1 00:00:01,920 --> 00:00:06,400 Speaker 1: Welcome to brain Stuff production of I Heart Radio. Hey 2 00:00:06,440 --> 00:00:10,920 Speaker 1: brain Stuff, Lauren Vogelbaum here. If you've used a travel 3 00:00:10,960 --> 00:00:15,280 Speaker 1: rental service like Verbo or Airbnb recently, it's possible you 4 00:00:15,280 --> 00:00:17,640 Speaker 1: were hit with a bit of sticker shock at booking time. 5 00:00:18,239 --> 00:00:21,200 Speaker 1: The nightly rental fee is but one part of the equation, 6 00:00:21,480 --> 00:00:25,319 Speaker 1: with cleaning fees, service fees, and occupancy taxes jacking up 7 00:00:25,360 --> 00:00:27,880 Speaker 1: the bill big time by hundreds of dollars per night 8 00:00:27,920 --> 00:00:31,560 Speaker 1: in some cases, and since these other fees aren't added 9 00:00:31,600 --> 00:00:34,080 Speaker 1: until the end of the checkout process, they can come 10 00:00:34,080 --> 00:00:36,800 Speaker 1: as a nasty surprise to renters who feel they were 11 00:00:36,880 --> 00:00:41,720 Speaker 1: lured in by the low nightly rental fee. This change 12 00:00:41,840 --> 00:00:44,159 Speaker 1: is partially due to changes in the way these services 13 00:00:44,200 --> 00:00:47,960 Speaker 1: are being used. Not that long ago, vacation rentals found 14 00:00:47,960 --> 00:00:52,400 Speaker 1: through these services were intended for backpackers, broke college students, 15 00:00:52,440 --> 00:00:55,560 Speaker 1: and people who otherwise needed places cheaper than hotels to 16 00:00:55,680 --> 00:00:59,360 Speaker 1: crash for a few days or months. Often this involved 17 00:00:59,360 --> 00:01:01,920 Speaker 1: a little more than a bedroom bathroom combo and then 18 00:01:02,000 --> 00:01:07,319 Speaker 1: otherwise occupied home or a temporarily unoccupied apartment. Though such 19 00:01:07,360 --> 00:01:11,319 Speaker 1: rentals are certainly still available, the model has changed tremendously. 20 00:01:14,080 --> 00:01:18,080 Speaker 1: Business Insider article reported that Airbnb's average daily rates had 21 00:01:18,080 --> 00:01:23,440 Speaker 1: grown by thirty in the first quarter compared to and 22 00:01:23,480 --> 00:01:26,480 Speaker 1: as we'll see, daily rates affect all the other charges 23 00:01:26,520 --> 00:01:29,640 Speaker 1: down the line. Too. Many the fees are anything but 24 00:01:29,760 --> 00:01:33,000 Speaker 1: clear cut. Here's a breakdown of feeds you can expect 25 00:01:33,000 --> 00:01:37,600 Speaker 1: to pay. First, there are those nightly fees. These are 26 00:01:37,600 --> 00:01:39,880 Speaker 1: set by the rental host, each of whom has a 27 00:01:39,920 --> 00:01:42,840 Speaker 1: slightly different way of setting the price. For the article, 28 00:01:42,840 --> 00:01:45,240 Speaker 1: this episode is based on how Stuff Works spoke with 29 00:01:45,280 --> 00:01:48,680 Speaker 1: Aaron Turner, who uses both Airbnb and Verbo to rent 30 00:01:48,720 --> 00:01:52,240 Speaker 1: her cabin in Tennessee. She said, I know what my 31 00:01:52,320 --> 00:01:54,880 Speaker 1: break even point is for the year, and that gives 32 00:01:54,960 --> 00:01:56,760 Speaker 1: me a base rate I have to charge per night 33 00:01:56,840 --> 00:02:00,120 Speaker 1: at so many nights rented per year. From there, I 34 00:02:00,120 --> 00:02:02,160 Speaker 1: have to determine what portion of the rate will go 35 00:02:02,200 --> 00:02:06,000 Speaker 1: to online booking agents Airbnb, Verbo, trip Advisor, booking dot 36 00:02:06,000 --> 00:02:10,400 Speaker 1: Com per night and account for that when pricing the room. 37 00:02:10,440 --> 00:02:14,360 Speaker 1: She also factors in the costs of maintenance, utilities, booking software, 38 00:02:14,400 --> 00:02:19,680 Speaker 1: insurance permits, and other normal business expenses. Then there