Over the past decade, real estate investors have turned to Airbnb to rent properties and meet new people around the world.The short-term rental business continues to grow, and in 2021 the typical US host will $13,800 on AirbnbAn 85% increase compared to Airbnb host revenue in 2019.
Let’s say you’re serious about buying vacation rentals as a side business or full-time income and becoming an Airbnb host. If so, you should understand the service charges associated with using the Platform and price your property accordingly.
So how much does Airbnb charge hosts for their services? Let’s take a closer look at how much Airbnb charges hosts, how it compares to other listing platforms, and what’s smart about it. Investor Everything you need to know to run a short term rental business.
What percentage does Airbnb account for?
Many Airbnb hosts 3% flat service charge of the reservation subtotal. The subtotal includes what the guest pays for her per night plus any additional charges the host charges the guest (such as cleaning fees). Tax is not included. Service fee payments are calculated from the host’s total payment for each reservation. For example, if his subtotal for the stay is $1,000, the Airbnb host fee is $30 and the host pays the remaining $970.
The most common fee paid by hosts is 3%, but there are several fee structures hosts can implement that affect the percentage of their earnings that Airbnb receives.
split fee
Split pricing is the most common, where hosts and guests share responsibility for Airbnb fees. For example, hosts pay a flat 3% fee, and guests typically pay a service fee of around 14% of the booking subtotal.
Host-only pricing
Unlike split fees, the host-only structure charges the host for the entire fee (typically 14%-16% of the reservation subtotal). Hosts with very strict cancellation policies can use this structure to cover the costs of their guests to offset their strict policies. Airbnb also requires a host-only service fee for traditional hospitality listings, such as hotels.
Why does Airbnb charge a service fee?
Because guests and hosts use Airbnb’s platform for direct bookings, the company charges for services that benefit both parties. These services include credit card processing, protection of hosts and their property, marketing on the Airbnb website, secure communications for hosts and guests, and 24/7 customer support. Airbnb hosts can also receive educational resources from the platform to help them improve. pricing strategy And grow your Airbnb business.
Are guests aware of these charges?
yes. Guests can view each item that contributes to the total cost of their stay at the time of booking. The breakdown includes Airbnb guest service fees, local taxes, and other related charges such as extra guest charges.
Where can I find guest rates?
Once the reservation is confirmed, Airbnb will send the host the reservation details and a price breakdown for the host and guest. The breakdown includes the total amount paid by the guest, the host fee, taxes, and the total amount paid by the host.
How Airbnb displays prices
Previously, Airbnb displayed the price by displaying the price per night of the accommodation. You will need to select your accommodation, enter your booking details, and then confirm the full amount of your booking, including any fees. Now, Airbnb has added the ability for guests to view the room rate excluding tax with the total price feature. This allows guests to better plan how much they will spend on their reservation and not be surprised by additional fees your host will add.
How to minimize Airbnb fees
If you want to reduce Airbnb’s host fees, follow these steps:
- Have your guests book directly. If you want to avoid host service fees on Airbnb, include a website where guests can book directly with your listing. Remember, you are responsible for receiving payments and communicating with guests outside of the Airbnb platform. Another booking site may discourage guests, as booking through Airbnb offers a level of security that most guests prefer.
- Avoid overly rigid cancellation policies. Airbnb charges hosts a hefty fee for this cancellation policy due to the additional administrative tasks and customer support required by the policy.
- Avoid canceling your reservation. In addition to offering flexible cancellation policies, hosts should avoid canceling guest reservations to avoid paying cancellation fees. Airbnb charges a fee to hosts who cancel a confirmed reservation. The amount depends on when the host accepts the reservation and how long before the reservation is canceled before check-in. If the Airbnb reservation is canceled more than a week before his check-in, the host will be charged $50. If he cancels his reservation less than a week before check-in, he will be charged $100 as a penalty.
- Options and nightly rates are cheaper. Airbnb’s service fees are calculated by calculating the subtotal percentage of the reservation. The lower the subtotal, the lower the total service fee paid to Airbnb. Lowering the price may not be worth it, but try to figure out if another solution would be more effective.
