Airbnb Charging 15% to HOSTS?!
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How is Airbnb’s new 15% service fee pricing structure going to affect you? Find out which hosts are going to be affected, and why this is actually a net positive for your Airbnb business.
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Today we’re going to talk about something that a lot of Airbnb hosts, and a lot of my students have been bringing up lately. Recently, Aitbnb announced there will be a bit of a new pricing structure for some of the hosts on the platform – a 15% service fee. Understandably, a lot of hosts are concerned that they will be making 15% less on their bookings, and losing out on a lot of money. We are going to look at which hosts will be affected by this, and why this is a net positive for hosts.
To start off, let’s look at who this is actually going to be impacted by this. If you do not currently use a channel manager, or if you don’t even know what a channel manager is, it is not going to be impacting you. A channel manager integrates different listings behind the scenes while using different booking platforms. For those of us who do use channel managers to integrate calendars on the back end, we know that other platforms, like for example booking.com, charge a 15% fee to hosts. So now, with Airbnb adding this 15% service fee, it’s actually going to become easier for us to price our properties the same across the board, because the fees are the same.
From what I’ve seen, this change is also not impacting listings in the US right now. So if you are in the US, or you’re someone who is only managing your listing on one single platform via Airbnb, this isn’t something you need to worry about at the moment, because you aren’t being affected.
What has historically happened when you list a property on Airbnb as the host, you set your price point at whatever you want to earn as a host. So for example, let’s use $100 a night. What’s really seamless about Airbnb is that if you set your price at $100 a night, you’re getting almost all of that money into your pocket without a lot of additional fees coming out of it. With most other platforms, they’re charging a 15% commission on all of your reservations, and after a certain amount of time you have a bill to pay.
The only difference is that Airbnb would charge the guests that additional markup and pockets it right away without you ever seeing the money. At the end of the day, the guest is still paying the exact same amount, the host is making the same amount of money, and the platform is making the same amount too. It’s just a different organization of how those funds move from account to account. So under this new system with Airbnb, the money is all going to go directly to the owner, and then need to be paid out to Airbnb afterwards.
From the guest perspective, they would see that they’re paying a service fee on Airbnb. If the property is listed at $100 a night, the guest is going to see a price that’s higher than that, with a $15 or $17 service fee in the breakdown. Let’s imagine 2 properties that each cost $350 for a 3 night stay. One of them costs $300 with a $50 service fee, and the other is $350 with no service fee. Even if the 2 properties cost the exact same at the end of the day, guests tend to choose the ones with no service fee, because it has a higher perceived value.
The research and analytics show is that it’s actually a net positive for hosts that have opted for this integrated service fee, because you can raise the perceived value of your property to guests. So this is a big win for property owners and managers, because you’re going to see an increase in bookings with this new system.
One fear is that with an integrated service fee system, your property will have a higher nightly rate compared to another property without the integrated service fee. But thankfully, the way Airbnb organizes their listings on the search page is a nightly average. So if you charge $100 a night with an additional $15 service fee, or if you charge $115 a night with no additional service fee, both of those properties will appear as being $115 a night.
I hope this has been helpful for you to understand these new changes with Airbnb and to see that it can actually mean a net positive for you and your listings.
What's up guys, it's James here and in today's video, I want to talk to you about something that a lot of Airbnb hosts, and students of mine have been bringing up recently, which is that Airbnb has recently announced that there's a bit of a new pricing structure in which for some hosts on the platform, they're going to be now charging a 15% service fee. Now pretty shocking for some hosts, because a lot of them saw that, hey, Airbnb is going to be charging this service fee. And now suddenly, I'm going to be making 15% less on my bookings on all my reservations that I get through Airbnb.
Now, that would represent a really, really big hit. So understandably, a lot of Airbnb hosts are concerned by this. Now, what I'm going to talk to you about in this video is specifically which hosts are affected by this, because it's some not all hosts that are actually impacted by this. And I actually want to talk to you as well. But why this is a net positive for hosts, this actually isn't going to be having hosts earning less money, despite what most people think when they see the kind of basic outlines of how things work, a lot of hosts think that they're actually going to be earning less, when in fact, there's evidence to support they're actually going to be earning more, I want to break all of that down in this video.
