Airbnb is undoubtedly one of the biggest travel startups to emerge in recent years. It’s an attractive option because anybody can become an Airbnb host via the platform.
There’s no denying Airbnb is a great platform for finding guests to fill your vacation property. It’s worldwide, it’s simple to use and requires little time or effort to set up at a very low cost – or so we all believe. But what’s the real cost of running an Airbnb?
- Are You Rental-Ready?
- Have You Covered Your Bases?
- Are You Prepared for the Time Commitment?
- What Are the Service Costs Involved?
Are You Rental-Ready?
Whether your offerings are simply a spare bedroom or a whole fleet of luxury beachfront condos, Airbnb has more than six million listings worldwide and has welcomed over 500 million guests to their properties.
However, is your vacation home rental-ready for Airbnb?
Your home might be perfect for you, but your guests might not share the same tastes. So some redecorating is usually needed to optimize it for stays. Even if you’re just renting out a spare room, you may need to invest in a sturdy bed frame, mattress and decorating. Everything should be perfect and new because you’re competing with other Airbnb hosts in your local area.
Even if you aren't looking to become a super host, there's basic equipment you need to invest in, such as:
- Digital keyless entry system.
- Reliable WiFi.
- Extra towels.
- Toiletries such as toilet paper and soap.
- Pantry essentials such as sugar, salt, pepper and condiments.
Of course, these are just the basics as you could provide many more amenities from ironing boards to jacuzzis. If you aren’t in a hotspot or popular vacation destination, you might even have to invest in amenities like pools to entice those that want to stay in the thick of it.
When you’re finally ready, you’ll also need to invest in a photography session to capture your vacation home in its best light. It’s important to keep in mind that you’ll need to put in time and money to successfully prepare your vacation home for rent through Airbnb.
Have You Covered Your Bases?
Forget kitting out your place with nice toiletries. You’ll also need to put some time aside to research whether it’s actually legal to host and the requirements you’ll need to meet. For example, some hosts will find they need to visit their local city hall to fill out some paperwork and some condominiums won’t allow vacation or short term rentals.
More often than not, you'll need to inform the city that you’re renting out your space. While you could perhaps bypass this and welcome guests without doing this step, it may later cause headaches. Be sure to check not only local laws but also rules enforced by HomeOwner’s’ Associations, for example.
To cover your new venture, you’ll need to purchase some short-term rental insurance. It can be extremely difficult and costly in some situations to get adequate insurance. Instead, you might go down the route of thoroughly screening your potential guests and asking for a security deposit.
Are You Prepared for the Time Commitment?
For every guest you book, you have conversations with five others. It’s inconvenient to manage bookings yourself, especially if you’re a working professional.
You’ll also be responsible for replenishing your toiletries and cleaning unless you outsource this to a housekeeper. For quick turnarounds, a cleaning service might be the better option. However, these all eat into your earnings.
Don’t forget to factor in upkeep costs and ongoing maintenance. Even if it’s just simple wear and tear, you’ll need to attend to it.
What Are the Service Costs Involved?
Airbnb states that to run smoothly and cover the services they provide, like 24/7 customer telephone support, they charge a service fee when a booking is confirmed.
They have two different service fee structures for booking a place to stay: a shared host and guest fee and a host-only fee.
Shared Host and Guest Fee
If you prefer the traditional Airbnb fee model, you choose to stick to the “shared host and guest fee” set-up.
In this case, hosts are subject to a charge of 3% or more (automatically deducted from the booking payout amount) every time a booking is finalized. At the same time, guests who reserve accommodation must also pay up to 13% in service fees - on top of their booking total. This can put a lot of guests off.
The exact fee is calculated using different factors such as booking amount and stay duration. It’s also important to note that having some specific listing characteristics will require guests to pay a higher service fee. Guests can review this fee on the checkout page before they book a reservation.
Depending on the laws of the jurisdiction involved, VAT may also be charged on top of the host and guest service fee.
The recently implemented Airbnb host-only fee is now the norm whenever somebody creates a new Airbnb account. Existing accounts can choose to activate it as well. This means the host pays the entire fee and guests are no longer charged additional costs on top of their booking total.
The minimum host-only fee starts at 14% and can potentially increase to 20%. Additionally, a 2% fee may be added if the host has a Super Strict cancellation policy.
An Airbnb is undeniably a good way to get bookings for your vacation rental. However, there are more convenient ways emerging that make vacation homeownership and rental a breeze.
Owning a Vacation Home in a Condo Hotel Resort Makes Vacation Rental Hassle-Free. Want to Learn More?
Renting out your vacation home can be simple. Forget managing guests and exhausting yourself with cleaning, and take a look at our guide ‘Why Bermudiana Beach Resort?’. It will help you understand how much easier vacation rental can be.
From our relationship with prestigious hospitality giant Hilton to how our condos make great vacation rental properties, you can find it all in this guide. Click below to get access and start your journey.