Are you looking for a simple explanation of what Airbnb fees are and how they are calculated? Then you’re in the right place! In this article, you’ll be able to read about the Airbnb commission structures, and find out which one likely applies to you. But first, while all property managers have probably heard about Airbnb, let’s start with a recap of the main characteristics of this vacation rental channel.
What is Airbnb?
Airbnb is one of the biggest and most-used vacation rental platforms. Founded in 2008, Airbnb is a moderated community where hosts can advertise their properties to short-term rental guests. The vacation rental website has since gathered more than 6 million property listings and over 4 million hosts in more than 220 countries and regions around the world. And it looks like Airbnb doesn’t have any plans to stop there, continuously introducing improvements and new features to enhance the experience for both hosts and guests.
On Airbnb, hosts can rent out all kinds of properties, from rooms, apartments, and houses to cabins and farms. There is always a very broad choice opportunity ranging from everyday, casual accommodations to pricier, more elegant ones. But it doesn’t stop there, Airbnb also lists boats, castles, treehouses, private islands, lighthouses, and igloos, catering to the needs of the more adventurous and extravagant guests.
While Airbnb used to attract mainly younger people looking for more affordable accommodations, it is now a great rental channel for any guest looking for a comfortable short-term stay. On Airbnb, there is a good choice of vacation homes adapted to the needs of families, while also business travellers looking for specific amenities will be sure to find something that fits their needs. And although Airbnb started mainly with rentals in urban areas, it now offers a wide range of rental homes in non-urban vacation destinations.
How are Airbnb fees calculated?
When one starts to dive into the Airbnb commissions and service fees it might feel like trying to find one’s way through a jungle. But here we’ll go through the different fee structures Airbnb offers and which are the main rules and exceptions. So, let’s get started with the Airbnb fee breakdown!
There are two different structures regarding Airbnb fees: the split-fee where both hosts and guests pay a service fee, and the host-only fee where only the host pays a service fee.
The split-fee model
The split-fee model had previously been the most common one, although it appears that it is slowly falling out of favour. With this model, Airbnb deducts a service fee from the host’s payout while charging a service fee to guests. The fee that generally hosts pay is around 3%, though there are some exceptions. For example, being an Airbnb Plus host (ie. being a host verified for quality and design), having listings in Italy, or using Super Strict cancellation policies may raise that percentage a bit. The host service fee is calculated from the booking subtotal (which includes the nightly rate, the cleaning fee and the additional guest fee, but excludes Airbnb fees and taxes).
Simultaneously, guests pay a service fee that goes up to 14.2% of the booking subtotal and that varies depending on an array of factors. Guests can see the fee before booking a reservation. As previously mentioned, this model is becoming less and less common and many property managers are unable to use it nowadays.
The host-only model
The host-only fee structure is deducted entirely from the host payout, while guests pay no Airbnb fee. Due to its simplicity and transparency for guests, this policy is becoming more common and increasingly popular. The host-only fee is usually between 14% and 16%, but it can differ depending on some factors like in which countries the host has the majority of listings or if the host uses Super Strict cancellation policies. This structure fee is also mandatory for hosts that use third-party software to manage their listings, as we will see in more detail below.
Airbnb Simplified Pricing
Starting out in fall 2020, Airbnb introduced a new solution for hosts that are connected through third-party software: the Airbnb Simplified Pricing. What this means is that the 15% host-only fee became mandatory for software-connected hosts, removing the choice between host-only and split fee. However, the Simplified Pricing doesn’t apply to hosts that have a majority of their listings in the US, Canada, Mexico, Uruguay, The Bahamas, Argentina and Taiwan, therefore these countries still have the choice between host-only and split-fee.
While at first sight the move may seem counterproductive, this new fee model allows hosts to set a more accurate pricing strategy since they are able to see what guests will be paying. Moreover, the property listings will be more attractive to the eyes of the guests thanks to the lack of guest service fees. In fact, Airbnb states that hosts that have moved to the Simplified Pricing have seen an overall increase in their bookings by an average of 17%. And this is because guests see the price in a transparent way, without added fees, making them more inclined to book by virtue of the simplicity and the psychological impression that they would be saving money.
And if you’re worrying that with the host-only fee model you would be losing money, that’s not true. In fact, by adjusting the nightly rate by +14% to offset the increase in Airbnb host fees from 3% to 15%, the guest will end up paying the same as before, and you will be able to keep the same revenue (if not possibly even a little bit more).
Should I list on Airbnb?
Airbnb is a big and well-known vacation rental website that will put your property in front of a wide audience worldwide. By listing on Airbnb, you’ll be able to increase visibility and drive traffic towards your listings. Other positive aspects of listing on Airbnb are the fact that you are able to retain control over your business since you’ll be able to set your house rules and your prices.
What more can I do?
Airbnb fees are the price to pay for such advantages of listing your properties on what is possibly the world’s biggest vacation rental channel. However, there are still times where one would like to avoid these commission fees, or listing on channels simply doesn’t give the desired flexibility. Offering Direct Bookings to your guests will allow you to diversify your revenue streams and increase your profit margin. In fact, by offering the possibility to your guests to book their stay directly with you without the need for sales channels, you’ll be able to skip the 15% channel fee. Read about how to drive more direct bookings here.
This doesn’t mean that you should focus only on direct bookings but offer them as an alternative. In fact, listing on big channels like Airbnb will give you high visibility since big sales channels receive millions of visitors and bookings every year. And if you’re listing on many different rental channels to maximize your exposure, a Channel Manager will save you time and energy.
The Your.Rentals Channel Manager helps you connect your properties to Airbnb, as well as more than 20 other channels, without needing to have an account on every channel. In fact, you only need one Your.Rentals account to build your listing, publish it on your selected channels and start managing your bookings, calendars, and guest messages. Plus, if you’re already listing your properties on Airbnb, Booking.com, Tripadvisor or Vrbo, you can import your existing listings into Your.Rentals and get listed on all the other sites in just a few minutes.
How to choose the best vacation rental websites
Not sure which channels are right for you? If you are curious about which channels would fit your properties best, you can take our quick quiz.