Cleaning fees vs Service fees vs Pricing

[Susan990]

The conversations about cleaning fees and ABB fees and Pricing displays deserves a good look at the way ABB explains these charges to the Guest consumer.

 Place cursor on Cleaning fee and read " This is the fee the Host charges to clean their property" Now read the cursor message for Service fee and read " this helps support this platform which provides 24/7 customer service" or something similar. Notice the subtle distortion? My solution is to think like a Hotel and calculate the actual cleaning costs to run your Listing annually and divide by 365 days and you have your daily rate to stuff  in the nightly  price.   Then I add to the value of my places by stating in the marketing remarks-- No cleaning fees, security deposits, or additional charges. Flat rate pricing. Plus, for my area the high demand  for monthly stays rules the top of my market so I have set 31 day minimum reservation--what this does to the hotel/tourist/lodging taxes is it VOIDS them... not legally collectable on monthly reservations.  End result-- the only Fees added onto the price are the ABB fees. P.S.  I skip out on all the weekly, monthly discount section totally none of it for me.  This formula has worked very well.  Clean simple math. No confusion. Occupancy rate at 93% today.

[Ryan2352]

Interesting concept, but in my market that wouldn't work.  The cleaning fees would push the nightly rate much higher out here.

[M199]

@Ryan2352 

An interesting idea, but would not work for me.  We're 7 months seasonal.  The pro-rated costs would not fly.

[M199]

@Susan990,  see above, sorry I missed you😞

[Lisa723]

@Susan990 wouldn't work for us either; this would heavily subsidize short-term guests at the expense of long-term guests, which is exactly the opposite of what we want. But if all of your stays are pretty similar in length you don't have that effect.

[Kitty-and-Creek0]

@Susan990 In California that length of stay would give guests tenants' rights and give you landlord's  obligations. Under those circumstances it is better to get a lease. 

[Susan990]

I understand California landlord-tenant law is unique and seems to give more power to renters than owners - the devil is in the details.  The contract agreement signed by the guest with ABB is crafted for short term occupancy and it is still a right in time agreement and when the time is up the right to occupy expires.  Hotels in California exercise this same right no matter how long a person books the room. There is a right to book a room in a Hotel without discrimination because all you are purchasing is a right in time. With a rental  lease agreement there is a screening process and selection process and the landlord can choose whom to accept as the renter to sign the Lease agreement.  The lease agreement provides for full property rights for the term of the agreement.  The landlord can discriminate in this decision of who to lease to.  An ABB booking does not magically turn into a lease agreement at the witching hour of 30 days. 

[Ryan2352]

@Kitty-and-Creek0Yes, over 28 days creates tenancy rights per California state law.

@Susan990I've been in court when hotels were trying to evict a guest who stayed more than a month and then stopped paying rent.  The "right in time" argument does not override California law.  It's not that the ABB agreement changes into a lease agreement, it's that at the 28 day mark California considers the guest a tenant and affords them all the rights there-in including seller contributing towards moving costs, eviction protections, etc.  Without a lease agreement signed ahead of time, it would be extremely difficult to evict.

To put icing on the cake, our Transient Occupancy Tax ("TOT") laws state that stays over 30 days are not subject to occupancy tax for days after the 30th, however the first 30 days are taxable (with the exception of insurance rentals and stays for official government business).

[Susan990]

Thank you all for the education on the state of California.  I am in shock and blessed to be an Oregonian. 

[Emilia42]

Where I live the guest is paying a 9% tax whether they book 3 nights or 53 nights. The tax is unavoidable, and when added to the additional service fee, can make long term stays on Airbnb very costly.

[Susan990]

Again thank you for the enlightenment.  I had no idea that other states managed this industry with such a range of charges and regulations. The unfriendly business environment makes me wonder what they have to gain. 

[Sandra126]

I have always had the cleaning baked into total price, but when I restart hosting I'm wondering about having one and dropping price accordingly. I'm not sure, but does Airbnb take service fees calculated on cleaning fees as well or is it exempt? Want to give better value for guests. The commission is steep.

[Susan990]

To your question- I have calculated it and yes ABB does add cleaning fee to the total and charges their 3% commission on that figure. At least that is what ABB is doing here in Oregon.

[Anonymous]

@Susan990   The cleaning fee is functionally just a short-stay surcharge. It might be better termed a "changeover fee," as it should reflect not the actual cost of cleaning the home but rather a flat amount above the rental that would make it worthwhile to turn over between guests.

Since I always wanted to encourage short stays (3 to 7 nights) I found a Cleaning Fee impractical. However, being an onsite Homestay host is similar to a hotel in that cleaning (at least of the shared spaces) is an ongoing task throughout the stay, rather than one that mostly happens at the end.  A flat rate makes more sense for an Entire Home property, considering that the turnover after a 2 night stay can be around the same amount of labor as for a 2 month stay.

[Susan990]

@Anonymous  Thanks for adding the comment that the cleaning labor for a 2 night stay is not much different from a 2 month stay. Just knowing this might encourage hosts to take longer stays and keep the calendar full. I think there is a shift in attitude from a night or two and trashing it out like a hotel room-just because they  can- to the realization that they have live in the messes they create. I have gone totally monthly and never looked back.