September 17, 2015

To Fee, or Not To Fee? A Discussion on Airbnb Fees in the Vacation Rental Industry:

Hated fees have started making an appearance in the vacation rental industry, and this is the reason why:

Recently, travel companies of all sorts have been receiving backlash for “hate-selling” to their customers. The term, coined by Skift’s Rafat Ali, “came out of my frustration of juggling between horrendously designed car rental booking sites, being hit with all kinds of surcharges for booking on, over-aggressive upsell on airline sites…to being bombarded with ‘buy-now-or-else’ false-sense-of-urgency prompts on online booking sites.”

In his article, Ali called for the disruption of industries that use such tactics to “hate-sell” to their customers, and recently USA Today published a similar piece regarding the rise of fees associated with vacation rentals. While the article criticized the vacation rental industry as quickly becoming “the most fee-happy segment of the travel industry,” the reality is that these fees are not meant to “hate-sell.”

In response to the USA Today article, professional managers and vacation rental homeowners jumped to defend fees as existing solely to cover costs and maintain competitive pricing. Some pointed out that with hotels, additional charges like resort, parking, and internet access fees are the norm and often expected. Andrew McConnell, CEO of, stated, “The reality is that a place to sleep of a certain quality is going to cost a certain amount. How you split that between an all-in cost, or a rental rate plus fees, is just semantics.”

Many in the vacation rental industry argue that fees exist to maintain competitive pricing. As stated in the article, “ recently tested customer pricing preferences on its site and determined that more guests booked a vacation rental when they saw a low base price with the added fees broken out.” Furthermore, with big-booking sites sorting listings based solely on rental rate, it becomes increasingly difficult for rentals that are priced “all-in” to even appear in search results.

Blake MacKenzie of EMR Vacation Rentals also argued for the value of additional fees, saying, “‘To be able to raise $25 in room revenue under a management plan with an owner, this may mean raising your room rates by $75 just to be able to collect an extra $25 (66% to owner 33% to management company). By charging a ‘booking fee’ of some sort, you can help keep the room rates down by only charging a $25 ‘booking fee,’ which means the guest in the end is saving $50.”

While additional fees are often set to maintain competitive pricing, the best practice for managers and homeowners is to maintain transparency and provide additional value. Today’s booking ecosystem may not be the most conducive to transparency under the current sorting system, but with rental fees exploding in the industry, it’s important to know why they exist.

Let us know what you think of additional fees in the comments below:

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