The Thing About Fees on Rental Platforms

Posted on January 15, 2018

When guests book through a short-term rental platform like Airbnb or HomeAway, there are two numbers that stick out: The price per night – and the total they pay.

Often times the total guests end up paying is more than just the price per night times the number of nights they're staying. This is due to fees, such as the infamous Airbnb cleaning fee.

Let's look at these fees.

Rental Platform Fees

The most visible fee is what the platform charges to guests. This fee cannot be influenced and varies from platform to platform. Read our blog post about fees here to learn more.

There are also a few fees the host can charge on top of what the platform already charges. The most common one is the cleaning fee. Unlike hotels where cleaning is included in the price of a booking, the vast majority of vacation rentals charge that fee separately.

This is because, especially with larger properties, the amount of effort it takes to clean the place is much more than a single hotel room. Many vacation rental owners and managers hire outside help to do this job. We see cleaning fees on average from $25 for a small room to as high as $500+ for luxury homes. And because of the platform's rules guests aren't able to get a refund for this fee, even if they only stay one night.

Should you charge it? Yes, unless you’re doing it yourself and are able to offset the cost with a great price per night.

Tourist Tax

Here's a fee often overlooked, not by guests, but by hosts: Tourist tax. It's usually a percentage (we see between 6% and 14%) of the total booking amount, and is charged by cities or counties to every host.

One of the issues here is that Airbnb does not allow for adding taxes in their pricing settings. This means hosts are stuck with increasing the nightly rate and then deducting and paying the correct amount themselves (unless the property is in a place where Airbnb remits the taxes directly, in which case that’s taken care of). Forgetting this can be expensive – so make sure to read our blog post on taxes and laws for short-term rentals.

Should you charge it? Yes if it's the law in your local area.

Extra Fees for Additional Guests

Then there’s this tricky one: Extra fees for additional guests. Some platforms allow hosts to charge more for larger groups. Say you have a $200 default rate per night for up to 4 people, you could charge every person (up to the limit of the property) an additional $10 per night.

At GoNitely, we don’t charge that fee for two reasons: First, we want our guests to see as close to the final price in the listing as they can. If you’re looking at a house for 10 people and you see $200, you don’t want to end up paying $320 because each person after 4 is an extra charge. Second, we charge a flat fee for cleaning and calculate an average wear and tear of the property – both of which are based on the maximum occupancy.

Should you charge it? We’d say no – but it’s ultimately up to you.

Service Fees

Certain fees might appear random at first – but mostly they’re completely justified. A typical one is a so-called service fee. While not very descriptive, it’s usually charged to offset some kind of cost associated with the booking process. That might be anything from a local resort fee to a mandatory service included in the booking process.

At GoNitely, we apply a service fee of 3% of the total booking amount to any booking made on booking.com: This is simply to offset the credit card fee we pay to charge guests, since this platform does not provide an integrated payment service.

Should you charge it? Yes, if it’s something you’re required to pay or forward.

In the end, it comes down to personal preference. Some hosts prefer to wrap all fees into the price per night – which makes sense because it makes for less of a surprise once a guest gets to the total price.

On the other hand, an increased price per night may prevent potential guests from looking at your listing in the first place. At GoNitely, we strictly separate the price per night and show any additional fees: This adds transparency, and also accounts for different types of fees specific to each rental platform.

Which do you prefer, a higher price per night but no surprises, or adding all fees separately?

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About the Author:

Picture of Markus
Proud father and husband, humble leader. Currently revolutionizing short-term rental management with GoNitely. Living in beautiful California close to San Francisco.

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