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Airbnb: Pay or charge? This is the dilemma

Airbnb: Pay or charge? This is the dilemma

A doubt has arisen in the minds of Airbnb’s hosts, pay or charge?

As of June 4 2019, Airbnb has launched its new commission scheme intended primarily for property managers; this change, to be considered epochal, is increasingly bringing Airbnb closer to other online booking platforms.

Airbnb pricing model

The platform is born with the revolutionary idea of ​​splitting the compensation between the host and the guest. The commission, ranging from 3% to 5% for landlords and from 14% to 20% for travellers, is applied to the mother rate provided by the listing owner. Therefore if a landlord publishes a price per night of 100 Euros, he receives from the portal a net rate between 95 and 97 Euros, varying according to the cancellation policy chosen. The guest instead pays a rate that varies between 114 and 120 Euros.

What changes?

From 4 June, hosts have the option of choosing whether to stay with the old model, or whether to switch to the new system which provides for a fixed commission of 14% paid entirely by the landlord.

What is the reason of this change?

Airbnb, in a statement sent to the hosts at the end of May, claims to have tested the new tariff model (14%) “on a number of hosts at global level” and “to have found a considerable increase in bookings in some regions for the hosts that have adopted it “.

According to Airbnb, the statement continues, “Many hosts have expressed their difficulty over having full control over the price shown to guests over time” so “we created the new pricing model to solve this problem and offer hosts the possibility of a major control”.

In this way, Airbnb is convinced that it can compete better with the main OTAs, and open up more and more to the hotel market.

Is the new plan available to all hosts?

At the moment the choice is reserved only for those who use a channel manager, or an ad management software linked to multiple portals.

Advantages and disadvantages

At first glance it would seem an easy choice by the host; why change a model that works and above all why take on a higher fee?

However, if we look at it in detail, we soon realise that the new model is more advantageous for both the host and the guest. Let’s see how.

We assume that you want to collect a net fee of 100 Euros per night for your property; with the original Airbnb system you should enter a price between 103 and 105 Euros. Your host would pay between 117 and 126 Euros.

With the new model, to get a net rate of 100 Euros, it is necessary to enter on the portal a rate comprising Airbnb’s 14% commission; the result is around 116 Euros.

The actual rate is lower than what the guest would pay with the old system.

Service fees covered by the host

 

Something that particularly needs to be mentioned is the choice made by the platform to “reward” those who choose the new plan.

Airbnb, starting from June 4th, highlights the hosts that decide to absorb the entire cost of the service fee.

On the ads the hosts are rewarded with the display of zero service costs, as well as a special mention to the host who “covers the service for their guests”.

Those who stay with the old system, whether by choice or because they do not have a channel manager, will be forced to compete with ads from hosts that give an all-inclusive price.

A look at the future

The new Airbnb business model is certainly an important step of the platform towards the hotel system. The logical consequence is that more and more hotels will become part of Airbnb.

Staying with the old system risks penalising hosts too much due to the loss of competitiveness.

Fans of the original Airbnb model, who made the fortunes of the platform, will feel like betrayed lovers. However Airbnb’s decision is understandable in order to keep up with the times and be ready for the confrontation with other sector’s giants.

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Marc Partiti

Experienced Property and Revenue Manager, with strong background in Business Administration. Born in the UK, I spent over 20 years in Italy. In 2007 I moved to Thailand where I’m currently living.

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