Now, to start off with, let's talk about who this actually impacts which hosts are actually going to be impacted by this right now. So to start off with, it's not going to be impacting you, if you currently do not use a channel manager, if you don't know what a channel manager is, then good, chances are, you're not using one. So you don't need to worry about this, it's not going to affect you. For those of you that do know what a channel manager is, you obviously know that it integrates different listings. Behind the scenes, that means that you're using different booking platforms.
Now the reason that Airbnb has rolled out this, this new functionality, this new pricing structure, to those of us who are using a channel manager to integrate calendars on the back end, is because it allows us to more easily set prices the same across different platforms. Because as we know, other platforms like for example, booking.com charge this 15% fee to host and so we're going to price our properties differently over there than we would on Airbnb. And so as a result of this new change, now, it's going to be easier for us to price our properties the same right across the board. That's the thought at least, the other big advantage for us is that it's actually going to help us to get more bookings.
I'm going to talk about that in a minute here as well. So basically, if you're only managing your listing on one single platform via Airbnb, then you don't actually need to worry about this change. Right now. There is a chance of course, that Airbnb will roll this out widespread to all listings in the future. But for right now, it's only impacting you if you have a channel manager setup on the back end. And from what I've seen, it's not impacting us listings either. So there's nothing to really worry about for anyone in the US or anyone without a channel manager right now.
Now, that being said, I do want to address kind of the elephant in the room with this discussion, where a lot of people are thinking what gives, why is Airbnb suddenly going to start charging me 15% on my listing, whether now or in the future, once they roll it out to me as a host. And I want to address that head on because it's actually not as bad as a lot of you think it's actually a big positive in most cases. And so basically what is always always historically happened when you list a property on Airbnb as you as the host, go and set your price at whatever you want to earn as a host. And so let's say at this price that you set is $100 a night, what's really, really nice and seamless about Airbnb for the host is that you get $100 a night doesn't really get much simpler than that you set your price at $100 a night, you get $100 a night might be some small fees, depending on your hosting. But for the most part, you're getting almost all of that money for your nightly rate right into your pocket without any additional fees coming out of it.
Now, that's very different from how a lot of other platforms like for example, booking.com operate, where they're going to take a 15% Commission on all of your reservations. And so you have to pay this bill to booking.com after a certain amount of time, once you've gotten enough bookings, and you're going to be charged and you're going to have a bill to pay.
Now, obviously, from an administration standpoint, that's a bit of a headache, you'd rather just have the money coming right into your account and know that that's yours and not have to pay a bill. But from an earnings standpoint, it's actually the exact same. The only difference is that Airbnb charges the guests that additional markup and just pockets it right away without you ever seeing it. Whereas booking.com just as you incorporate into your price and then charges you for it later on. At the end of the day, the guest is still paying the exact same amount. And the exact same amount is still going to the platform and the exact same amount is still going to the owner. It's just a different organization of how those funds actually move from account to account with booking.com. And with Airbnb under this new system.
The money is all going to come to the property owner and then need to be paid out to Airbnb, whereas before part of it went directly directly to Airbnb. And so it never had to pass through the owner and then end up going to Airbnb. What that looked like on the guest side of things is that they would see that they're paying a service fee on Airbnb. So though you as a host may have set your price at $100 a night, that's actually not what the guest is going to see, they're going to see a price that's slightly higher than that. And they're also going to see that there's a breakdown on the checkout page where they can see that there's a whatever dollar service fee, let's call it a $15 $17 service fee that Airbnb is going to charge them.
Now all they can see is it that's an Airbnb service fee doesn't portray a lot of value to them. And from a guest perspective, that's something that they're paying for, just for the ability to book through Airbnb, which they don't necessarily like, if you think about it from a guest point of view, if I'm a guest, and I'm looking at two identical properties to in price as far as what I'm going to pay for them for this day.
