Over the last decade, real estate investors have used Airbnb to rent properties and meet new people worldwide. The short-term rentals business continues to grow—in 2021, the typical U.S. host made $13,800 on Airbnb, an 85% increase over Airbnb host income in 2019.
Suppose you’re serious about purchasing a vacation rental property and becoming an Airbnb host as a side hustle or full-time income. In that case, you need to understand the service fees involved in using the platform so you can price your property accordingly.
So how much does Airbnb take from hosts for service fees? Let’s break down what Airbnb charges hosts, how other listing platforms compare, and what savvy investors should know to run their short-term rental business.
What Percentage Does Airbnb Take?
Many Airbnb hosts only pay a flat service fee of 3% of the booking subtotal. The subtotal includes the price guests pay per night, and any additional fees hosts charge guests, such as a cleaning fee. It does not include taxes. Service fee payments are taken from a host’s total payout for each reservation. For example, if the subtotal of the stay is $1,000, the Airbnb host fee is $30, and the remaining $970 is the host payout.
While 3% is the most common fee hosts pay, there are a few different fee structures that hosts can implement that affect the percentage Airbnb takes from a host’s earnings.
The split fee structure is the most common and involves hosts and guests sharing the responsibility of Airbnb fees. For example, the host pays the flat 3% fee, and guests typically pay a service fee of around 14% of the booking subtotal.
Host only fee
Unlike split fees, the host-only structure will charge hosts for the entire fee, usually 14%-16% of the booking subtotal. Hosts with super strict cancellation policies may use this structure and cover the costs for their guests to offset the strict policy. The host-only service fee is also mandatory on Airbnb for traditional hospitality listings, such as hotels.
Why Does Airbnb Charge Service Fees?
Since guests and hosts use Airbnb’s platform for direct bookings, the company charges fees for services that benefit both parties. These services include credit card processing, protection for hosts and their property, marketing on the Airbnb website, secure communication for hosts and guests, and 24/7 customer support. Airbnb hosts also receive educational resources from the platform to improve their pricing strategy and grow their Airbnb business.
Are Guests Aware of These Fees?
Yes. Guests can see each line item that adds up to the total cost of their stay when making a reservation. The breakdown includes the Airbnb guest service fee, local taxes, and other relevant fees, such as an additional guest fee.
Where can I find what guests will pay?
Once a booking is confirmed, Airbnb sends the host the reservation details and a price breakdown for hosts and guests. The breakdown includes the total price the guest will pay, host fees, taxes, and the total host payout.
How Airbnb Prices Are Displayed
In the past, Airbnb has displayed prices by showing the property’s nightly rate. Guests would need to select a property and input their reservation details before seeing the reservation’s full cost with fees. Now, Airbnb has a feature where guests can view the full price of their stay before taxes with the total price display feature. This allows guests to better plan for what a reservation might cost and not be surprised by any additional fees the host might add.
How To Minimize Airbnb Fees
If you’re looking to lower your Airbnb host fees, here are a few steps you can take:
- Have guests book directly with you. If you want to avoid the host service fees on Airbnb, include a website on your listing where guests can book directly with you. Remember that you’ll be responsible for taking payments and communicating with guests outside the Airbnb platform. A separate booking site may also deter guests since booking via Airbnb offers a level of safety most guests prefer.
- Avoid the super strict cancellation policy. Airbnb charges hosts more for this cancellation policy because of the extra administrative tasks and customer support that the policy will need.
- Avoid canceling reservations. In addition to offering a flexible cancellation policy, hosts should avoid canceling reservations on guests to avoid paying cancellation fees. Hosts who cancel confirmed reservations will be charged a fee from Airbnb. The amount depends on when the host accepts the reservation and how soon it’s canceled before check-in. For Airbnb bookings canceled more than a week before check-in, hosts are charged $50. If the reservation is canceled less than a week before check-in, the penalty is $100.
- Lower optional costs or the nightly rate. Airbnb service fees are calculated by taking a percentage of the booking subtotal. If the subtotal is lower, the total service fees paid to Airbnb are less. Lowering your prices may not be worth it, but play around with the math to see if another solution works better for you.
