New fee structure

[Carolyn-And-Stephen0]

This is absolutely a horrible decision on AirBnN’s part. It completely penalizes the host.  We have been hosting for over 10 years and a Superhost for the entire time.  I will be thinking hard about staying on with AirBnB bead on this policy change. It adversely affects the host too much.  Especially on the Income tax and Rooms& Meal Tax

[Patricia2526]

Hi @Carolyn-And-Stephen0 

In principle, your economic outcome shouldn’t change if you increase your nightly rate to offset the 15.5% host-only fee. You’re simply moving the Airbnb service fee from the guest side into your accommodation price.

While the simplified pricing model is designed to keep your payout roughly the same, it may not be tax-neutral in every jurisdiction. Hosts should check how their local tax authority defines gross revenue and whether Airbnb’s host service fee is deductible.

This is one area where Airbnb could provide much clearer guidance, especially for hosts in countries with different tax systems.

[Carolyn-And-Stephen0]

Again this is a terrible decision on AirBnB’s part.  All in pricing was already there for people booking.  All you’re doing is negatively impacting hosts.  Member’s that are booking should see the fees that you are charging, in a very short time it will be forgotten and guests will think that Hosts are making more money when in fact we are making less.  

[Elaine701]

@Carolyn-And-Stephen0 

So far, those who have been on the industry standard single fee model have not experienced any downside.

No change in bookings, earnings or guest prices. It's as if nothing has changed, except it's easier to account for and consistent with the whole industry.

Perhaps it might be best to wait to see if it affects you in any way? It hasn't affected others. 

[Shelley159]

If you use the tool to adjust your fees before the deadline, you will receive the same payouts as before @Carolyn-And-Stephen0 

Your guests will also pay very close to the same as before (with some minor variations).

[Francesco602]

Hosts will pay more taxes; therefore the revenue will be less. 

If you want to make the same amount of money, you'll have to increase your rates, with consequences on how much the guests will be paying. 

It works like this in many countries; especially in the ones where Airbnb is more present ;). 

[Bruce817]

Airbnb says the price adjustment was in response to feedback from hosts about how confusing the old pricing was. Which is nonsense. There was no notice of this, they did it unilaterally. This adjustment made my nightly rates go from $170 to $195. A recent booking under the new pricing shows the guest fee is $0. This is deceptive and totally false. The guest still pays the fee in the form of a higher nightly rate, which Airbnb deducts from my payout. Guests should be aware that they are still paying the same Airbnb service fee in the form of increased nightly rates that I had no choice in.

The income reporting breaks out the fee so it can be deducted from income, so there is no additional tax paid as a result. But this is just Airbnb looking out for themselves, trying to look good and avoid complaints about their fees. This didn’t reduce confusion, it created it. Airbnb’s premise that this adjusted price shows what the guest will actually pay is also false, since the occupancy taxes are still added separately. I do not like this policy, and want it rescinded.

[Shelley159]

@Bruce817 I understand what you're saying, but I disagree that it's not simpler to be on the single fee structure. The single fee structure works as follows:

Most hosts pay 15.5%, remaining hosts typically pay 14%-16%, and hosts pay a 16% fee for listings in Brazil and Mexico.

That's all in one sentence!

The split fee structure used to work as follows:

Host service fee:

Most hosts pay a 3% service fee, but some pay more. Hosts pay a 4% fee for listings in Brazil and Mexico. The fee is automatically deducted from the total price (service fees are a percentage of the nightly price and any fees charged by the host, but exclude the guest service fee and taxes) to calculate the host payout.

Guest service fee

The guest service fee can be found in the Price breakdown before booking a reservation.

Guests pay a service fee ranging from 14.1% to 16.5% of the booking subtotal (the booking subtotal includes the nightly price and any additional fees charged by the host, but excludes the guest service fee and taxes). The guest service fee varies based on a variety of factors and may be higher or lower depending on the booking.

For bookings where the guest pays using a different currency from the one set by the host for their listing, we adjust our fees to align with the value we provide our guests. For these cross-currency bookings, the guest service fee will include an additional amount, resulting in a guest service fee of up to 16.5% of the booking subtotal.

The above is copied from this help article:

https://www.airbnb.co.uk/help/article/1857

The concerns we presently see from hosts about the fee structure change, almost all come from the fact that they didn't know exactly how the complicated split fee structure worked. They thought they paid 3% and that was the end of it.

