Buying a lake home and renting it out can be a great source of income that can pay for the mortgage and put additional money in your pocket. Listing your home on multiple booking sites like VRBO and Airbnb will get your property in front of as many travelers as possible and help you bring in more revenue. But as the popular saying goes, you have to spend money to make money. Most of these sites charge property owners and their guests’ various fees, so it’s important to understand what these fee structures are before creating your listing.
The most popular fee that most listing sites will charge is a booking fee. They will charge both owners and guests for using their services through a booking fee for reservations. Then, depending on the site, there might be other fees you might need to pay. With all of the fine print, sometimes it’s hard to figure out exactly what these fees will be for sites like Airbnb and Vrbo. This is why in today’s blog post we will break down all the costs and fees for some of the most popular booking sites… This will ultimately help you decide the right path to make sure you’re making the most money out of your lake home rental!
Airbnb’s site is free to post listings… but they collect money when a guest schedules a reservation. The host service fee on Airbnb is 3% for most homeowners, but that fee may be higher if your listing has one of Airbnb’s “Super Strict” cancellation policies (these policies are rare and by invitation only). The company says this service fee is calculated from “the booking subtotal (the nightly rate plus cleaning fee and additional guest fee, if applicable, but excluding Airbnb fees and taxes) and is automatically deducted from the payout to the host.”
You will also end up being charged if you cancel a reservation a guest has booked and you will lose Superhost status! Sometimes Airbnb will waive these cancellation fees (they’ll look at how many times you’ve canceled in the past before waiving your fee). If you cancel on a guest more than seven days before their scheduled check-in, Airbnb subtracts $50 from your following payout. If you cancel on a guest less than seven days before their scheduled check-in, the company gets $100 from your next payout. Whenever you cancel more than seven days before the guest arrives, Airbnb will automatically post a review on the listing that you canceled. When it is less than seven days before the guest arrives, they will give the guest the opportunity to write a review. Having good reviews is essential to ensure your listing gets a full occupancy. If your reviews are full of cancelations, you will look unreliable and a guest is less likely to book your lake home.
When you’re listing your lake home vacation rental property on Vrbo, you have two options for fees. With the subscription model, you pay an annual fee of $499. This fee includes a 12-month subscription to the site and it includes special features like online booking, listing your property on international sites, access to Reservation Manager, 50 HD photos, an interactive map, and a reservation calendar. If you don’t want to pay annually, you can select the pay-per-booking option. This means you’ll just pay for the listings that you book. If you’re only renting out your property during certain seasons or for special events in your city, this could be a better option for you than the subscription model. These fees start at about 8% per booking but can go up to 10% depending on the reservation.
According to Vrbo, this 8% includes “5% commission charged for the rental amount, any fees (such as cleaning or pet fees), and any additional payments” and “3% credit card/eCheck processing fee charged on the total payment amount you receive from your traveler, including taxes and refundable damage deposits.” They also might charge an extra 2% fee if a non-US credit card is used. With the pay-per-booking model, you get the same inquiry management, calendar, and reservation tools as those with the subscription plan. Also if you require a security deposit, Vrbo will charge a 3% processing fee. That amount is returned to you once you refund the security deposit to your guest.
When it comes to cancellations, you may or may not get your fees back. If you cancel an upcoming guest’s reservation in “accordance with your cancellation policy which gives the traveler a full refund,” all billed fees get refunded. However, if your guest cancels the reservation and gets just a partial refund, your booking and services fees don’t get refunded, but the payment processing fee gets reversed for the amount refunded to the traveler.
Although Booking.com is mainly known for hotel bookings, you are able to list your lake rental property on the site. Although they don’t charge you to list your property, you will have to pay a 10-25% commission rate when a guest books. When it comes to cancellations, you may or may not get your fees back. If you cancel an upcoming guest’s reservation in “accordance with your cancellation policy which gives the traveler a full refund,” all billed fees get refunded. However, if your guest cancels the reservation and gets just a partial refund, your booking and services fees don’t get refunded, but the payment processing fee gets reversed for the amount refunded to the traveler.
TripAdvisor offers 2 ways to list your property. You can create a “free” listing or an “annual” listing, and both have different fee structures. For free listings, owners pay a 3% booking fee for each reservation. For annual listings, owners pay an annual fee to the site for each property. With this type of listing, you can choose to accept payment directly from guests or through TripAdvisor. For all payments done through TripAdvisor, the site charges a 3% processing fee.
Property owners who use the free listing feature also get access to free tools, like a property page editor, review management, marketing tools, and TripAdvisor insights. Annual members get all of the free tools in their membership, as well as business advantage tools, instant booking, and sponsored placements.
Guests will also pay a booking fee while renting your home that can range from 8-16% of the total cost of the rental, but it can be lower in some cases. If you would like to charge guests a cleaning fee or any other optional fees, you have that option when you’re creating your listing.
Using a Property Manager-
If you prefer to have a more hands-off approach of managing your lake home rental, then choosing a property manager may be right for you. Using a property manager means you won’t have to pay for each site individually, rather they may charge a Variable Booking Fee” for each listing. This is a fee that the guest pays in order to cover the fees on booking sites like Airbnb, Vrbo, TripAdvisor, Booking.com, and more.
The fee percentage can change depending on several factors such as the listing site, the demand of the home based on the market, the time frame when the reservation was made, and more. Varying the fee like this helps improve conversion rates at your property for close-in and shoulder-season bookings. No matter the percentage, the fee will always be paid by the guest staying in your home and will cover your entire cost of Homeowner Agency Fees regardless of the source of the booking.
Your property manager will also charge you for the overall management of your property and the services they provide. A good property manager will obviously help you with marketing and listing your property, but they typically offer other services too that are included in the fees you pay them. For example, if you need a new rental permit for your home or if you need to upgrade your living room furniture, a great manager can offer suggestions and assistance to help you get the most out of your rental.
Property managers can also require a restocking fee. When you pay this fee, you don’t have to be responsible for managing and maintaining all the supplies in your home. The property manager is responsible for supplying all new guests with the essentials, like a couple of rolls of toilet paper per bathroom, a roll of paper towels, soap, shampoo and conditioner, and dish soap. This fee is typically determined based on the size of your home (larger homes need more supplies).
Choosing the right site to list your Lake Vacation Rental-
With all these different fees, it can feel overwhelming to decide which site is best to post your listings on because it is your money after all. By listing your property across several different sites, you’ll also have to pay many of the fees mentioned above depending on which ones you ultimately choose. It is recommended to sit down and calculate how much you would be paying in fees if you list on these sites individually versus how much you would pay if you used a property manager who could handle all of the fees for you (as well as handling the overall management of your rental). After calculating these costs and pros and cons your decision should be a little bit clearer and you will be on the right track to making sure your lake home rental is at full occupancy all year-round!
Posted by Scott Freerksen “The Lake Guy”