Overview

Airbnb is undoubtedly a giant in the short-term rental industry. Their market share is estimated to be approximately 20% in the United States with a net worth of $90 billion. Many guests browse Airbnb to prepare for their vacations and the platform’s popularity provides them with an ample list of vacation rentals to choose from.

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Airbnb charges should be familiar to most people who consistently use their services. In the past, Airbnb functioned with a split fee structure. Still, with the recent changes to their policies, the Airbnb service fees can be adjusted at the host’s discretion in the U.S., Canada, Mexico, Bahamas, Argentina, Taiwan, or Uruguay. Starting in April 2024, Airbnb also added a 2% payment processing fee for cross-currency transactions, adding to the 12% service fee that the guests pay per booking.

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This blog will show how Airbnb hosts can adjust the Airbnb fees to find the best middle ground for the guests and the hosts. A smart pricing strategy will certainly bring additional guests and raise visibility on the Airbnb platform against other competitors in the area. 

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Airbnb Host Fees

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Host Service Fee

The Airbnb standard service fees are normally limited to the 3% host service fee. However, according to the newest information from Airbnb, hosts that are using the Airbnb official software will now be charged the new host service fee of 15% outside of the United States, Canada, Mexico, Bahamas, Argentina, Taiwan, or Uruguay. Refer to the flowchart below for additional clarification.

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Value Added Tax (VAT) and Other Taxes

Depending on the country of residence, Airbnb is also required to apply a value-added tax to the reservation. The VAT charges differ according to the location of the short-term rental properties so refer to this site for additional information.

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What’s Changing

In the past, Airbnb used to function in a way where there were split fees that were paid by the host and the guests. While an average Airbnb host pays their 3% fee, the guest service fee percentage can range from 12% to 20%. Aiming for a simplified pricing model, Airbnb drastically changed its service fee structure. Starting from December 4th, there will be no additional guest fees. Instead, Airbnb will deduct a 15% service charge from the host payout. 

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Along with these changes, Airbnb is assuring benefits such as 24/7 customer support and covering credit card processing costs. At first glance, the change seems like another attempt to establish a more streamlined relationship between the hosts and the platform, much like their Airbnb Plus Hosts program.

What If I Operate in One of the Locations Mentioned?

If the short-term rentals are located in the United States, Canada, Mexico, Bahamas, Argentina, Taiwan, or Uruguay, Airbnb can choose between two different fee structures. The fact that Airbnb charge hosts a service fee will stay the same. The decision is whether or not the host is willing to pay all of the service fees or if they will split the fee with the guests.

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Is this Good or Bad?

Impact for Hosts

The impact on the hosts is minimal at best. Just because the service fees go up doesn’t necessarily mean that their total revenue will decrease. The option to take all of the service fees can give the host total control over the nightly price and Airbnb cleaning fees. In many ways, Airbnb hosts can emulate traditional hospitality listings with hotels where most of the fees are included in the nightly price.

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Impact for Guests

Guests May Pay Less

The immediate changes will be felt by the guests instead of the hosts. For starters, the guest service fees that were always visible on the total price will now disappear during their transaction. As some guests pay up to 20% of the nightly rate as service fees, many of them will notice a noticeable decrease in the total cost. Many guests worry that the initial price that is displayed on the Airbnb listings can balloon with the additional fees, but this change will remove that anxiety from their minds.

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Additional Experience Fees or Upsells

Furthermore, taking full responsibility for the Airbnb service fees gives further agency to the hosts, which they can use to enforce policies ranging from house rules to a strict cancellation policy.

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The drop in the booking subtotal means that the guests also feel more comfortable in exploring additional upsell services that will be included in the booking subtotal. For example, if the guests wish for more flexible cancellation policies, they can pay an additional fee for booking insurance. Developing more justifications for upsell opportunities should be welcomed since successfully marketing upsells is one of the best ways to increase the total revenue while developing a unique, accommodating brand for the guests that will encourage them to reuse the host’s services again.

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Conclusion

The change to the Airbnb service fee structure should be good news for hosts who wish to take more control over the booking subtotal for the guests. It can be a way to establish a competitive, outstanding relationship with the guests in a saturated platform.

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