Airbnb Commission & Fee’s Guide
As Airbnb has become increasingly popular, questions about commission and fees have often surfaced. In this guide, we aim to provide clarity on how Airbnb charges hosts and guests, helping you navigate the platform confidently.
For hosts, we'll explain the commission structure, which varies depending on the type of booking, services provided, and location. We'll also delve into additional fees hosts may encounter, such as cleaning fees and service fees, as well as how to set your own pricing.
Guests will gain insight into the fees they may encounter when booking through Airbnb, including service fees, cleaning fees, and taxes. We'll also explore ways guests can save money and ensure transparency when making a reservation.
What are Airbnb fees?
Airbnb fees are the costs that hosts and guests incur when using the Airbnb platform. These fees are designed to cover the operational costs of the platform and provide services such as customer support, secure payment processing, and the development of new features.
As a host, understanding these fees is crucial as they directly impact your revenue and profitability.
Host Service Fee
Airbnb charges hosts a service fee, which is typically 3% of the booking subtotal. This subtotal includes the nightly rate and any additional fees such as cleaning fees but excludes Airbnb service fees and taxes. The host service fee is automatically deducted from the host’s payout.
However, Airbnb’s commission can go up to 14% or more for hosts who have a Super Strict cancellation policy.
Example:
Nightly rate: £100
Cleaning fee: £20
Booking subtotal (for 3 nights): £320 (£100 x 3 nights + £20 cleaning fee)
Host service fee (3% of £320): £9.60
Host payout: £310.40 (£320 - £9.60)
Different types of Airbnb fees hosts need to know
Host service fee
Host service fee is the fee that hosts are required to pay for covering the cost of running the Airbnb platform. It’s generally around 3% to 16%, depending on various factors. Host service fees include services like customer support and secure payment processing. Airbnb service fees are further subdivided into two:
Split-fee: This is the most common fee structure. It’s when the service fee is split between the Host and the guest. Most hosts pay about 3% of the booking subtotal (nightly rate + cleaning fee + additional guest fee, excluding Airbnb fees and taxes). This is automatically taken out of your payout.
Hosts who are in certain countries (such as Italy) and those who have Super Strict cancellation policies may pay more than 3%.
So, how much do your guests pay? Most guest service fees are under 14.2% of the booking subtotal, but varies depending on a few factors, e.g. if they are staying for more than three months.
Host-only fee: The “host-only” fee option means that the entire Airbnb commission is dedicated from your payout. It’s usually about 14% to 16% – but like split-fee, Super Strict cancellation policies may cost more and monthly stays may cost less.
For some Airbnb listings, host-only fee is mandatory – this includes traditional listings like hotels.
For example, if you charged £100 a night, then Airbnb would take £15 of that for their fee.
Additional Considerations
VAT: In the UK, Airbnb may be required to collect and remit VAT on the service fee. This is something to keep in mind when calculating your final costs and pricing your property.
Long-Term Stays: For bookings of 28 nights or more, Airbnb often charges a lower service fee. This can be beneficial for hosts offering long-term accommodations.
Airbnb guest fees
These are fees that can be charged to your guests in addition to the service fee. There are four main types of fees that guests can be charged on Airbnb:
Cleaning fee
The cleaning fee is set by hosts to cover the cost of cleaning their space after guests leave. This fee is not mandatory, and hosts can choose whether or not to include it in their listing.
Extra guest fee
Hosts can charge an extra fee for additional guests beyond a certain number. This fee is set by the host and is typically charged on a per-night basis.
Security deposit
A security deposit is an amount that hosts can set to cover potential damages to their property. This amount is not charged to guests unless the host makes a claim within 14 days of checkout.
Cancellation fees
Cancellation fees apply if a guest cancels a reservation during certain periods. The amount of the fee and the timing depend on the host’s cancellation policy.
Alternatives to Airbnb with lower commission and fees
While Airbnb has become a dominant player in the vacation rental market, it's not the only option available to Guests. There are several alternative platforms that offer similar services but with lower commission and fees for both hosts and guests.
VRBO
One such alternative is Vrbo (Vacation Rentals by Owner), which is owned by Expedia Group.
Vrbo typically charges a lower commission rate for hosts, ranging from 5% to 10%, compared to Airbnb's 14% to 16% commission. Guests on Vrbo may also encounter lower service fees, often in the range of 4% to 6% of the total booking cost.
Booking.com
Another option is Booking.com, which offers a vacation rental platform in addition to its traditional hotel booking services. Booking.com's commission rates for hosts are generally lower than Airbnb's, typically ranging from 10% to 15%.
Guests on Booking.com may also benefit from lower service fees, which are often around 6% to 8% of the total booking cost.
Explore local online travel agents
For hosts who prefer a more localised approach, some cities and regions have their own vacation rental platforms with even lower commission rates.
For example, some cities in Europe have their own rental platforms, such as Holidu in Germany, which offers a commission rate of just 3% for hosts.
Strategies for managing Airbnb fees
Managing Airbnb’s fees and balancing competitive pricing with good profitability can be a difficult juggle. Here are the top five strategies you can use to find the sweet spot:
1. Build fees into your costs
You can only manage what’s measured. Analytics and insights are key to balance Airbnb fees against your costs and avoid losing money in the long run.
Before setting your prices, understand all the costs associated with running your property. This includes Airbnb fees, cleaning costs, maintenance costs, and any other expenses. This will help you set a price that covers your costs and leaves room for profit.
Remember that £100 a night example from earlier? If you lose £15 to fees every time someone books through Airbnb, you must ensure that the difference is made up in your actual price. Suddenly, that £100 room may need to become $115.
2. Stay competitive (even against non-hotels)
Success on Airbnb despite the extra fees tacked on is all about staying competitive. With all hotels needing to switch to the simplified pricing model, you’re working on an even playing field with them – but what about non-hotel Airbnb listings?
Look at what other hosts in your area are charging and consider how your property compares. If your property offers more value, you might be able to charge a higher price. If not, you might need to adjust your prices or find ways to add value to your listing. This is easier said than done, which is why Little Hotelier has a dedicated competitor insights report to help you stay on top.
3. Don’t be afraid to switch things up
The fees that Airbnb charges may be constant for your small hotel, but seasonality means that pricing should always be changing to meet demand and maximise profit. During slow seasons, it may be worthwhile dropping your prices despite the fees for every booking so you can drum up sales and repeat customers during the more popular (and thus more profitable) months.
4. Maximise your add-ons & amenities
Airbnb fees are based on nightly rates and any extra fees you charge the guests for things like cleaning and extra guests. But those aren’t the only things you can offer your guests! Make sure that you have the opportunity to charge for add-ons that won’t have the Airbnb slice taken out of it. Think airport pickup, breakfast, guided tours, equipment hire, and so on.
5. Stop relying on Airbnb
Airbnb is just one of the many listing options available for your hotel. Commissions and fees are a fact of life with nearly all online travel agents (OTAs) – but not all of them charge the same amount or the same way as Airbnb.
More to the point, successful hotels are built on a strategy that maximises direct booking, not OTA bookings. This cuts out the middleman and ensures that your business gets the whole slice of the revenue and the profit from every booking.
Airbnb management
If you are looking to make all of these checks you need to do to make your listing stand out and also keep Airbnb fees low, it might be worth while partnering with an Airbnb management company.
Stayful provide Airbnb management nationwide and will make sure you are maximising the revenue of your Airbnb listing as well as:
Finding quality cleaners
Chasing for reviews
Listing optimisation
Key management
Pricing strategy.
Making your Airbnb investment passive, if you are interested then let’s have a chat!