How Do Other Short-Term Rental Listings Platforms Compare?
Airbnb is not your only option for listing your property. Many investors use multiple listing platforms for marketing their property listings, expanding their reach, and filling their reservation calendars. Below are other rental listing platforms and each site’s hosting fee structure.
This site is similar to Airbnb but focuses on condos or vacation rental homes instead of shared spaces or unique spaces offered on Airbnb, like treehouses. VRBO offers two different fee structures for hosts: a pay-per-booking or a subscription fee.
The pay-per-booking fee includes a 3% payment processing fee and a 5% commission fee. The payment processing fee, including taxes, is charged on the guest’s total payment. The commission fee and any additional guest service fees are charged on the rental amount. VRBO also charges property hosts a 5% booking fee for using its property management site or a 10% fee for using a third-party site to source the reservation.
The subscription fee is a better option for hosts with higher traffic listings who make more than $6,250 a year with the platform. The subscription costs a one-time, flat fee of $499, paid in advance.
Booking.com is another option for property managers to list their vacation or short-term rental properties. On average, Booking.com charges hosts a 15% commission fee based on the reservation total amount. This is the only fee Booking.com charges hosts, and no listing costs exist for using the platform. The site does not automatically deduct commission fees from hosts’ earnings. Instead, it charges hosts commission fees at the end of every month.
While the fee percentage may seem higher on Booking.com than on other platforms, this simple fee structure avoids any surprises from guests with additional fees.
TripAdvisor also offers two different payment structures for property managers looking to list properties for rent. The first option is paying a host service fee of 3% fee per booking. The fee is based on the reservation’s total cost, including any required and optional fees for the property, like a pet or cleaning fee.
Hosts also have the option to pay an annual fee per property listing on TripAdvisor. Hosts can receive reservations and payments from guests directly on their own platforms or through TripAdvisor’s site for properties with an annual fee. If guests book through TripAdvisor’s site, hosts will still have to pay a processing fee of 3%. If you don’t have a way to take payments online yourself, TripAdvisor’s pay-per-booking option is probably the best route.
Frequently Asked Questions About Airbnb Fees
Keeping all the ins and outs of Airbnb fee structures straight can be tricky. Here are the quick answers to common questions.
How does Airbnb calculate service fees?
Service fees are based on a percentage of the reservation’s subtotal cost. These fees cover things like payment processing and customer support. In most cases, Airbnb charges hosts a flat 3% service fee. If a host chooses to cover the total service fee for their guests, they will pay a higher amount, about 14-16% of the booking subtotal.
Can I avoid paying the Airbnb service fee?
There is no way for Airbnb hosts to avoid paying service fees while using the platform. To offset costs, hosts can raise their listing prices or include their own service and cleaning fees for guests to cover as part of the reservation. Otherwise, hosts can set up their own direct booking website to schedule reservations for guests to avoid paying the host service fee.
What happens to the fee if a guest cancels?
Service fees are refunded to both the guest and host if a guest cancels a reservation within the free cancellation period of the reservation.
How do cleaning fees factor into Airbnb host fees?
Hosts who charge a cleaning fee will pay more in Airbnb service fees since Airbnb host fees are a percentage of the booking subtotal, which includes the nightly rate and optional charges like cleaning fees. The higher the subtotal, the higher the host service fee.
Just how much do fees impact Airbnb prices?
Fees can have a significant impact on what guests pay on Airbnb. If hosts use the split fee structure with their guests and charge additional guest fees, it can add up to as much as 30% of the total reservation cost for renters, though Airbnb says most guest service fees are under 14.2% of the booking subtotal. Hosts should consider the guest’s total cost to help inform their pricing strategy and determine if adding optional fees will deter customers.
Build long-term wealth with short-term rentals
Vacation rentals can be an extremely lucrative way to boost your monthly income—but only if you acquire and manage your properties correctly. This ultimate guide to analyzing, buying, and managing vacation rental properties will set you up for immediate success and long-term wealth.
Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.