Airbnb fees to hosts - might they change soon?

[Annette33]

 Right now, hosts (in the US) just have something like 3% subtracted from their payout as their Airbnb fees. That gets us plenty of bookings, support from Airbnb (even though it could be better), basically no financial dealings with guests, and access to the community here! If I were in business myself, just running a credit card would cost me close to 3% . Also, the marketing necessary to get me customers , then build up a credible and trustworthy platform, would consume lots of $$ and time. So I recognize that as a host I am getting a great deal from Airbnb! 
I consider all this almost too good to be true and think it might change fairly soon: guests look at the base price per lodging, but then often enough a cleaning fee gets added, then taxes, which in many cases Airbnb adds and collects on behalf of the host, and finally the 10-15% Airbnb charges to guests as their fees, so the final cost to the guest can easily be 30% higher than the listed nightly price of a property.
Gone are the days where Airbnb listings were dirt cheap, never charged taxes, and you could really get a great deal. Sooner or later, guests will wake up and realize that for hotel bookings they never pay an extra cleaning fee, nor a service charge, and often enough they can score special deals.
As Airbnb is actively morphing itself into a major booking site, perhaps the biggest one out there, comparison is inevitable: So I am afraid that Airbnb itself might sooner than later shift the burden of booking fees away from the guest and simply pile it onto the host. Airbnb hosts who are renting their properties through other outlest always pay more than 3% to them, right? Airbnb might just follow suit sooner than later, and I can't say I'd blame them. Any thoughts on this out there?

[Mark26]

Wow... I began to respond to your post regarding fees, but as soon as I started typing it became apparent that you've struck a nerve...   You spoke of fees the guest pays... and included Taxes, as if that that were an unnecessary annoyance to the guest.

I was listening to an NPR Radio Program yesterday about AirBnB, and Miami.   They had Hosts and Neighbors calling in to talk.  A Host called in...  She and her husband are both retired law enforcement officers... and she complained that she wasn't required to collect taxes for two years, and then AirBnB began collecting State and Local Taxes from her guests.  Gawd...  I wanted to reach right through the radio and choke the living crap out of that woman.  "I wasn't required to collect taxes....  "   UH.....  YES YOU WERE!

Taxes are always a requirement if you are operating a legitimate business.  Before AirBnB began collecting taxes on our behalf, I added State and local sales and tourist development taxes into the rate.  Other sites include a seperate line item for taxes, and it was always clear.  Our rate looked higher on AirBnB, but when you add tax to the rates we quote on other sites, it is the same.  The obstinate difference between AirBnB and any other platform is that we've always been responsible for forwarding appropriate taxs to State and Local Government.  Now that AirBnB is collecting it, we don't see it... and our accounting process has become different. We still report income and forward taxes on a monthly basis, but don't include AirBnB income in those reports.  Federal Income Reporting remains unchanged.

AirBnB collecting Taxes lends an aura of legitimacy to people who don't want to worry about complying with State and Local Regultions, and all that messy "Paperwork" stuff...  and inspections... and licensing fees. 

Cleaning fees?  Nothing says you have to charge them.  Hotels don't and neither do I.  But that's your option.  If you want to charge a cleaning fee, and your guest will put up with it, go for it.  

As regards the real focus of your post.... AirBnB Fees to hosts.   Other sites charge the same. They hit the guest with a booking fee, and hosts with a lesser fee that is equal to the fee you'd pay for processing credit cards through your bank.  When I look at the booking fees that guests pay I recognize that we're not charging enough.  If AirBnB raises their fees to hosts a few might drop out... the rest of us will just raise our rates to make up for it.

I find it both annoying and humorous that AirBnB keeps sending me messages urging me to lower my rates.... Yet, at the same time other platforms are sending me messages telling me I'm not charging enough. Who do I want to believe?  I charge a fair price.  It is a tremendous value for what we have to offer, and we stay more than busy enough.  Lower my rates to attract more bookings?  Why would I want to work harder for less?

end rant

[Annette33]

not a rant, @Mark26 , just contributing to the conversation. 🙂

you say:  "As regards the real focus of your post.... AirBnB Fees to hosts. Other sites charge the same.".    Do they?? I have read repeatedly here by other hosts that use multiple platforms, such as  booking.com , that they charge hosts more than 3%, that's partly what prompted my post and looking into the future.  would love to get correct figures from hosts who know. All in all, my apprehension about the overall pricing  goes hand in hand with your observation about Airbnb pushing on us hosts to lower our prices. We'll see where it all goes, won't we?

[Mark26]

You're right.... Booking.com does charge more, but I don't use them.  Not because of their fees, but because they only offer an "Instant Book" option.  My neighbor uses them... and guests cherry pick Friday and Saturday night stays.  His calendar is fully booked months in advance with nothing but Friday and Saturday Night Stays.   We're not in a location that gets much in the way of Business Travelers.  My guests are primarily people who are here visiting family... They're typically here for six to ten days, and there is always a Friday and Saturday night involved in there.  With all those weekends tied up, I'd be turning down guests due to lack of availability, while still having 22 nights available on my calendar.  Instant book takes away the personal interaction I have with guests during the booking process, and that doesn't work for me. 