Let's for this simplification, everything, let's take cleaning fees out of this equation. And let's look at two different properties that I look at that I can book, either one of them for my three night stay is going to cost me $350. One of them, however, is a property that doesn't have any service fee on it. So I'm getting a property that's actually worth $350 in my mind, whereas with another property that I'm looking at, there's a $50 service fee. And that to me as a guest seems like something that I don't really want to pay for it doesn't portray any value to me, because I only get a property that's worth $300, I still end up paying $350, but I get a property that's actually only worth $300.
So I get a less valuable property for the same amount of money. If I'm comparing those two properties side by side, then I'm probably going to opt for the one that has a higher perceived value. Now that's the thought process behind Airbnb making this shift. And from with studies that they've done the research they've done into the analytics. So far, it's actually been a net positive for hosts that have opted for this integrated service fee, it's called by integrating the service free Wi Fi, you can increase the perceived value of your property to guess. And in most cases, it's actually going to get you more bookings.
So that's a really big win, actually, you end up making the same amount of money oftentimes more because you are like I said, getting more bookings because people are perceiving your property as being more valuable than others. And they see it, they're going to save the service fee when they choose to book with your listing. And so at the end of the day, you're still going to net the same, the guest is still going to get still going to spend the same amount of money, but you're just going to end up getting more bookings. That's a really, really big win for you.
Now, the other big advantage here is that it shows up the same in the search results. That's another thing I really like to point out to people when you're looking at this, because with Airbnb search results, your nightly rate is not going to show up as being higher than the competition. Just because you have to incorporate this service feed into that nightly rate. A lot of people are scared of that a lot of people are scared that in the search results, now they're going to be harder to find they're going to show up in the initial search results as being higher price, because their nightly rate will in fact be higher since it'll have to incorporate this service fee.
What's important to note though, is that the way Airbnb shows the night, the night the rate on their search results is based on the total all in cost divided by the number of nights. So it will be virtually unchanged from one property to the next with one property having a service fee that's integrated, and one property that charges a service fee to guess in either case, because the guest is paying the exact same amount of money, that amount of money is just divided by the number of nights in their stay when demonstrate On the results page.
So simply put, to give you an example, if you've got one property that's priced at $115 a night, and another property that's priced at $100 a night with a $15 service fee, they're both going to show up on the search results page for Airbnb as being $115 per night, the one that has a $15 service fee is not going to show up as a $100 a night property, it's still going to show up as $115 a night because they both actually charge $115 total per night. Now, again, this is excluding cleaning fees from the equation just for simplicity sake. But if you have a cleaning fee on your property as well, that also gets factored into the nightly rate that shows up on Airbnb search results page. We just took that out here for simplicity.
So all that being said, for most hosts, you don't have to worry about this change in the integrated fee structure. But if you do have the opportunity to switch your listing over as some hosts do to this integrated service fee structure, I recommend that you do all signs point towards it. It's actually going to be a net positive for you in your listing. You're going to be able to net more on your listing and it's likely that this is going to be rolled out Right across the board over the over the next couple months, maybe a couple of years here.
And so you're just going to be getting ahead of the curve and get this slight edge over the competition for the time being. And again, don't worry, it does not mean that you're going to be actually netting less on your listing, you're not going to be at a disadvantage that way and you're not going to be at a disadvantage in the search results. It's really important when things like this come up to actually look into the details of it. So hopefully this video has been really helpful to you if you are wondering about this for your listing yourself. And if you're starting to manage properties for other people, you can go in with your eyes wide open knowing exactly what to do to optimize your property effectively.
So again, I hope this video has been really valuable to you if it has then please take a quick second and just give this video a like hit that like button give it a thumbs up. If you're new to the channel here then please consider subscribing as well. If you liked the video, it helps you tremendously with the YouTube algorithm actually subscribed to the channel then you'll be notified when we release new videos twice every week. This has been James I will look forward to talking to you in the next video.