Agent commission question

[Richard3359]

Hi AirBnB hosts

We have our home on AirBnB in Australia. I would like opinion from hosts or agents on my manager/agent’s commission structure. 
They charge 18.5% on ‘total booking cost’ plus $50 booking fee. There’s GST on the 18.5% added as well. We assumed total booking cost was the accommodation cost including booking fee and cleaning. AirBnB service fees come out of the total cost (a deduction) but they’re ADDING it on top of the original accommodation cost.
Here's their maths on a recent booking.
Guest Mr and Mrs X

12 Nights
Accom $3669.15
Booking Fee $50
Clean $270
Gross Accommodation $3989.15
AirBnB Fee $658.21
They then ADD this as a COST to get a
Total Cost of  $4647.36 

From this new ‘total cost’ of $4647.36, they take 18.5% = $859.76
$859.76 + GST = $945.74
Then they add another $50 booking fee at the end. 

Total commission is
$995.74
Thoughts, opinion?

[Guy991]

Hello @Richard3359 ,

If I understood the calculation correctly, the bottom line is that out of around 4000 (Gross accommodation), they take around 1000, which is 25%. 

I don't know what is customary in Australia, but I would definitely check alternative services.
Consider using a simpler method where you pay a percentage of your host earnings, somewhere between 15%-20%.

[Richard3359]

It’s how they came to the total cost/gross accommodation figure that irks me. Adding AirBnB service fee ON TOP OFF the gross accommodation costs is a ‘unique’ way of inflating the amount the commission is charged.

[Elaine701]

@Richard3359 

Is there a reason why you're using a "manager"? It sure appears that they're not really doing anything you can't do, and are charging you a small fortune for it.

I have known of other hosts that fall into this rut, and spend a bundle for something they can easily do themselves. Yet it's not clear what other value your "manager" adds to your business. Maybe there's something else that isn't mentioned here?

??

[Richard3359]

No other value. We were working thousands of kilometres away so we felt we needed a manager to be on hand for our guests if required.

[Helen3]

surely the time to ask that question is before you commission their services . Did you get comparative quotes from other cohosts before commissioning them @Richard3359 

I'm a cohost and charge a flat % but I don't know what's standard in Australia 

[Richard3359]

We were in a tricky situation, about to work in a remote location. Manager came highly recommended . We were simply told “18.5 of total costs”. The maths was never unpacked in a practical way, no spreadsheets with breakdowns were provided until last week. We’re closer to home now so hosting ourselves. 

[Lorna170]

@Richard3359   IMO, they should be earning their percentage ONLY on what YOU would be paid out by AirBnB.

WHY would they expect to take earnings on what AirBnB has charged the guest? This money does not pass through their hands or yours.  

You may wish to take this up with an accountant -- in my state in the US, managers cannot charge fees for federal/state taxes or fees paid to other companies if those monies are not paid to the owner.  

[Richard3359]

I agree with you. But cannot find a definitive answer on the legalities of the fee structure. The other bizarre part is that she was including in her commission calculations a $50 booking fee as part of the ‘total booking cost’ AND adding it again after the commission calculation! I challenged this at the start of our arrangement but she pushed back  and I had nobody else lined up at such short notice. Legal or not, the feedback indicates consensus being that it is unethical. 

[Mike-And-Jane0]

@Richard3359 The simple answer is that it is whatever is written in your contract. Now if the contract is open to interpretation then you could go to court and get the court to decide who is right. Whilst this is risky the court will usually find against the person who wrote the contract if the contract is ambiguous.

[Mike-And-Jane0]

@Richard3359 One other thought from me. I think they are charging GST on the GST already charged by Airbnb. Typically this would be frowned upon by the tax authorities.......