Hosts who were aware of all the issues around the complicated split fee structure, are generally not opposed to the single fee structure. The exception is hosts in areas where there are taxes, levies or subsidies calculated with gross income (not net income) as reference point. For such hosts there are legitimate concerns about paying more tax. From what I can see in the Community Center, the main group affected by this, is hosts in some European countries who cannot deduct the service fee as an expense unless they register their short-term rentals as a business.

[Bruce817]

I didn’t say it wasn’t simpler. I know how both fee structures work, and the split fee wasn’t complicated. I don’t like the disingenuous way Airbnb buried their service fee in the nightly rate, then showing the guest paid $0 for the service fee, which isn’t true.  I also don’t like that as a host, I had no input in the policy.

[Bruce817]

And look at all the chatter about this on the Community Center and tell me it hasn't created confusion.

[Shelley159]

@Francesco602 the negative impact on taxes is limited to certain countries as you say. There can only be an impact if a particular tax is calculated with reference to gross (not net) income. In other words, if the Airbnb service fee cannot be deducted before the tax is calculated. I agree with you that this will mean hosts in those areas receive less net of taxes.

What we've been seeing in the community center, though, is that many hosts in the US are strongly opposed to the new service fee structure, either because they assume they will be paid less by Airbnb (which isn't the case), or (in a great many cases) they assume that the guest will pay more because they switched from one service fee structure to another. The guest pays the same if you correctly adjust prices using the update tool. US income tax works on taxable income, after service fees have been deducted. The guest and the host are generally no worse off, unless the host is in a specific position where a tax, levy or subsidy based on gross income is negatively impacted (as I understand is the case with hosts in Italy who have not specifically registered their short-term rental activities as a business).

[Francesco602]

Hello @Shelley159 , you're right.

If your taxable income is calculated on your payout, then - technically - this change won't imply lower revenues for hosts. I believe that's the case for hosts based in the US, correct me if I am wrong.

While the above is true, I still believe that “educating” the guest on the fact that there's a substantial amount of fees that counts towards the final price is important. This helps guests understanding more precisely the listing's value and directly contribute to that specific score, as well as their attitude towards occupying the space and, simultaneously, expect / pretend what they deserve. 

It's quite clear to me that, perception-wise, the two scenarios are different:

- Accommodation Cost = 85 + Fees
- Accommodation Cost = 100

This reflection comes from years of hosting in which guests often think the most absurd things, as such:

- We increase prices because we're greedy, ignoring that our pricing strategy is often a result of several hidden costs and a precise market analysis (competitors).

- I had guests asking me to send their money back after a cancellation, totally ignoring the role of Airbnb as a mediator. 

- The list could go on, but I am sure you get what I mean ...

For European Hosts:
That being said, I hope you agree with me that this change is NOT neutral for many European hosts based on the taxation principles here. In many countries (Italy, France, Spain...) you pay tax on your gross earnings, therefore also on Airbnb's fees. 

Airbnb is well aware of that, and I am quite sure their “fees simplifications” is a precise market strategy aimed at making more money, essentially. Are you telling me that they didn't think about this, especially where they have a strong presence (Italy, France, Spain... again to name a few)? I doubt, honestly. 

As it's been demonstrated in this community, hosts will have to increase their base price; therefore Airbnb will make more money in commissions. It's always about that. 

Is this fair? Probably not.

Is there an exit strategy? Probably not; because that's what happens when you have a monopoly and there's no competition.

Are they going to get away with this? Yes, of course. They are also well aware that Europe in much more fragmented than the US when it comes to class actions or petitions. 

This is just my point of view, of course. I am not claiming this is absolute truth. 

[Michele657]

Exactly my thoughts!

[LaVerne29]

Then they should keep it like it was before and charge the breakdown in the fee payments.  In other words, keep our base price showing and then show the 15.5% charge in guest fee breakdown with the taxes and cleaning fee. This inflated price is going to kill my business in our little town.

[Shelley159]

Why will it kill your business @LaVerne29 ?

Before the change, guests saw one all-inclusive total price when they searched for accommodation. Now they see that same price. There will be some minor variations, but for the most part the guest total is within 1% (higher or lower) than what it was before the change. You can check this for yourself comparing the guest view price before and after you run the tool.

Whether guests search in a big city or a small town, prices in a specific area still look the same as they did before, EXCEPT for those unfortunate hosts who don't run the tool to adjust their prices by 15 September. On 15 September when the mandatory change kicks in, their listings will be significantly underpriced. They risk not covering their costs and/or attracting bad guests.

It's possible that for a few days after15 September, our bookings may slow down a bit if there are many such unadjusted listings in our area (assuming that guests will prefer the underpriced options). But the negatively affected hosts will generally realise the mistake quickly and update their prices so that everything goes back to normal.