are 39 00:02:19,760 --> 00:02:23,560 Speaker 1: cleaning fees. These are also set by hosts and typically 40 00:02:23,600 --> 00:02:26,080 Speaker 1: are the same per length of stay whether you rent 41 00:02:26,120 --> 00:02:29,919 Speaker 1: for one night or seven, so cost efficiency really depends 42 00:02:29,960 --> 00:02:34,400 Speaker 1: on the rental period. Enhanced five step and more expensive 43 00:02:34,440 --> 00:02:38,799 Speaker 1: cleaning protocols necessitated by COVID nineteen have made these more expensive, 44 00:02:39,280 --> 00:02:42,720 Speaker 1: and of course professional cleaning rates vary widely by location 45 00:02:42,880 --> 00:02:46,359 Speaker 1: and the size of the rental. And next, there are 46 00:02:46,480 --> 00:02:49,320 Speaker 1: service fees meant to cover many of the costs of 47 00:02:49,480 --> 00:02:53,720 Speaker 1: operating these services. On its website, Airbnb explains that it 48 00:02:53,760 --> 00:02:56,960 Speaker 1: generally charges guests a fee that's less than fourteen point 49 00:02:57,040 --> 00:02:59,960 Speaker 1: two percent of the total nightly fee plus the cleaning 50 00:03:00,080 --> 00:03:04,560 Speaker 1: fee plus any additional guest fees. That's up dramatically from 51 00:03:04,680 --> 00:03:08,040 Speaker 1: six point six percent as of and it can go 52 00:03:08,080 --> 00:03:12,200 Speaker 1: as high as eighteen percent. The hosts themselves are generally 53 00:03:12,280 --> 00:03:15,000 Speaker 1: charged in additional three to five percent fee as well, 54 00:03:15,280 --> 00:03:19,880 Speaker 1: which mostly discovers the costs of credit card processing. Verbo 55 00:03:20,080 --> 00:03:23,200 Speaker 1: has a similar service fee structure of roughly nine to 56 00:03:25,040 --> 00:03:28,200 Speaker 1: how staff works also spoke with Verbo representative Alison Quong. 57 00:03:28,840 --> 00:03:32,720 Speaker 1: She explained verbos traveler service fee varies depending on the 58 00:03:32,760 --> 00:03:36,000 Speaker 1: cost of the booking. Generally, the higher the reservation amount, 59 00:03:36,160 --> 00:03:40,240 Speaker 1: the lower the percentage of the fee. Additional fees like 60 00:03:40,320 --> 00:03:42,840 Speaker 1: pet fees may apply as well, depending on the specific 61 00:03:42,840 --> 00:03:48,400 Speaker 1: circumstances of your rental. But finally, there are local lodging taxes. 62 00:03:48,880 --> 00:03:51,120 Speaker 1: These are added to the bill where there are laws 63 00:03:51,160 --> 00:03:55,480 Speaker 1: requiring vacation rentals to pay tax. How staff Works also 64 00:03:55,480 --> 00:03:58,720 Speaker 1: spoke via email with vacation rental industry expert T bout 65 00:03:58,760 --> 00:04:02,520 Speaker 1: Mason with rentals ail up dot com. He said, a 66 00:04:02,560 --> 00:04:05,280 Speaker 1: few years ago, a lot of hosts were forgetting to 67 00:04:05,360 --> 00:04:07,960 Speaker 1: pay local taxes. They were supposed to take them out 68 00:04:07,960 --> 00:04:10,760 Speaker 1: of their Airbnb revenues and transfer them to the local 69 00:04:10,760 --> 00:04:14,960 Speaker 1: tax authorities. Under the pressure of municipalities, Airbnb has started 70 00:04:14,960 --> 00:04:18,120 Speaker 1: collecting taxes directly from guests and sending the money to 71 00:04:18,240 --> 00:04:21,720 Speaker 1: tax authorities, So guests may also see an increase in 72 00:04:21,760 --> 00:04:24,880 Speaker 1: the overall cost of their Airbnb as things are done 73 00:04:24,920 --> 00:04:29,520 Speaker 1: more legally these days. These occupancy taxes are not set 74 00:04:29,560 --> 00:04:32,120 Speaker 1: by the service, but by the local government. They are 75 00:04:32,200 --> 00:04:34,760 Speaker 1: often the same rates that apply to hotels in the area. 76 00:04:36,600 --> 00:04:39,320 