What is your financial cost for hosting?

[Ben205]

I'm wondering if any of you have figures to share for the financial cost to you of hosting?

It's a slow morning, so I thought I'd work out how much it costs me to do the laundry each change-over - £2.22! That's 4 loads at home, covering electric, soap, water, ironing and depreciation of the machine. Drying I do outside on the line. Doesn't sound much, but 40-50 times each year and it adds up.

Broadband is £336/ year. Insurance £152.

Have you done any calculations? Replacing linens? Heating/ electric? I know all properties are different, but it may be interesting to share - please do!

[Kathy33]

Kelly I have my cost down per day are 7.50 for utilities and supplies & new towels, sheets,mattress for one year is 8.50 a night. I clean the unit myself so there’s no cleaning cost. But in Seattle starting in 2019 we will be charged 14-17 a night by the city of Seattle. So I needed to know my nightly cost thanks

[Ben205]

@Kathy33Hi. To make sure @Kelly149 reads your post, it's best to use the 'at' symbol then select the name from the drop-down list. Kelly will get a message, then.

That additional charge is going to make a big difference to prices, I would think. I doubt you can cut costs much more, so they'll have to go up?

[Amy38]

What is that extra fee for?  If it is a tax, the guest pays it.  I do not include taxes in my price, but collect them seperately.  There is no way to absorb hotel and occupancy taxes.  That would make my nightly absurdly high.   Every hotel or motel adds taxes as seperate line item on the final bill and so should we.

The tax is mentioned twice in my listing so there is rarely a surprised guest.

[Ben205]

@Amy38We don't have a tax like this in the UK (my income is declared as earnings, so I pay 20-40% on everything I earn, depending on how well I do that year). I'm copying in @Kathy, who can answer your question, I hope.

I guess if taxes are common then guests will be used to them. But it could suddenly make Seattle a less attractive destination?

[Alice-and-Jeff0]

@Amy38 - it's a new tax on short-term letting in Seattle.  https://www.geekwire.com/2017/seattle-council-passes-new-airbnb-tax-charging-short-term-rental-hosts...

@Kathy33 - This is like "hotel tax" or "occupancy tax" in other parts of the US.  Airbnb collects and pays occupancy tax for us here in North Carolina.  It's a line item in the final bill of a guest booking just like Sales Tax and the Airbnb service fee.  It's not rolled into the cost of the nightly fee.  To @Amy38's point, you can always pass this additional fee onto the guest (Airbnb does!) instead of paying it out of your own pocket.  It's unfortunate, but I would suspect, without looking into it, that there are plenty of hosts in Nashville where Amy's from that are just not paying it at all which makes it difficult for everyone.  

[Amy38]

@Alice-and-Jeff0@Ben205@Kathy 

The hotel tax in Nahville comes to 15.25% plus $2.50/night.  No way to roll that into my nightly rate which I keep at about half or more than that of the nearest good hotel.  My place was a long term rental for years, so rather than itemize my costs too carefully, I  look at the average monthly gross which in 2017 was about $1200/month  more than a long term rental. The utilities come to about $150/mo so I am happy with the return.

There seem to be a lot of people in different conversations worrying about expenses like a stained towel when the answer is just raise your prices.  Airbnb users are looking for an experience and private space and charm, not just cheap. If your place is beautiful, you dont have to charge less then the local hostel or a Motel 6.  And the more people pay, the better they will treat your place. @Rebecca181

I stock a lot of extras which are rarely used but the availabilty of choice raises the perception of value even when I end up eating a lot of extra fruit and yoghurt.  I figure that about $40 of food and drink sitting around and a well stocked medicine cabinet add $40/night of value ...so if a guest drinks a couple beers or a bottle of wine, it doesnt cost enough to worry about.

Sorry, Iseem to have gone off on a tangent. 

[Rebecca181]

@Amy38 Fortunately for me, Airbnb collects taxes on my behalf and pays them out to the County and State where I live, but it certainly would cut into my profit margin if I had to collect the required taxes themselves and pay them myself, as you do. I also go 'above and beyond' for my guests and pay for little 'extras' - And provide excellent indoor and outdoor amenities. I put a lot of money out up front, but am looking at this as a long-term investment. The consistent 5 star ratings and enthusiastic reviews make it more than worth it, and I remain booked year-round, even in the off-season, as a result of these reviews, and what I offer guests to increase their comfort and happiness while staying with me.

[Rebecca181]

This is my first year hosting and I am figuring out costs now; with that said, there are also many legal tax deductions I will be able to take advantage of, which will go a long way toward making up the costs of hosting. Not sure how the taxes work there in the UK, but that is something to think about when you look at your final breakdown of profit / loss for the year.

[Ben205]

@Rebecca181Any costs come up that surprise you? I keep thinking there's something I've forgotten that's going to bite me! One here in the UK is, are we're registered as a small business we don't pay business rates (or council tax, which would be about £1400/ year). But, we have to have the property available for 200+ days each year, and rented out 110+ days. If we don't make that, our tax status changes, and there could be a big bill!

