Increases in Airbnb service fees to guests: a price elasticity issue for hosts.

Status: New
by Susan 2 weeks ago

Hello All.

 

I wanted to share some information I recently received from Airbnb about their increases in service fees. I decided to find out what the guest was actually paying for my accommodation as this is not immediately apparent on the Host platform. I went in to the Airbnb site with an incognito tab and discovered that Airbnb was adding on a 14 to 15%% service fee. I was a bit surprised as they advertised that they charged between 5% and 12% (sometimes starting at 6%). I then went in and looked at a wide range of scenarios - different guest numbers, different days, and so on. In every case the service fee was well above the advertised maximum of 12%.

 

I had not received any notification from Airbnb that they had increased their service fees to guests, so I decided to ring them and ask about it. I felt that this was important information to inform my price settings. The customer service representative first re-stated the advertised service fee of 5% to 12%, but when I told them that mine was well above that rate, consistently, they confirmed that Airbnb had put up their service fees in August 2017 and told me they were receiving feedback about the issue and were reviewing the policy. I have been monitoring this forum and have never seen another comment about this. I invite you all to check how much Airbnb is charging from your guests so you can see clearly what is going on. This can only be done via an incognito tab, or to ask the guests directly which I have also started doing.

 

I have a few points I would like to communicate to Airbnb. Perhaps if any of you are experiencing the same issue we could come together to ask for further clarification.

 

  1. Why did Airbnb not inform me about this significant increase? Price setting is a fundamental aspect of managing my small business.
  2. Why does Airbnb documentation still state 5% to 12%, when my customers are being charged well over this amount, on every booking?
  3. What proportion of guests are being charged at the low end of the advertised service fee - say 6%? What circumstances trigger a low service fee?
  4. Is Airbnb preparing to float the company, and therefore needs to show a greater level of profit?
  5. Is there a risk that hosts, who own the actual assets, pay for the human resources involved, and all associated costs (aside from marketing) may feel the Airbnb platform no longer represents good value for money? Price elasticity is just as important to hosts as guests.
  6. Is this leaving the market open to another major operator who feels they can offer a similar service for much less? Airbnb has already prepared the market with a huge number of enthusiastic hosts with a great deal of experience, all looking to increase their own profitability. It would seem careless to hand them over to another company willing to offer more for less. Why not take great care to preserve brand loyalty from Hosts?
  7. Does Airbnb recognise that, in the past, the brand has been associated with the "feel-good-factor" with ideas of community and sharing. When that community is faced with behaviours that may be associated with corporate greed, positive perceptions could change in a flash. We know from elections around the world that the global community is fatiguing of actions of corporate greed.

Over to you hosts. In case we don't get an answer from Airbnb, we might have a go at informing each other. What's happening in your world?

 

Susan

Comments
by Gerald
2 weeks ago

Hey Susan,

 

I completely agree with most of your suggestions you just made. I myself am now monitoring the forum and other changes across their platforms. They have so much potential and this is why I'm taking the time to reply in hopes of a change very close to what your suggesting. I mean this is just the beginning and like you statement about corporate greed is really showing. I've done more research in and around the company and it really sounds like that's the case.

I have seen the increase in service fee as well and wow, the overall internal communication system they have seems like it has room for improvement. If customer service reps are giving outdated info...

Thanks for posting Susan I'm glad someone else agrees with me. Very reassuring lol

- Gerry

by Jennifer
2 weeks ago

Add to the Airbnb fees, my State taxation of a whopping 15 percent to the guest, and I am shocked I have any bookings at all.  No wonder Airbnb algorithm is always asking us to lower our price.  Uber gets away with charging a 25 to 30 percent commission to drivers.  It is just a way to make money off of the poor.  

by Cormac
2 weeks ago

@Susan

Totally agree.

I have posted numerous times about the fees Airbnb are charging, which in my opinion are far too high and unjustified relative to the risk Airbnb are taking.

 

I only posted recently on this topic, where I gave a detailed breakdown of my cost for a two day stay in my 55m2 apartment which showed that in fact Airbnb made more money before taxes on the transaction then I did.