Speaker 1: So with all of these fees in place, would it 77 00:04:39,360 --> 00:04:42,440 Speaker 1: be cheaper overall to go to a hotel as opposed 78 00:04:42,480 --> 00:04:46,280 Speaker 1: to a vacation rental And that depends a study by 79 00:04:46,320 --> 00:04:49,719 Speaker 1: Inner city bus company Bus bud found that airbnb prices 80 00:04:49,800 --> 00:04:52,520 Speaker 1: were better than hotels in seven of the twelve US 81 00:04:52,560 --> 00:04:55,560 Speaker 1: cities and in eight of the nine European cities it 82 00:04:55,640 --> 00:04:58,839 Speaker 1: looked at. So the short answer there is to do 83 00:04:58,960 --> 00:05:02,000 Speaker 1: your research, take into consideration that the type of hotel 84 00:05:02,240 --> 00:05:04,279 Speaker 1: and the type of rental you're looking at may not 85 00:05:04,360 --> 00:05:09,080 Speaker 1: be directly comparable. Unfortunately, there are some ways to save 86 00:05:09,320 --> 00:05:13,040 Speaker 1: or at least make the most informed choice possible. How 87 00:05:13,080 --> 00:05:16,080 Speaker 1: Stuff Works also spoke with Ann Cross, owner and operator 88 00:05:16,120 --> 00:05:19,680 Speaker 1: of two Airbnb rentals. She said the way to beat 89 00:05:19,720 --> 00:05:22,839 Speaker 1: the system is to essentially ignore the nightly rates posted 90 00:05:22,839 --> 00:05:26,200 Speaker 1: on an Airbnb listing and look instead at the overall rate. 91 00:05:27,560 --> 00:05:30,640 Speaker 1: This is because Airbnb at least gives higher ranking to 92 00:05:30,800 --> 00:05:34,799 Speaker 1: properties that use their recommended pricing format, which is often 93 00:05:34,960 --> 00:05:37,479 Speaker 1: much less than what the market calls for. She says. 94 00:05:38,120 --> 00:05:40,240 Speaker 1: These hosts may then make up for the loss of 95 00:05:40,240 --> 00:05:44,920 Speaker 1: revenue by charging exorbitant cleaning fees. Across said the key 96 00:05:45,000 --> 00:05:47,760 Speaker 1: if you're looking for an affordable Airbnb is to plan 97 00:05:47,880 --> 00:05:50,520 Speaker 1: to spend some time browsing properties and skip to some 98 00:05:50,560 --> 00:05:53,440 Speaker 1: of the properties further in the results. They may be 99 00:05:53,520 --> 00:05:56,440 Speaker 1: a better overall deal, but because they're not playing the 100 00:05:56,520 --> 00:05:58,880 Speaker 1: rate game, you won't necessarily see them in the top 101 00:05:58,920 --> 00:06:03,040 Speaker 1: search results. Another way to save can be by cutting 102 00:06:03,040 --> 00:06:06,279 Speaker 1: out the middleman and booking directly through the rental property, 103 00:06:06,520 --> 00:06:08,680 Speaker 1: although you'll have to seek out its website or phone 104 00:06:08,760 --> 00:06:11,440 Speaker 1: number on your own, and the booking may not come 105 00:06:11,440 --> 00:06:17,000 Speaker 1: with services comparable to what companies like Verbo and Airbnb guarantee. Again, 106 00:06:17,200 --> 00:06:19,240 Speaker 1: be prepared to do some leg work and make sure 107 00:06:19,279 --> 00:06:27,360 Speaker 1: you're comparing apples to apples. Today's episode is based on 108 00:06:27,400 --> 00:06:31,080 Speaker 1: the article why have Airbnb and Verbo prices suddenly skyrocketed? 109 00:06:31,160 --> 00:06:33,479 Speaker 1: On how stuff works dot Com, written by A. Leah Hoyt. 110 00:06:33,960 --> 00:06:36,240 Speaker 1: Brain Stuff is production by Heart Radio and partnership with 111 00:06:36,279 --> 00:06:38,720 Speaker 1: how stuff Works dot Com and is produced by Tyler Clay. 112 00:06:39,279 --> 00:06:41,920 Speaker 1: For more podcasts my heart Radio, visit the I heart 113 00:06:41,960 --> 00:06:44,640 Speaker 1: Radio app, Apple Podcasts, or wherever you listen to your 114 00:06:44,680 --> 00:06:45,440 Speaker 1: favorite shows.