The refund decision created another problem
In his March 30 letter to hosts, Brian Chesky explained Airbnb’s decision to allow qualifying COVID-19 cancellations and refunds. He also apologized for communicating the decision without consulting hosts. The letter announced $250 million in support, including payments of 25% of what eligible hosts would normally receive under their cancellation policies.
Those details matter. The announced support was not a promise to replace all lost booking revenue. The policy attempted to protect guests while cushioning part of the impact on hosts. A reader should distinguish the basis for a payment from the headline size of the fund.
Sources: Airbnb: a letter to hosts ↗
Liquidity and focus became linked
On May 5, Chesky told employees that revenue for the year was forecast to be less than half of 2019’s level. He described raising $2 billion, cutting costs, and reducing the workforce by nearly 1,900 people. That revenue statement was a forecast at the time, not a final result.
The same letter connected the reduction to a narrower strategy: more emphasis on the core host community, with some adjacent initiatives paused or scaled back. It also described support for departing employees. These were connected decisions about the future organization, not just a percentage reduction in spending.
How to reason about a two-sided crisis
Our analysis begins with a loss map. List who has already paid, who expected income, who bears fixed costs, and who can realistically wait. A refund, credit, or support fund moves a burden; it does not make the underlying loss disappear. State the burden honestly before arguing that a policy is fair.
Then distinguish survival from recovery. Preserving cash can extend the time available to act, but a marketplace also needs people willing to return. Ask which relationships are hardest to rebuild and what credible action would preserve them. Promises should be evaluated alongside the resources required to honor them.
A final question concerns uncertainty. Planning for a short interruption produces different commitments from planning for changed demand. Rather than pretending to know the recovery date, compare a few plausible scenarios and identify decisions that remain useful across them. Set a review point for commitments that depend on a particular forecast.
OUR DECISION ANALYSIS
Three trade-offs to examine
- 01Guest flexibility versus host income
- Relief for one side can deepen the shock for the other. Specify eligibility and acknowledge who still carries a loss.
- 02Support today versus reserves tomorrow
- A generous policy must remain credible if the disruption lasts longer than expected.
- 03A smaller organization versus future options
- Cost reductions shape what a company can deliver later. Connect cuts to an explicit strategy, not only a savings target.
Before you make the call
- Which losses would your policy cover, and which would it leave with guests or hosts?
- What would change if travel stayed depressed for another six months?
- How would you explain a decision to the group receiving the least protection?
What you practice in the game
The Airbnb scenario asks you to balance guest refunds, host support, available reserves, and the shape of a recovery plan. You practice recognizing obligations on both sides of a marketplace and explaining a difficult allocation. Its choices and consequences are educational models, not a recreation of private company deliberations.
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Read the primary sources
Historical facts above come from these original company materials. Our trade-off analysis and practice questions are educational interpretations, not statements by the companies.
- Airbnb: a letter to hosts
March 30, 2020. Refund policy, consultation, and the announced host-support measures.
- Airbnb: Brian Chesky’s message to employees
May 5, 2020. Forecasts, financing, workforce reductions, and strategic focus.