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Airbnb Streamlines Fees As It Tilts Towards Biggest Hosts

Published on Dec 9 2020 1:04 PM in Hotel tagged: Airbnb

Airbnb Streamlines Fees As It Tilts Towards Biggest Hosts

Airbnb is requiring most professional hosts outside of North America to include all service fees in the rate presented to guests, which is a move that mirrors how rival platforms operate.

Airbnb will require hosts who use third-party software to manage bookings to eliminate the "service fee" paid by guests that is traditionally tacked on to the listing price. Instead, hosts will pay a standard fee of 15%, up from the typical 3% they are assessed now.

Hosts interviewed by Reuters said that they expect that most will raise their listed prices to account for the larger host fee, making the change cost-neutral for most guests and for Airbnb. But hosts with fewer properties expressed some concerns.

The new fee structure comes as the San Francisco-based home rental platform prepares to sell shares in its initial public offering this week. Airbnb said that early tests show the simplified pricing helped to drive 17% more bookings.

"Following feedback from hosts we recently introduced a simplified host-only fee structure for professional hosts who connect to our API in certain countries," Airbnb spokesperson Christopher Nulty said. "Our fee structure for individual hosts remains unchanged."

The change will not impact individual hosts on Airbnb who do not use third-party software to manage listings. Airbnb said in a statement to Reuters that the move is based on feedback from hosts in an effort to make pricing "effortless."

The fee change has been communicated to professional hosts but not reported widely.

Airbnb began with hosts renting out air mattresses in their homes. A former Airbnb host acquisition specialist told Reuters that "individual hosts are good for PR." But hosts managing hundreds or thousands of properties drive an outsized portion of revenue. As of the end of September, 10% of Airbnb's hosts were professional managers, and they accounted for 28% of nights booked, according to Airbnb's IPO filings.

Management software platform Uplisting's CEO, Vincent Breslin, said that hotels and professional managers of multiple properties have asked for the change to make it easier to list across different platforms with one sticker price.

"Having fee parity across all platforms is a benefit to all," said Ryan Danz, CEO of Air Concierge Inc., which manages approximately 500 properties. "It makes a better apples-to-apples comparison for the traveler if they find the same home listed on various websites."

But some smaller property managers are worried that the change could hurt them if they can't raise prices enough to cover the increased host fee.

Airbnb already gave itself a black eye with many hosts when it made them issue refunds for cancellations caused by the global pandemic. It now faces a class action suit and hundreds of arbitration cases stemming from that.

Johnny Buckingham, who manages nine listings on Airbnb across the United States, said that he would not want to raise his listing price to cover the increased host fee and believes Airbnb is discouraging hosts from using software to cross-list on other platforms.

"They've made their message clear. Stick exclusively with us or pay us 5x as much," he said. 

Airbnb denied that the move targets hosts using third-party software, saying that the fee change is available "on a test basis" and will help hosts control pricing across platforms. "If hosts are already pricing consistently and want to maintain their earnings, they can adjust their prices so their earnings stay the same and guests will pay the same price as before," a spokesperson at Airbnb said.

Sarah DuPre, sales director at AirDNA, an analytics firm that specialises in vacation rentals, said that the move will have a minimal impact on host retention but could impact Airbnb's "ability to be seen as the most economical source of accommodation."

"They Don't Need Us As Much Anymore"

Rowan Clifford, who helps Airbnb hosts improve visibility of their listings and is also a host, predicted in a blog post two years ago that host fees would go up as hosts become reliant on Airbnb. He expects individual hosts will eventually also see a fee hike and said that smaller hosts could face price competition from professionally managed listings that don't raise prices to cover the increased host fee. He stated, "They don't need us as much anymore, basically."

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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