 

Rather disparagingly a Host who shall remain anonymous, suggested to me that it was up to me to get a handle on my cost, and that I really should not have included my fixed cost in the equation in other words I should not have included a proportionate cost of my mortgage.

 

Basically, I made zl50 (euro 10.70, $12.72) and Airbnb made zl56 (euros 12.13, $14.41) for a two day stay and smart pricing want me to go lower.

 

If you compare Airbnb's fees against your profit you quickly realise they are not low at all.

 

Thanks for the post, it will be buried fast.

 

Regards

Cormac

The Explorer's Club Krakow III

 

 

by Tiare
2 weeks ago

My state charges a transient accomodation tax of 9.25% (going up in January to 10.25%), plus a general excise tax of 4.712%.  I include that in my listing to make things easier for the guests... 

 

But my issue is that one of my guests wanted to add a day to his reservation.  Fine.  I added it, but Airbnb is charging me $23 service fee for adding that one day.  This is not right, as the previous 4 days of the reservation were only $25 service fee for all 4 days.  I had not seen any information relating to adding on service fee charges, and in looking at other bookings, my service charges are only 3%, as they always have been, except when the guests want to add a day.  

 

I am not happy with this...  Suggestions?  

by Marco
2 weeks ago - last edited 2 weeks ago

Unfortunatelly Tiare in those situations it might be better to just request money from your guest through the plataform and then you modify the reservation to accomodate for the alternative days...

by Tiare
2 weeks ago

Okay, good idea...  Thanks.  Aloha from Hawaii, Tiare

by Jim & Marcia
a week ago - last edited a week ago

@Susan  Thank you for bringing this topic to the HOST VOICE forum.

 

I suspected something was going on when we stopped being able to readily see the total $$ that our guests were paying. Guests are heading back to hotels, so I know it isn't the sales tax and lodging tax that's biting them. Unfortunately, when the price to the guest soars, we are the ones who take the brunt of their disatisfaction.

 

I've been struggling with the pricing issue. We had a reasonable price and no cleaning fee..... easy for guests.  We were doing fine.  Then the nonsense began... Airbnb started pitting hosts against one another in a type of price war. Battering Hosts with messages to lower our prices.  Hosts in our area started dropping their listing price, but adding cleaning fees.  I hesitated to do this, but finally did. Now when guests search there is even less transparency.  They are getting hit with the Airbnb booking fee, the sales tax & lodging tax, and cleaning fee in addition to the listed room rate.

 

I had no idea the booking fee that guests pay was so high until I looked at booking a place for a trip we wanted to take. Such a disappointment. Compared to a great Airbnb stay we had in Europe in 2015, the booking experience is now much worse and the pricing too high.

 

by Susan
a week ago

@Jim & Marcia Thanks so very much for your comments. From the phone call I had with Airbnb on this issue, I understood that they were waiting for feedback from Hosts before they changed their new policy on service fees. The problem is that most hosts are either unaware, or not bothered enough to act. This will mean that Airbnb will assume with no complaints that they are free to continue upping the service fee.

 

The reality is that if we Hosts do not ring and question the policy, then we get what we deserve. I suggest Hosts become more proactive in shaping their own future rather than giving up easily. Come on everyone, ring your customer service representative and protect your future. Change only comes from speaking out.

 

by Aunt Betty
a week ago

Susan: my sentiments exactly. You could not have been more articulate in your description of the situation. I too have been questioning why my bookings have slowed way way down and why I am asked do consistently lower my rates to a point that makes it almost not worth short term rentals any longer. I might as well revert back to a long term tenant! 

by Patty And Peter
a week ago
I didn't see anyone mention this, in my experience and understanding the Airbnb guest fee % changes based on the total amount paid. So low $ bookings have a high % guest fee and high $ bookings have a low % fee. I haven't paid attention to when the % changes, we rent higher value timeshares where a week is $5,000 to $10,000. In the past these incurred 5% guest fees and I recently noticed it is more than 5% now. It upsets me greatly to constantly be bombarded by Airbnb to lower our rates or use the "smart pricing" which in my experience is rather unintelligent... and here we have Airbnb silently raising fees to guests.
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