Everything You Need to Know About Airbnb’s Host-Only Fee
As of December 2020, Airbnb instituted a new type of service fee structure, providing two options for some short-term rental hosts. The two options are as follows:
Split-fee Pricing TRADITIONAL
Hosts pay 3% from the total payout and guests are charged a Service Fee which varies between 13-20%.
Simplified Pricing NEW
There will be no service fee visible to the guest, and the host will pay 15% from the total payout.
How to decide which model to use?
Well, not everyone has a choice! Airbnb has made Simplified Pricing mandatory since December 7, 2020 for hosts who are connected to a third party software, such as Guesty For Hosts within certain categories. However, if the majority of your listings are in one of the countries below, or you are not connected to software, you can still choose which structure you prefer to use by going to your Airbnb account.
Who Has Mandatory Simplified Pricing?
Simplified Pricing is mandatory for software-connected hosts with the majority of listings outside of the above listed countries.
Simplified Pricing is also mandatory for hosts with at least one traditional hospitality listing (aparthotel, hostel, serviced apartment etc.), regardless of location, or whether they are connected to third-party software.
When you connect your Airbnb account to Guesty For Hosts, you will be automatically switched to the Simplified Pricing host-only fee. You won’t have the option to change it to Split-fee while connected.
It is important to be aware of this change, and to adjust your rates accordingly to maintain parity by increasing your base price, or adding a fee.
Read more about Simplified Pricing from Airbnb here.
As this setting is kind of hidden in the Airbnb website, you can use this direct link to reach your setting page: https://www.airbnb.com/account-settings/payments/api-host-service-fee
Before deciding about the fee structure, let’s make some calculations to see how these two structures affect how much a guest and host pays for a reservation.
How much do my guests pay to stay at my place?
This was an unanswered question with the current structure Airbnb had. We used to name our price for our property, and Airbnb would put a service fee on top of that. The hosts would never know how much the guest actually paid to stay at their place. Airbnb’s guest fees vary between 10-20%, probably determined by multiple factors like length of stay, traveler’s country, and more…
With the new Simplified Pricing structure, the host has full control over what the guest will pay in total and there will be no guest fee added on top of the final rate. This structure has been used by Booking.com for years.
This is how it looks when you switch to Simplified Pricing. The guest will see $0 Service Fee and an explanation when they click to learn more.
Let’s compare how much a guest pays and how much a host makes under several scenarios for the traditional Split-fee and the new Simplified Pricing. We will compare a 3-night stay with a nightly rate of $100 in our examples. I searched my property from two different locations and the service fee for the guest was around 16-17%.
|Breakdown||Split-Fee(Current Pricing)||Simplified Pricing(Do Nothing)||Simplified Pricing(Rates +14%)||Simplified Pricing(Rates +15%)|
|Guest Pays||$494||$429 13%||$489 1%||$494|
|Host Earns||$368||$323 12%||$368||$371 1%|
When you investigate the numbers in the table above, you can see that you need to raise your rates and cleaning fee by 14% if you want to keep earning the same amount. Alternatively, by taking advantage of Simplified Pricing, you can raise your rates by 15%, which makes you earn 1% more while the guest pays the same. This is your own business decision to use the new structure as a competitive advantage against similar listings like yours or simply give a small boost on your revenue.
Another thing to note is that I made the calculation where some occupancy taxes apply (Florida, USA). When your accommodation fee goes higher, the tax your guest needs to pay gets higher as well. However, there is still a margin to cover that with the Simplified Pricing’s lower service fee. If your country does not charge extra taxes, you have an extra margin of 1% to use for your benefit or competitive price advantage.
If you are hosting longer stays (28 days+), Airbnb’s service fee drops roughly to 10% in the current structure. In this case, switching to the Simplified Pricing might be disadvantageous for you as the Host Service Fee is fixed to 15% for the new pricing structure. It is not adjusting with the length of stay for now. We shared our feedback with the Airbnb team about the longer stays, let’s see if they will apply new terms for longer stays in the future.
Which one is better at the end of the day?
Airbnb states that during the test phase of Simplified Pricing, the listings with the new price structure secured up to 17% more bookings compared to the listings with the traditional service fee. You can take a look at Airbnb’s information sheet about Simplified Pricing.
Some of the other advantages of Simplified Pricing can be summarized as below:
- Have full control of what your guests pay to stay at your place
- Remove an extra service fee price item from the guest’s side
- Have a similar price structure to platforms such as Booking.com
- Increase your payout while guests pay the same amount
On the other hand, you need to be aware of the fact that:
- Your nightly rate will look higher than your competition
- Guest expectations may increase with the visible nightly rate
- The host fee may end up being more for longer duration stays
Considering all the facts above, you need to choose the best option for your business and adapt to the changes. As Airbnb strongly recommends the new Simplified Pricing, there are reasons to believe that you may get more exposure in the search results after switching to the new structure.
How to adapt to the new Simplified Pricing
If you decide to switch to the Simplified Pricing or you are obliged to use it for a reason (using a third party software in select locations), you definitely need to increase your rates 14-15% to keep your final payout on the same level. Please keep in mind that the service fee applies both on accommodation fee and cleaning fee, so you obviously need to adjust your cleaning fee as well.
On Guesty For Hosts, we have an automated system to adjust everything according to your strategy. You can do it immediately after switching your settings in Airbnb or schedule the change for a future date if Airbnb makes the change obligatory after a certain date.
Please keep in mind that if you adjust your Airbnb rates, you need to edit your mark-up settings on different channels to reflect the correct rates for your listing. Guesty For Hosts will automatically calculate your daily rates and adjust your calendar on other platforms like Booking.com and Vrbo.
You can try Guesty For Hosts for free during your 14-day trial. We offer automated messages, channel management, and a direct booking website for professional Airbnb hosts. Guesty For Hosts is the only mobile-first solution providing all of its features on native mobile apps for iOS and Android.