Service Fee Increase (June 2020) - No Communication with Hosts

[Becky88]

The Service Fee that Airbnb charges guests has gone up to 16.63% in the U.S. versus the previous rate of 14.12% (that's an increase of 2.5 percentage points.)

There has been NO communication about this with hosts and NO update to their own Help Page which still quotes "typically less than 14.2%".

https://www.airbnb.com/help/article/1857/what-is-the-airbnb-service-fee

Hold on, let me check.  Nope, still not feeling like Airbnb thinks of hosts as partners.

[Helen350]

Just been perusing my dashboard.... Found this 'New' thing at the bottom - Airbnb 'Associates' - Sigh! - Had a quick look.... Didn't understand the detail, but got the gist that it's a marketing tool, to sign up people to sign up guests.... The 'Associates' get 30% of the booking fee!

SO, I mused, Who's paying for this? Will booking fees go up to cover it? -And then I saw your post @Becky88 !

[Debra300]

@Becky88,

I never thought that I was in a partnership with Airbnb. I have no direct say in their business policies or operations, and they have no investment in my properties. Just like with the other OTAs that I use, my viewpoint is that I am one of many service providers who, for a fee, use their portal to market my spaces to potential customers. 

[Becky88]

Hi Debra - I was making a joke based on Brian Chesky's letter to hosts regarding overriding host cancellation policies with no communication to hosts.  He said something to the effect of "we realize we haven't done as good a job as we could at being partners with our hosts."  Tongue is firmly in cheek!

[Becky88]

Here's a quote from his March 30 letter to hosts:  "While I believe we did the right thing in prioritizing health and safety, I’m sorry that we communicated this decision to guests without consulting you—like partners should. We have heard from you, and we know we could have been better partners.  Although it may not have felt like it, we are partners. When your business suffers, our business suffers."

[Sarah977]

Blah, blah, blah. You'd think he'd be embarrassed to say such things. It's either a total lack of self-awareness, or he simply doesn't care about lying to hosts as long as it has good media optics.

[Debra300]

@Becky88,

I now have a better understanding why you were alarmed about the non-communicated service fee increase, because your payout is impacted.   My listings are set up with the host and guest sharing the service fee.  I pay a flat 3% for the payout; a little less than the credit card fee for processing international currencies, and the guest pays the remainder of the service fee.  This structure is very convenient for me.

I pay both Booking.com and Expedia.com 15% commission, and 3-4.5% to my credit card process.  The base rates on these platforms are higher than on Airbnb, and I charge for required taxes, to cover the additional costs.  The biggest problem that I have with both of those OTAs is with guests making a reservation with an invalid credit card, and having to wait wait at least 24 hours to cancel the booking if a valid payment isn't provided.  During that time period, our calendar is blocked.  This happens with about 40% of the Booking.com reservations, because of their marketing statement, "No credit card needed to book", but they put in very small print that accommodations have different prepayment policies.  As a result of the poor quality of reservations, I will often break the calendar sync with other OTAs and my website.  Dealing with Booking and Expedia does mean extra work, but on the flip side, I have the ability to collect an actual security deposit.

[Becky88]

@Debra300 

I also pay the flat 3% Host Fee.  However, hosts also pay *indirectly* every time Airbnb increases the Guest Fee (Service Fee) because this increases the price to guests.  Hosts then need to lower their nightly prices to stay competitive with other lodging options.

Unless lodging prices are going up across the board in your market, when the Airbnb Guest Fee goes up, or when state or local taxes go up, it forces your prices down to stay competitive.

[Debra300]

@Becky88,

Based upon my personal experience, until the recent service fee hike, Airbnb fees were less than Booking or Expedia fees.  Typically, an Airbnb guest paid about 12-13%.  That means the overhead on my reservations totaled about 15-16%.  Since most of the reservations at my St. Lucia place are made by international travelers, the higher credit card processing fees and commission fees on the other OTAs have overheard costs of about 19-19.5%.  I am currently closed, but do not have any plans to lower my rates, because we are going to renovate our guestsuites by installing kitchenettes and compact washers, and close the shared guest kitchen and stop providing laundry service. 

I don't understand how raising state and local taxes puts pressure on hosts to lower their rates to stay competitive, because the tax increase is also applied to all types of STR providers.  Hotels and resorts will also pass along the cost increase to their guests.

[Becky88]

@Debra300 

That's great for you that you have headroom versus the other platforms you use.  Let me preface my point-of-view with "For hosts who exclusively or predominantly use Airbnb because that's the dominant platform in their area..."

Point taken regarding taxes that are applied to all lodging option, you're right.

[Debra300]

@Becky88

Just to reiterate what I said, "Based upon my personal experience, until the recent service fee hike, Airbnb fees were less than Booking or Expedia fees."  That variance will no longer exists if the service increases to the amount that you stated.

[Resort-Vacation-Rentals0]

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@Debra300 wrote:

@Becky88,

I pay both Booking.com and Expedia.com 15% commission, and 3-4.5% to my credit card process.  The base rates on these platforms are higher than on Airbnb, and I charge for required taxes, to cover the additional costs.  The biggest problem that I have with both of those OTAs is with guests making a reservation with an invalid credit card, and having to wait wait at least 24 hours to cancel the booking if a valid payment isn't provided.  During that time period, our calendar is blocked.  This happens with about 40% of the Booking.com reservations, because of their marketing statement, "No credit card needed to book", but they put in very small print that accommodations have different prepayment policies.  As a result of the poor quality of reservations, I will often break the calendar sync with other OTAs and my website.  Dealing with Booking and Expedia does mean extra work, but on the flip side, I have the ability to collect an actual security deposit.

---

We have used Booking.com for years.  We stopped dealing with invalid or declined credit cards quite some time ago and have Booking.com charge the guest and also pass on the 15-18% commission to the guests if they want to pay it.  We pay no processing fees that way and, most importantly, are not liable for bad payments or credit card chargebacks!

The last straw for us was when some guests claiming to speak only Portuguese from Brazil (no English) and wanting last second before Thanksgiving, claimed upon their arrival that the person who made the payment was not with them and would be arriving later.  Then, after we refunded their damage deposit they did a charge back claiming they were never here.  They won.  We were left with not a penny to show for that entire grueling booking we worked extra hard translating everything for (even though turns out they really did understand English).  Now we have doorbell cameras.

[MightyHeidi0]

Intresting when, We have been told to reduce our price to stand out, give deep discounts for extended stays or weekend discounts to stand out.  I make more with quick turns as my nightly rate is getting closer to my clean fee it hurts. We super host work hard to uphold the Airbnb brand lowering our prices and raising there's feels off Brand.

[Sleepy6]

How can Airbnb increase the fee without communicating this to hosts?  

[Sarah977]

@Becky88  Why do you think that service fees are all the same according to country? Do you have some proof of that? I don't believe they are- I think it has to do with the listing itself, the base price, etc.

And I also am under the impression that Airbnb often increases the service fee as you drop your price- guest pays the same in total, host receives less, Airbnb scoops more. I would not reduce my nightly rate to make up for increased service fees to the guest.