357. Airbnb's 15.5% Fee Hits Every Host September 15 (Fix These 4 Numbers First)

Tim Hubbard (0:00)

On September 15th, Airbnb is changing their fee structure, so all hosts now have to pay the 15.5%.

But it's not just coming out of your reservation price, it also comes out of your extra guest fee, your pet fee, and your cleaning fee. And so if you don't have the right markup in place, you could be missing out on money. We're gonna give you the exact markup you need to put in. It's not 15.5%.

We'll walk you through step by step. Stay tuned, let's jump into it. Welcome to Short Term Rental Riches. We'll discuss investing in real estate, but with a specific focus on short term rentals. Quick, actionable items to acquire, manage, and scale your portfolio. I'm your host, Tim Hubbard.

On September 15th, Airbnb is changing their fee structure, so all hosts now have to pay the 15.5%.

But it's not just coming out of your reservation price, it also comes out of your extra guest fee, your pet fee, and your cleaning fee. And so if you don't have the right markup in place, you could be missing out on money. We're gonna give you the exact markup you need to put in. It's not 15.5%.

We'll walk you through step by step. Stay tuned, let's jump into it. So is this applicable to you? Yes, if your property is on Airbnb, then this is applicable to you. About a year ago, hosts that were connected to a PMS platform had this change already happen. But now it's for everyone. So if you're not connected to a PMS platform, that 3% that you're paying is now going to 15.5%.

There's no more guest fee side of the equation. And so if you log in your Airbnb account, you see that little price prompt, then this is applicable to you. So what happens if you do nothing? Well, you're gonna earn less money on each reservation. In fact, around 12.5% less. Just gonna read off my math here to give you an example. So if your old rate was $100, and the guest paid 115, you kept to 97 But now, if you don't do anything with that $100 rate, and the guest pays 100, you're gonna get 84.50. And it's actually the same math on every fee, and that's where it's catching hosts off guard, because this includes our cleaning fee, this includes our pet fee, this includes extra guest fees. The 15.5% is on your booking subtotal, excluding taxes. It's on the whole price the guest pays. Now, the math isn't as straightforward as you might think it is. If you're simply going to multiply your total reservation amount by 1.155, so that would be the additional 15.5%, then you're still falling behind where you were before. In fact, you'd be earning about 1.3% less than you were previously, so the correct math is an 18.34% markup. This is the same number my team and I applied around a year ago when we made this change. It's the same change you need to apply if you haven't already done it. So let's give an example here on your cleaning fee. Let's just imagine that you had $150 cleaning fee. You used to pay 3%. It's always been charged on your cleaning fee. It's just a much higher fee now. That would have been $4.50 out of your cleaning fee that you paid to Airbnb. Now if you do nothing, if you don't mark up your cleaning fee, and Airbnb starts to charge you 15.5%, well now you're going to be paying Airbnb $23.50 just out of that $150 cleaning fee. So you need to make sure that you're adding this markup, 18.34%, to all of the fees that are applicable to the guest reservation. Now if you started in Airbnb sometime in the last year, and you added your property to a property management software platform, like HostAway or Guesty or Hospitable, well then you're going to need to add this in a channel markup. So your PMS system is pushing its prices to Airbnb and hopefully the other platforms as well, right? booking.com, VRBO, Google, et cetera. So you need to make sure that the channel markup is not directly in Airbnb, but it's in your PMS. That way, you're distributing the same prices across the different platforms. You can, of course, charge higher markups in different platforms if you want, but that's really a topic for another episode. So if you've, over the last year, been a single individual host on Airbnb, not on other platforms, and you've since joined a PMS, and you don't have these markups in place, make sure you get it in there, but make sure that you also add it on top of the cleaning fee and those extra guest fees, because if your property management software is like ours, those are not all combined. They're separated out, and they all need their own calculation. Now, you might be thinking, Tim, if I raise my rate over 18%, isn't that just going to tink my bookings? Well, no, because the amount that your guest is paying is essentially the same price. Remember, they used to pay around roughly 14%, and you paid roughly 3%, now you're paying 15.5%.