AirBnB can suggest prices all they like, but I've been doing this for going on fourteen years now.  I know my market, and I know the value of my product better than any snot-nosed kid in San Francisco with an algorithym.  My competition is NOT the guy across the river with a broken-down Motor-home parked on the side of his house that rents for $40 a night, or the converted office space above a Psychic's Storefront, in a building on a busy highway that is sandwiched between a gas station and a car wash.  AirBnB is attracting some pretty edgy offerings, and those listings are devaluing the image of AirBnB as a whole.  I can tell you this...  AirBnB was once my best marketing platform... it outperformed everything else combined.  But in the last three years I've watched a steady decline in bookings and income from AirBnB. BUT.... Every year has been better than the last.  Our business continues to grow, and AirBnB contributes less and less to our bottom line year afte year.  I'm not ready to wash my hands of them, but the numbers don't lie... They might be growing... but we're growing in different directions.  What makes no sense to me whatsoever is their recent accquisition of Luxury Retreats.  Does the owner of a Vacation Home that rents for $3000 a night really want to be associated with a company that offers up Broken-down Motor homes parked on the side of someone's house?  And... how will that owner respond to messages from AirBnB urging them to lower their rates?

[Annette33]

@Mark26 , yes, I am just looking at the Airbnb trend : you, like many others here, now also affirm that you have gotten less and less bookings from them.  so incorporating all of that, I was just speculating about their future, seeing some changes coming that will  impact us hosts. IB, and other things they changed , all point into one  direction... I'm just curious about it all, not advocating anything.

[Robin4]

@Annette33.....Ssssshhhhh, for goodness sake Annette, don't give them any more ideas or ammunition to make the hosts job even less profitable!

Cheers.....Rob

[Annette33]

 @Robin4 , mine aren't ground breaking new ideas, not to worry I'm not coming up with anything that they have never thought of, so I'm not giving anybody at Airbnb ammunition. I am just interested in such questions from a business angle, probably because I had built up my own from scratch , but I understand that discussing this question/hypothesis of mine will make many hosts uncomfortable. In any case, To keep one's overhead costs for marketing and payment processing at 3% is very profitable in my eyes. Of course I am interested in keeping it that way! 

[Mark26]

"To keep one's overhead costs for marketing and payment processing at 3% is very profitable in my eyes. Of course I am interested in keeping it that way! "

If AirBnB raises their fees, you simply raise your rates.  If they're doing a great job keeping you filled, they can justify that increase.  If they're not doing a great job, you'll find someone who does.  I'm very much in favor of performance based marketing.  If someone is doing an amazing job of keeping me filled, I'm happy to pay them.  If they think the only way to compete in a saturated market is to lower your rates.... they won't be earning that extra commission. 

[Kimberly74]

I am new this this vacation home rentals. I can not afford higher prices when I am trying to get off the ground and buy decent furnishings. I think any talk about higher prices that harms the owners should not be discussed in this forum.

[David126]

I do not look on the fees that way at all.

I look at the gross to the customer and the net to me.

If I want say 85 whatever in my hand then if they give me cash that is fine, if I have to run it through a Credit Card Machine then I am probably looking at 90 and through AirBnB then it costs c100.

The advantage to me is that as well as the Credit Card processing AirBnB provides marketing so ignoring the cash price as most people use CC's it is costing me about 10% to market my rooms. If I was to market another way probably cost at least that much.

Now whether this 15% is 3% me 12% guest, or the ther way around is immaterial.

[Annette33]

@David126 , I totally get  how you summarize the service fees and put it into the larger persepective in case it were to change - you are a business owner, so was I. But I wasn't talking or looking at how one would adjust as a host, I was only wondering and curious if Airbnb might distribute their service fees differently in the future , to come across in some potential guest's eyes as not charging a service fee. Btw., In case they would redistribute it by loading more in the host, I think you are in the 1% of hosts that would just adjust to it by changing one's own base price. there surely would be an uproar here!  I now realize how easily one gets misunderstood or not fully understood  in a post, so it probably is better not to even bring up such hypothetical ideas or questions.

[Crustt0]

LOL Airbnb chages 3% to host and 12% guest fee, Booking dot com charges 15% fee for being a booking agency.

Their is no difference between the two, it's just marketing! The only difference between the two is that airbnb marketed themselves to the host, the little guy with the spare room and sucked them into thinking "gee this is a good deal they only charge me 3%, they're not greedy like the rest" Litttleguy didn't look past the 3% and see the 12% that adds up to 15% that is added to his listing to make the total price.

Up until 3 years ago booking .com would not list you unless you had 6 rooms or more, but they had to change their ways as Airbnb was overtaking the market and were allowing big hotels and rental agencys to list with them, so they started to let the little guy list with them to combat this.

I peed myself laughing the other night when I seen the booking .com advert, "come stay with us we don't charge any service fees"

They have picked up that airbnb have used different wording for thier fees and show the fee and the customer gets annoyed see when they the fee, but it's all just marketing a fee is a fee or a commission

[Annette33]

@Crustt0, absolutely, yes, a fee is a fee, just depends how it is getting marketed. Airbnb is now much more catering to guests than to hosts, that is what made me think

that possibly 

a shift in the distribution might be on the horizon....

[J-Renato0]

@Annette33

From my point of view, in practical terms, it is not the guest who pays the "guests fee".

It is us, the hosts who pay the "guests fee" by lowering our prices to make the final price viable and competetive.

So, in practical terms, it does not matter if they change the system.

In fact, Airbnb charges 3% + ( between 6% and 13%) to provide the service.

I belive that, in a future, this percentage (between 9% and 16%) will tend to be reduced, because it is a large scale enterprise.

[Annette33]

@J-Renato0, we'll see... what you say makes perfect sense from a business perspective, absolutely! Just wondering from the potential guest's perspective,if when THEY see it, they might jump ship....thus less bookings for Airbnb,....thus looking for ways to compensate...