New Service Fee Included Option charges 17.36%

Rex27
Level 2
Salt Lake City, UT

New Service Fee Included Option charges 17.36%

I just got the feature option on my account that offered to show prices to guests that already include the service fees. The wording and comparison of current service fees to new service fees said that in the old model, hosts pay 3%, and guests are charged a fee of up to 20%. In the new model, guests arent charged any service fees, and hosts agree to pay 14%. I gave it a try, and both bookins were charged 17.36%. I sent the matter to Airbnb help, and was not given any reasonable response. See below for service fee page.

 

BEWARE of the new service fee model, they will charge a hidden 3.36% just for fuqs-sake

 

 

 

 

AirbnbNewServiceFees.jpg

54 Replies 54
Ben551
Level 10
Wellington, New Zealand

@Sandra126I definitely think there should continue to be a choice.  I'm a bit of a believer in the free market determining fair competition, not regulation.  If this kind of new pricing model works for customers, then it will simply become more popular.  If it doesn't, then it won't.  I expect that will be true in some places but not in others, like most things.  Ultimately demand and supply will normalise somewhere along the line... so long as AirBnb don't start limiting choices and arbitrarily constraining the market..

@Ben551 But Airbnb does effectively limit choices, while giving the impression that it doesn't. For instance, they figure guests prefer IB. We havea choice whether to use IB or not. But Airbnb punishes hosts who don't use it by putting the IB listings above in search rankings. It's like telling your kid he's free to choose whether to go to bed at 8 or at 9, but if he chooses 9, he won't get any dessert..

This is 100% accurate. Guests see and filter based on average nightly rate (which does not include service fees). If this functionality were to work, Airbnb must display the total rate (rate + cleaning +fees / # of nights). 

Pete28
Level 10
Seattle, WA

What a cluster Airbnb has become

 

- still only show base price on map and price sliders

- need to go over every listing to see total price with cleaning fee. Hosts game this by having huge cleaning fee to offset low nightly price

- now provide an option to obscure the platform fee which may or may not be included

 

i tried to book a vacation with Airbnb myself over Xmas in LA - under $100, 300+ results all over $100, can't sort by price, can't see total price on map. Result I gave up and used booking.com. Way to go Airbnb !

 

Ben551
Level 10
Wellington, New Zealand

@Pete28you're going to love the picture I just posted below lol.  People are doing this all the time in NZ.  Guest's rage quit AirBnb's trick pricing after 20 minutes, then head to Booking.com for something transparent they can understand...

Ben551
Level 10
Wellington, New Zealand

 

Just one more thing to share on this...

 

bookingpricing.jpg

 

Still think the new option is a bad thing?  It seems some folk do think AirBnb's current pricing is a demon of it's own making... perhaps a realignment and simplification is overdue.

@Ben551 

 

That at does capture it, although another few columns with base price without cleaning fee etc are needed. 

 

The biggest irony is that the Airbnb customer is very price sensitive, thus hiding the full price is a great way to kill the business...

Ben551
Level 10
Wellington, New Zealand

@Pete28 yeah I agree. Folk aren’t up for this surprise check-out additions where we live.... at all. It’s seen as dishonest so it does wreck the business. To fight it we have to operate our pricing in crash down mode... all the time. Which ultimately means we Hosts are paying the AirBnb invention of a guest service fee anyway... it’s an illusion to think we aren’t.

 

I can see why AirBnb did this in the beginning though.

 

At the start, to compete with other big platforms, they used this strategy to do 2 things:

  1. Encourage hosts to register on their platform thinking host fees were only 3% (even though the $97 take home is the same... fooled ya!)
  2. Encourage Guests to look at their platform with lower advertised nightly rates (even though they would then pay the same $116 at check-out... fooled ya!)

This pricing strategy only ever had a limited shelf life before people figured it out and pictures like the above started popping up. But hey, it injected some momentum into growing the platform, so it was likely a good strategy to open with.

But as my example shows, the final destination is so unusable that the business is slowing. I care about price, but have no meaningful way of searching by or ordering by price.

 

Booking allows me to order by price and see other options like hotels which are tragically often cheaper than some crazy Airbnb with $250 cleaning fee.

 

At this point, for a short stay off season hotels are almost always better priced.

Nice graphic but your'e not addressing the tax side of this equation.  Maybe in New Zealand, it's no so convoluted but a 14% fee instead of a 3% fee will make it for less lucrative for many European hosts.  I don't list on booking for that exact reason.  Hopefully, this will give another platform a way to get a foothold and provide what is really needed here - COMPETITION.

 

cheers

Tony

Sarah977
Level 10
Sayulita, Mexico

@Ben551  But what does this have to do with this trial where they are giving hosts the option of paying all the guest fees themselves? Airbnb could easily show the listing price including fees. Now they are proposing that they do this, but that the host has to pay for them being transparent.

Ben551
Level 10
Wellington, New Zealand

@Sarah977  the bit that is relevant is:  on Booking.com (and VRBO for that matter) the Host does pay all the fees.  There are no such thing as Guest service fees.  This issue has been created, in the first place, because AirBnb initroduced Guest fees.  If they hadn't, there wouldn't be an issue to fix.

Stacey27
Level 2
Corner Brook, Canada

I understand why Airbnb is choosing to do this because I have so many older/newer guests write me saying " what are all these fees, I don't understand." They probably contact airbnb and it takes up a lot of their resource time. However, I certainly don't want guests to think that I make an extra $20-30 more a night than what I am...

Paul154
Level 10
Seattle, WA

Fascinating. 

I really, really hope this is not a way for Airbnb to increase their cut from each transaction.

I always thought their cut was 12% from guest + 3% from hosts. 17.1% would be higher. Just my impression....

I kind of like that the hosts pay the fee. It always has been  a transaction fee - not a guest fee or a host fee. But each person loses money.

So however Airbnb presents this fee is "the same".   My thinking the guest will like it more. Better that the host pays, in his mind (although everybody truly pays...)

The other upside is that it will limit competition.  When I started, I had no experience with paying a management/marketing/agent fee to anyone. No way would I sign up to willingly give airbnb a 15% commision, without the experience I now have of what they can do.

@Paul154 It used to be 12%. But it has been slowly creeping up and can go as high as 20%, so I've been reading. It varies according to some algorithm which none of us are privy to. I've also heard they charge a higher fee on lower priced listings, go figure.