Listing on Airbnb can bring every short-term rental business enhanced exposure, a steady income, and a whole set of worthwhile benefits. But, how much does Airbnb charge hosts for all these advantages? Once you start receiving bookings, you must pay a percentage of the total booking amount to Airbnb. This commission is called Airbnb service fees and is the immediate source of Airbnb’s income.
Being aware of all your expenses clarifies your profit margin and helps you expand it by adjusting your prices accordingly. So, all property managers must fully understand the Airbnb commission structure and service fee breakdown.
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What Is the Airbnb Service Fee?
Airbnb service fees are the cost of using the Airbnb platform and its services. It includes marketing, administration, 24/7 customer support, and the commission of processing payments, which is charged to hosts and/or guests. A service fee is charged once a booking is confirmed.
Until 2020, most Airbnb hosts were paying a split-fee service fee to Airbnb. In this method, hosts had to pay 3% to 5% of the booking value. This fee was around 11-12% of the booking subtotal for guests. In the summer of 2020, Airbnb introduced a new service fee structure: a split fee and a host-only fee.
The Airbnb service fee is shared between the host and the guest. In this structure, guests absorb most of the fees.
Airbnb Service Fees for Hosts
Typically, hosts pay 3% of the booking subtotal. But, it is not a fixed fee for all hosts. Some like Airbnb Plus Hosts and hosts with listings in Italy and Mainland China pay more.
The service fee includes a percentage of the nightly booking rate, cleaning fee, and any additional guest fees. Airbnb fees and taxes are excluded from this subtotal. This fee is automatically deducted from the host payout and added to the property price.
Airbnb Service Fees for Guests
Typically, guests pay a service fee below 14.2% of the total booking cost. This fee, just like the host fee, is calculated based on the nightly rate, cleaning charges, and any extra guest fees.
Airbnb rewards extended stays (over 3 months) with lower guest service fees, making long-term rentals more attractive.
With this service fee structure, there are no more guest fees as the hosts cover the entire Airbnb fee. Hosts who choose the host-only fee plan will pay from 14% to 16% of the total payout. Therefore, there will be a 0% service fee visible to their guests.
Although hosts pay a much higher Airbnb fee, travellers only pay the price they expect. This can make for a better experience and increased bookings. This is why Airbnb calls it simplified pricing.
Airbnb Service Fees for Experiences
Airbnb charges a service fee of 20% on Experiences to defray the cost of the goods, services, and support they offer, including liability insurance. This is immediately subtracted from the payment and is dependent on the Experience’s cost.
Certain Experiences with a social impact are exempt from this cost, and Airbnb doesn’t charge a fee to guests of Experiences.
Value Added Tax (VAT) Charges
How to Calculate the Airbnb Service Fee
Host service fees differ for each property based on several factors, such as location, property type, cancellation policy, and VAT charges. However, Airbnb fees typically vary from 3% to 16%. In some cases like Airbnb Experiences, the host service fee can rise to 20%.
So, the host service fee is calculated by multiplying the total booking amount by a percentage based on the criteria mentioned above.
To calculate your total payout, you need to do this equation:
(nightly rate + optional extra charges) – (host service fees + co-host payouts)
Which Airbnb Service Fee to Choose?
First, Airbnb has made the host-only fee mandatory for hosts connected to third-party software and the ones with the majority of their listings outside of the US, Canada, Mexico, Bahamas, Argentina, Taiwan, and Uruguay. Therefore, once your account connects to a PMS or a channel manager like Zeevou, the service fee plan for all listings will automatically switch to the host-only fee. This means there’s no other way left for some hosts than to choose the simplified pricing.
Second, for other hosts who still have a choice, here’s what they need to know about Airbnb Simplified Pricing:
When you turn the simplified pricing on, you must adjust your Airbnb fees accordingly. You have to increase the minimum base rate to cover expenses and the whole percentage of the service fee. (Bear in mind that the service fee applies to the accommodation and cleaning fees.)
At this stage, many hosts used to employing the traditional split-fee might worry that their property rates on the calendar would look much higher than before.
These hosts argue that, with the new pricing method, listings might look more expensive on the map before their visitors even click on their listing to notice they are not charging fees separately.
Here’s a Subtle Point All Hosts Need to Be Aware Of!
Airbnb has adjusted its search mechanism to always show the total price, including the service fee. What your guests see is not your standard price but the total amount they will be charged for each night of their stay at your home. Therefore, there is no price incompatibility in the first price overview for the two plans. Only the guest service fee will be displayed as 0 in the final overview. Airbnb doesn’t consider its service fee in the search result’s total value.
Finally, the host-only service fee plan will provide the following benefits for Airbnb hosts:
- A Simpler Pricing Strategy
In contrast to the split-fee, hosts can set what guests will pay in this plan. So, their pricing will be more straightforward, and they will have complete control over the total price of their listing. With no guest fee added on top of the final rate, the final price for guests will remain unchanged until they check out.
- Increased Bookings
Airbnb hosts who have switched to the new simplified pricing and kept their prices competitive have experienced receiving more bookings (about 17%) compared to the listings using the traditional service fee. Promoting your property as a no-fee listing will make your listings more appealing to many accommodation seekers.
- Enhanced Guest Experience
When you cover your guests’ service fees, you prevent any hidden costs and additional expenses at check-in for your guests. This way, your property will be more transparently-priced, and your guest experience will improve significantly. The more satisfied guests you have, the more five-star reviews you’ll collect.
- Matching Prices on All Booking Platforms
Vacation rental managers with properties listed on multiple channels can take advantage of this simplified pricing system. They can set the same prices on different booking platforms like Booking.com and Vrbo and on their direct booking websites. As the hosts know their final payout on each platform, it gets easier to analyse and compare the efficiency of the different platforms concerning driving bookings and profitability. Making pricing decisions will also get much more manageable.
How to Waive Airbnb Service Fees
You can’t escape Airbnb service fees if you use their platform to manage your rentals. However, you can avoid Airbnb fees by building connections outside this platform.
Promote Direct Reservations
It could be beneficial to encourage direct bookings if you already have a website for your rental property. You would be able to avoid paying the Airbnb service fee by doing this.
You should be aware, though, that this also implies that you will not be using Airbnb’s administrative or customer service. So, you will be responsible for these things yourself.
Use Other Listing Platforms
Finding a rival website to showcase your property is another method to completely avoid paying Airbnb’s service charge. Your budget may be better fitted with other platforms, such as Vrbo or Tripadvisor, which have reduced service fees.
But, remembering that Airbnb has the best platform in the industry is crucial. It has a significant amount of web traffic and listings. It additionally grants you entry to a broad audience of diverse travellers. Before acting, be sure you have carefully considered the advantages and disadvantages of your choice.
Understanding how much Airbnb charges hosts and/or guests for its exceptional services is crucial to every vacation rental manager. Equipped with full knowledge of Airbnb service fee structures, you can personalise your fees and opt for the plan that best suits your business.
If you decide to use the simplified pricing, you need to find out the best practices to optimise your prices. So, you minimise the effect of the raised fees on your bottom line and keep your rates competitive. A decent PMS, channel manager and dynamic pricing software will help you automate this process for you to effortlessly stay on top of your pricing.