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

[Shell1094]

I wonder if we should put how much Airbnb fee is in our listing description so that the guest knows that the host isn't keeping it all. I do like the transparency of seeing the fees and taxes as a traveler so I'm surprised to see it being removed. 

[Shelley159]

Hi @Shell1094 

I wouldn't, it creates the impression that there's been a fee increase.

If you ordered food on an app, wouldn't it be a bit weird if your favourite restaurant suddenly added a banner "keep in mind that the app takes 30%"? Especially if the price you paid stayed the same as before (as it does with the Airbnb service fee change). It would make you wonder what's going on, when everything is actually the same for the customer.

[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.

[Snehal1]

I think it's a little early to judge the impact. Let's see a few transactions under the new fee structure and compare the actual payouts, taxes, and booking trends before making a final decision. Real experience will tell us more than assumptions.

[Shelley159]

I agree with you that most hosts will feel better once they see that the payouts are the same @Snehal1 

For the guest prices, once a host has used the tool to change to the single fee, they can already verify for themselves that the guest prices have stayed roughly the same. One must just remember to take screenshots of some prices beforehand, so you can compare them afterwards.

[Shelley159]

Hi @Carolyn-And-Stephen0 

Can you let us know how income taxes are affected in your region?

Income tax in most countries is calculated at the applicable level of taxable income (one can fall into a cheaper or a more expensive tax bracket based on your taxable income). 

The change in the Airbnb service fee structure affects the host's gross income before deductions. As commissions payable ("service fees") are deducted before arriving at the taxable income, there should be no impact on a host's taxable income (no new tax bracket) for income tax purposes.

It's possible that other taxes and levies that are based on gross (not net) income may increase due to the new service fee structure. Is the "Rooms and Meal Tax" in your area based on the host's gross income? In other words, it's calculated on the full amount before deducting commission paid ("service fee") as an expense?

[Sarah5258]

At first I was confused as to why they were telling host to raise their price 18.34% then I was appalled to see that it's because they're taking their cut from the new higher rate wow Airbnb y'all are another level

[Shelley159]

Hi @Sarah5258 it's just because percentages are different depending on the base. Maybe this is what you mean, anyway (sorry if so), but to add an example: 

If you increase 100 by 15.5% it's 115.5. But if you take a service fee of 15.5% from that, you end up with only 97.6. So you have to increase the 100 by a larger percentage to be in the same position (because the base of the calculation will be different).

The 15.5% was calculated to make sure most guest prices stay close to the same after the change. The tool is used to make sure hosts get the same out.

So it's the internal fee structure that's changing, not the total service fee.

[Sarah5258]

Correct so if I'm understanding it correctly, airbnb is making more money now, right? If they take their % off higher total

[Elaine701]

@Sarah5258 

Considering that in this process, Airbnb has eliminated 16%-19% of combined commissions, 15.5% is actually a bit of a discount. 

[Shelley159]

@Sarah5258 

They take 15.5% off a higher total than what they took the 3% host fee from.

On the guest side they took between 12% and 16%, where they now take 0%

On average, globally, wrapping the 3% on the host side and the 12% to 16% on the guest side into one fee, resulted in them having to charge 15.5% to keep things close to the same for everyone.

[Sarah5258]

So the 3% host fee is no longer going to be taken at all? I'm going to go to their website

[Shelley159]

Yes @Sarah5258 the 3% host fee was one component of the split fee structure (together with the 12% to 16% guest component). That structure is being scrapped entirely.

The only remaining fee structure s now the 15.5% host fee. That's why we all have to transition to it.