Airbnb Host-Only Fee | What to Know about the 15% Host Fee

Did you know that listings using Airbnb’s Simplified Pricing structure saw up to a 17% increase in bookings during its test phase? Understanding and adapting to Airbnb’s service fee options could be the key to maximizing your earnings as a host or property manager. 

Here’s a look at the details of Airbnb’s fee structures, how they impact your bottom line and how to make the best choice for your Airbnb business model.

Understanding Airbnb's Fee Structures

Airbnb currently offers two main fee structures for hosts:

1. Split-fee Pricing: Here, the host pays a 3% service fee, while the guest gets charged a service fee that ranges from 13% to 20%. This means guests often see a higher price at checkout than what’s initially shown in the listing.

2. Simplified Pricing: In this model, the host pays a flat 15% service fee and there’s no additional service fee for the guest. What the guest sees on the listing is exactly what they pay—no surprises.

Who Is Required To Have Mandatory Simplified Pricing?

Since December 7, 2020, Airbnb has mandated certain hosts to adopt Simplified Pricing.

Here’s who is affected:

1. Hosts connected to third-party software

If your Airbnb account is linked to vacation rental software like Hostaway, you’re required to use Simplified Pricing.

2. Certain types of listings

If you’re managing traditional hospitality properties, such as apart-hotels, hostels or serviced apartments, Simplified Pricing is mandatory.

3. Hosts in specific countries

If the majority of your listings are outside of the U.S., Canada, Taiwan, Argentina, Mexico and a few other countries, you’ll need to use Simplified Pricing.

How to Decide Which Model to Use

If you have the option to choose between Split-fee and Simplified Pricing, how do you decide? It depends on your situation. 

• Guest perception and booking rates: If your guests are price-sensitive or often abandon their booking at checkout due to unexpected fees, Simplified Pricing makes your listing more attractive and increases bookings.

• Earnings per booking: Prefer to keep a higher percentage of your booking amount? The Split-fee model might be for you, especially if your guests don’t mind seeing a service fee at checkout.

• Long-term stays: If you host a lot of long-term bookings, the Split-fee model could be more profitable due to lower guest service fees on extended stays.

• Competitive markets: In highly competitive markets, Simplified Pricing might give you an edge by offering the guest a lower total cost upfront.

• Software integration: If you’re using vacation rental software like Hostaway, you might not have a choice—you’ll need to go with Simplified Pricing.

Analyzing the Impact on Hosts

Switching to Simplified Pricing can feel like a big change, especially if you're used to the traditional Split-fee model. 

Here’s how it might impact your operations,

• Control over guest pricing: One major advantage of Simplified Pricing is that you control the final price guests see. This can make your listing more appealing, as there’s no surprise service fee added at checkout, which might encourage more bookings.

• Price perception and competitive positioning: While you have more control over the final guest price, keep in mind that your nightly rate might appear higher compared to competitors using the Split-fee model. It’s important to adjust your pricing strategy to remain competitive.

• Impact on long-term stays: If you often host long-term guests, Simplified Pricing could be less advantageous. The host pays a fixed 15% fee, regardless of the stay length, which could cut into your profits for extended bookings.

Pros and Cons of Simplified Pricing

Pros

• Increased bookings: Airbnb reported that properties using Simplified Pricing during its test phase saw up to a 17% increase in bookings. The transparent pricing can make your listing more appealing.

• Pricing parity: Simplified Pricing brings Airbnb in line with other booking platforms like Booking.com, which don’t add a separate service fee for guests. This can make your property more competitive across platforms.

• Enhanced guest experience: Guests appreciate knowing the exact price upfront, with no additional fees at checkout. This clarity can lead to better reviews and more repeat business.

Cons

• Higher visible rates: With the service fee included in the listing price, your nightly rate might look higher, which could deter price-sensitive guests or raise their expectations for the accommodation quality.

• Less flexibility for long-term stays: As mentioned earlier, the fixed 15% fee may not be as favorable for longer stays, whereas the traditional model offers lower service fees.

• Adjustment required: Moving to Simplified Pricing might require you to adjust your rates to keep your earnings consistent. This could mean raising your base price or adding extra fees, like cleaning fees.

Comparing the Pricing Models: Split-Fee vs. Simplified Pricing

To get a clear picture, let’s break down an example of a 4-night stay at $100 per night, assuming a 16% service fee.

As the table shows, if you want to keep your earnings steady with Simplified Pricing, you’ll probably need to raise your rates by about 14%. If you bump them up by 15%, you might even earn a bit more, while the guest’s total cost stays the same.

Which Fee Structure is Better at the End of the Day?

Deciding which fee structure is better for your vacation rental business really comes down to your specific needs and market conditions. 

Here’s a quick comparison: 

Solutions to potential issues

While the 15% host fee structure presents some challenges, particularly regarding earnings and profit margins, there are effective strategies to mitigate these concerns:

• Earnings per booking: Use Hostaway’s dynamic pricing tools to adjust your rates in real time. This ensures your pricing remains competitive while covering the 15% fee, helping you maintain profitability without deterring guests.

• Booking rate: Highlight the all-inclusive pricing in your listing description so guests know there won’t be any hidden fees. This transparency can make your property more appealing, especially in competitive markets.

• Guest perception: Use Hostaway’s guest communication tools to emphasize your pricing transparency. This can lead to better reviews and repeat business, as guests appreciate knowing they are getting good value with no surprise fees.

• Competitiveness: Stay ahead of the competition by using Hostaway’s competitive analysis tools to monitor local pricing trends. This will help you adjust your pricing in real-time, ensuring your listing remains attractive in your market.

• Price sensitivity: Hostaway’s dynamic pricing feature lets you fine-tune your rates based on market demand, helping you stay competitive while ensuring profitability. This is especially important in price-sensitive markets.

• Tax implications: Simplify your tax reporting by using Hostaway’s financial reporting tools, which provide detailed breakdowns of earnings and fees, making it easier to manage your finances.

• Long-term viability: Regularly assess your market with Hostaway’s analytics to ensure that the Simplified Pricing model continues to meet your financial goals. Staying informed about market trends allows you to adapt your strategy as needed.

• Search ranking & visibility: Use ranking management tools to boost your visibility in Airbnb’s search results. This can help you capitalize on the benefits of Simplified Pricing, ensuring your listing remains prominent and attractive to potential guests.

• Impact on profit margins: Protect your margins by using Hostaway’s revenue management tools to strategically adjust your pricing and occupancy rates. These tools help you maximize your earnings, even with the 15% fee.

Hostaway Advantage in Navigating Airbnb’s Fee Changes

For hosts, the 15% host fee is a solid option in competitive, price-sensitive markets where lower costs drive higher bookings. Hostaway’s suite of tools makes managing this structure easier, helping you maintain profitability and guest satisfaction. Alternatively, the traditional split-fee model offers higher earnings per booking and greater pricing flexibility, which Hostaway’s advanced features can optimize for established hosts in less price-sensitive markets.

With Hostaway, the Simplified Pricing model integrates seamlessly, automating rate adjustments and keeping your listings competitive with minimal effort—ideal for managing multiple properties. New users will also find it easy to adapt to Airbnb’s fee structure, thanks to Hostaway’s intuitive platform and robust analytics that maximize earnings.

Ultimately, choosing between the two models should depend on your market conditions, guest demographics and financial goals. Hostaway equips you with the tools to navigate these changes effectively, ensuring your vacation rental business remains competitive and profitable.