How does it compare to other short-term rental property platforms?
Airbnb isn’t the only option for listing your accommodation. Many investors use multiple property platforms to market their properties, extend their reach, and embed booking calendars. Below are other rental listing platforms and hosting pricing for each site.
VRBO
The site is similar to Airbnb, but focuses on condos and vacation rentals rather than the shared spaces and unique spaces such as treehouses that Airbnb offers. VRBO Offer Two different pricing structures For hosts: pay-per-reservation or subscription fee.
Per-booking payment fees include a 3% payment processing fee and a 5% processing fee. Payment processing fees, including taxes, will be charged on the guest’s total payment amount. Fees and additional guest service charges will be charged to the rental amount. VRBO also charges a 5% booking fee if you use an accommodation host’s property management site and a 10% booking fee if you use a third party site to source your booking.
Subscription pricing is a better option for hosts who earn more than $6,250 a year on the platform and have large traffic lists. The subscription has a one-time flat fee of $499, prepaid.
Booking.com
Booking.com is another option for property managers to list vacation or short-term rental properties. On average, Booking.com charges hosts a 15% commission based on the total booking amount. This is the only fee Booking.com charges hosts and there are no listing costs for using the platform. This site does not automatically deduct fees from a host’s earnings. Instead, we charge the host a fee at the end of each month.
Booking.com may seem like a higher percentage of fees than other platforms, but our simple pricing structure ensures that guests aren’t surprised by extra charges.
trip advisor
TripAdvisor also offers two different payment methods for property managers looking to list a property for rent. The first option is to pay his 3% host service fee per booking. Prices are based on the total price of the reservation including mandatory and optional property charges such as pet and cleaning fees.
Hosts can also pay an annual fee for each property listed on TripAdvisor. Hosts can receive bookings and payments from guests directly on their own platform, or for properties with annual fees, through the TripAdvisor site. Even if a guest books through the TripAdvisor site, the host must pay her 3% processing fee. If you don’t have a way to pay online yourself, TripAdvisor’s pay-per-booking option is probably your best bet.
Airbnb pricing FAQ
It can be difficult to keep all of Airbnb’s pricing structures accurate. Here are quick answers to frequently asked questions.
How does Airbnb calculate service fees?
Service charges are calculated based on a percentage of the booking subtotal cost. These charges include things like payment processing and customer support. In most cases, Airbnb host fees include a flat 3% service fee. If the host chooses to cover the guest’s total service fee, the host will pay a higher amount of approximately 14-16% of the reservation subtotal.
Can I avoid paying Airbnb service fees?
There is no way for Airbnb hosts to avoid paying service fees while using the platform. To offset costs, hosts can increase their listing prices or include their own service and cleaning fees as part of the reservation, which guests pay. Otherwise, hosts can set up their own direct booking website to schedule guest reservations and avoid paying host service fees.
What happens to the charges if a guest cancels?
If the guest cancels the reservation in time, the service fee will be refunded to both the guest and the host. Free cancellation period of reservation.
How are cleaning fees reflected in Airbnb host fees?
Airbnb’s host fee is a percentage of the reservation subtotal, which includes optional fees such as the nightly rate and cleaning, so hosts who charge a cleaning fee will pay more in Airbnb’s service fee. The higher the subtotal, the higher the host’s service fee.
How much do fees affect Airbnb prices?
Prices can have a big impact on how much your guests pay on Airbnb.When a host uses a split fee structure with a guest and charges an additional guest fee, in total as much as 30% According to Airbnb, most guest service fees are: 14.2% of booking subtotal. Hosts should consider the total cost of their guests to determine their pricing strategy and determine if adding optional charges would deter customers.
Build long-term wealth with short-term rentals
Vacation rentals can be a very lucrative way to increase your monthly income, but only if you acquire and manage your property correctly. This ultimate guide to analyzing, buying, and managing vacation rentals will set you up for immediate success and long-term wealth.
Note by BiggerPockets: These are opinions written by the authors and do not necessarily represent the opinions of BiggerPockets.