frustrating it can be.”

Nonetheless, the effects of Portugal’s ‘lockdown’ are biting hard. Rui Nuno Baleiras, one of the coordinators of budgetary support unit UTAO, told Lusa this week that even with all the government measures brought in to try and bolster companies through this crisis “many will prefer to close their doors rather than go into debt” (which is where government support will eventually lead).

Refusing to make a drama out of a crisis

Bart Eikelenboom’s properties, like almost everyone else’s, have lost their habitual Easter clients – but that doesn’t mean they’re going to waste. The formerly abandoned building next to the GNR station in the centre of town – recently transformed into a complex with three-apartments – has now been opened up to policemen and women ‘to shower, change, rest, watch television, whatever they need to do…’ through the lockdown.
As Bart explains, “it’s not always easy for these people to go home: they have to be careful too”. And it’s a way of confronting the invisible beast that is wrecking the world’s economy with solidarity and creative thinking.

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Bart Hoogwerff Eikelenboom