[Rebecca181]

@Ben205 - I would say that my start-up costs were way higher than I had anticipated, but that is because I decided I wanted to offer a 5-Star experience to guests, so I went all out with the amenities and some of the furnishings and wall decor. However, it was worth the investment, because we have remained 90% booked, even through the supposed 'off-season', since opening 10 months ago.

Over time I began to notice patterns in regard to what guests valued and focused on and what didn't seem to matter to most guests so much, and I tailored my amenities accordingly. I also never buy anything at full price; I search until I find quality items at a discount (I bought all my furniture this way and saved thousands of dollars by doing so). My electric was less than I thought it would be (the Cottage is very well insulated), and the wear and tear so far was less than I expected - Most guests have been very thoughtful in how they treat our place.

I did opt to get commercial / residential coverage, and this cost me $1000.00 more a year, but it is worth it because I have peace of mind knowing I am covered if something happens - I have read too many stories here of Airbnb not reimbursing hosts for damages, which has caused me to be somewhat skeptical about the Host Protection Program. I do also pay 9.8% in lodging taxes to the County and State (I live outside of City boundaries so don't have to pay taxes to the City). I'll know more when I do my profit and loss sheet for this past year - I will let you know if anything stands out in regard to costs. 

[Ben205]

@Rebecca181Agreed that start-up costs can be high. We had to furnish a whole house we had rebuilt, probably spent £8500, which we've just covered in rentals after 9 months.

Luckily, being a builder, I do the maintenance myself. It has surprised me how many people have managed to stop the shower working, removed the carpet from the stairs, flooded the bathroom, etc.

We have insurance for being a holiday let, but at £150 it's much less than you're paying. Tax is more like 20%, though.

Look forward to hearing your spreadsheet highlights!

[Cor3]

Hi All, Just a couple of notes on this topic – from our side: I suppose that the total costs associated with our accommodation are pretty much higher than most of yours. But then again, we have to manage our accommodation from abroad. So we have to hire local support. In order to monitor our costs and revenue, I use a spreadsheet to calculate and forecast/estimate all costs involved in running the accommodation. And to keep an eye on future Cash flow. Costs can basically be divided in 3 categories: • Fixed costs (Insurance, Condominium charges, Community tax, Any other annual charges, Etc) • Fixed costs per visit (Once guests set foot at the accommodation, the accommodation has to be cleaned anyway. Whether they stay 1 night or a whole week) • Variable costs per visit (4 guests consume more on utilities than 2 guests) 1 thing you certainly also have to keep in mind are/is investments and depreciation! When will you be replacing any major furniture or mattresses and that sort of stuff – in the future? Another simple example: When a guest breaks a glass, it is pretty clear who is to blame. But what, when it just starts to look worn out. Because it has simply been in the dishwasher a thousand times. The same basically applies to any furniture. And most likely all of you know, what can be the implication of breakages by guests (Which host is successful in getting a 100% reimbursement – by guests?). We’ve had guests informing us, they had broken a single wineglass. And asking what they had to pay for this. But we’ve also had other guests, that completely destroyed – by brutal force – the delicate drawers in our coffee table. And they claimed afterwards, they had no recollection of such an incident to happen – during their visit. But this is a topic that has been discussed in many other threads on this community. When we acquired our accommodation, it was already good. But we have improved it even further. And as a result we could increase our rates. But also our costs went up. Such as the implementation of a proper climate control system. But then it has to be checked out annually as well and obviously it consumes energy, when used! Another thing you have to bear in mind is inflation (Annually about: 2%?). The majority of inflation is usually caused by the authorities. This year the Portuguese authorities have been thinking about introducing a broadcasting charge/tax to be applied to short term rental accommodations (simply because we have a TV and an Internet connection at our property). The intended charge is not much. But it is something, which doesn't exist today. And last year the authorities just increased the gross rental income tax rate from 3,75% to 8,75% (basically: For no reason specified, any other than: To bring short term rental taxes more in line with long term rental taxes). Why didn't they decide to bring the long term rental taxes more in line with the short term rental taxes 🙂 And in our case: In order to be fully legally compliant with the bureaucratic Portuguese laws, we have to hire an administration company at a nice € 1.599 per year. Best regards, Cor.

[Karina-Каринa0]

Rebecca - what were the amenities the customers did not really appreciate?

[Margaret0]

Thats an interesting question I think value of amenities provided depends on your market.. I get mostly working people working.  I gave up on breakfast and leaving lots of food around. I do leave a bit people don't use it most of it. Airbnb used to advise giving small gifts I gave up on that. I looked at the listings that got higher ratings (I moved house) and saw in the photos cheaper bedlinen (ikea), cheaper furniture.  I was wasting my money buying Egyptian cotton sheets and good towels.  I used  to do one laundry load a week for people if they stay more than a week. I stopped that and tell them to go to the laundry 10 minutes walk.  

What I learnt is that some people just complain.  I keep it simpler and I get higher ratings. 

[Amy38]

@Rebecca181. Insurance 1000 more than what?  I have good residential coverage and the add on forextra liability is only 140/year.  Last year it was 300 but I shopped around a bit and lowered my entire bill by over a thousand a year.