WEBVTT - Why Are Airbnb, VRBO Fees Skyrocketing? 0:00:01.920 --> 0:00:06.400 Welcome to brain Stuff production of I Heart Radio. Hey 0:00:06.440 --> 0:00:10.920 brain Stuff, Lauren Vogelbaum here. If you've used a travel 0:00:10.960 --> 0:00:15.280 rental service like Verbo or Airbnb recently, it's possible you 0:00:15.280 --> 0:00:17.640 were hit with a bit of sticker shock at booking time. 0:00:18.239 --> 0:00:21.200 The nightly rental fee is but one part of the equation, 0:00:21.480 --> 0:00:25.319 with cleaning fees, service fees, and occupancy taxes jacking up 0:00:25.360 --> 0:00:27.880 the bill big time by hundreds of dollars per night 0:00:27.920 --> 0:00:31.560 in some cases, and since these other fees aren't added 0:00:31.600 --> 0:00:34.080 until the end of the checkout process, they can come 0:00:34.080 --> 0:00:36.800 as a nasty surprise to renters who feel they were 0:00:36.880 --> 0:00:41.720 lured in by the low nightly rental fee. This change 0:00:41.840 --> 0:00:44.159 is partially due to changes in the way these services 0:00:44.200 --> 0:00:47.960 are being used. Not that long ago, vacation rentals found 0:00:47.960 --> 0:00:52.400 through these services were intended for backpackers, broke college students, 0:00:52.440 --> 0:00:55.560 and people who otherwise needed places cheaper than hotels to 0:00:55.680 --> 0:00:59.360 crash for a few days or months. Often this involved 0:00:59.360 --> 0:01:01.920 a little more than a bedroom bathroom combo and then 0:01:02.000 --> 0:01:07.319 otherwise occupied home or a temporarily unoccupied apartment. Though such 0:01:07.360 --> 0:01:11.319 rentals are certainly still available, the model has changed tremendously. 0:01:14.080 --> 0:01:18.080 Business Insider article reported that Airbnb's average daily rates had 0:01:18.080 --> 0:01:23.440 grown by thirty in the first quarter compared to and 0:01:23.480 --> 0:01:26.480 as we'll see, daily rates affect all the other charges 0:01:26.520 --> 0:01:29.640 down the line. Too. Many the fees are anything but 0:01:29.760 --> 0:01:33.000 clear cut. Here's a breakdown of feeds you can expect 0:01:33.000 --> 0:01:37.600 to pay. First, there are those nightly fees. These are 0:01:37.600 --> 0:01:39.880 set by the rental host, each of whom has a 0:01:39.920 --> 0:01:42.840 slightly different way of setting the price. For the article, 0:01:42.840 --> 0:01:45.240 this episode is based on how Stuff Works spoke with 0:01:45.280 --> 0:01:48.680 Aaron Turner, who uses both Airbnb and Verbo to rent 0:01:48.720 --> 0:01:52.240 her cabin in Tennessee. She said, I know what my 0:01:52.320 --> 0:01:54.880 break even point is for the year, and that gives 0:01:54.960 --> 0:01:56.760 me a base rate I have to charge per night 0:01:56.840 --> 0:02:00.120 at so many nights rented per year. From there, I 0:02:00.120 --> 0:02:02.160 have to determine what portion of the rate will go 0:02:02.200 --> 0:02:06.000 to online booking agents Airbnb, Verbo, trip Advisor, booking dot 0:02:06.000 --> 0:02:10.400 Com per night and account for that when pricing the room. 0:02:10.440 --> 0:02:14.360 She also factors in the costs of maintenance, utilities, booking software, 0:02:14.400 --> 0:02:19.680 insurance permits, and other normal business expenses. Then there are 0:02:19.760 --> 0:02:23.560 cleaning fees. These are also set by hosts and typically 0:02:23.600 --> 0:02:26.080 are the same per length of stay whether you rent 0:02:26.120 --> 0:02:29.919 for one night or seven, so cost efficiency really depends 0:02:29.960 --> 0:02:34.400 on the rental period. Enhanced five step and more expensive 0:02:34.440 --> 0:02:38.799 cleaning protocols necessitated by COVID nineteen have made these more expensive, 0:02:39.280 --> 0:02:42.720 and of course professional cleaning rates vary widely by location 0:02:42.880 --> 0:02:46.359 and the size of the rental. And next, there are 0:02:46.480 --> 0:02:49.320 service fees meant to cover many of the costs of 0:02:49.480 --> 0:02:53.720 operating these services. On its website, Airbnb explains that it 0:02:53.760 --> 0:02:56.960 generally charges guests a fee that's less than fourteen point 0:02:57.040 --> 0:02:59.960 two percent of the total nightly fee plus the cleaning 0:03:00.080 --> 0:03:04.560 fee plus any additional guest fees. That's up dramatically from 0:03:04.680 --> 0:03:08.040 six point six percent as of and it can go 0:03:08.080 --> 0:03:12.200 as high as eighteen percent. The hosts themselves are generally 0:03:12.280 --> 0:03:15.000 charged in additional three to five percent fee as well, 0:03:15.280 --> 0:03:19.880 which mostly discovers the costs of credit card processing. Verbo 0:03:20.080 --> 0:03:23.200 has a similar service fee structure of roughly nine to 0:03:25.040 --> 0:03:28.200 how staff works also spoke with Verbo representative Alison Quong. 0:03:28.840 --> 0:03:32.720 She explained verbos traveler service fee varies depending on the 0:03:32.760 --> 0:03:36.000 cost of the booking. Generally, the higher the reservation amount, 0:03:36.160 --> 0:03:40.240 the lower the percentage of the fee. Additional fees like 0:03:40.320 --> 0:03:42.840 pet fees may apply as well, depending on the specific 0:03:42.840 --> 0:03:48.400 circumstances of your rental. But finally, there are local lodging taxes. 0:03:48.880 --> 0:03:51.120 These are added to the bill where there are laws 0:03:51.160 --> 0:03:55.480 requiring vacation rentals to pay tax. How staff Works also 0:03:55.480 --> 0:03:58.720 spoke via email with vacation rental industry expert T bout 0:03:58.760 --> 0:04:02.520 Mason with rentals ail up dot com. He said, a 0:04:02.560 --> 0:04:05.280 few years ago, a lot of hosts were forgetting to 0:04:05.360 --> 0:04:07.960 pay local taxes. They were supposed to take them out 0:04:07.960 --> 0:04:10.760 of their Airbnb revenues and transfer them to the local 0:04:10.760 --> 0:04:14.960 tax authorities. Under the pressure of municipalities, Airbnb has started 0:04:14.960 --> 0:04:18.120 collecting taxes directly from guests and sending the money to 0:04:18.240 --> 0:04:21.720 tax authorities, So guests may also see an increase in 0:04:21.760 --> 0:04:24.880 the overall cost of their Airbnb as things are done 0:04:24.920 --> 0:04:29.520 more legally these days. These occupancy taxes are not set 0:04:29.560 --> 0:04:32.120 by the service, but by the local government. They are 0:04:32.200 --> 0:04:34.760 often the same rates that apply to hotels in the area. 0:04:36.600 --> 0:04:39.320 So with all of these fees in place, would it 0:04:39.360 --> 0:04:42.440 be cheaper overall to go to a hotel as opposed 0:04:42.480 --> 0:04:46.280 to a vacation rental And that depends a study by 0:04:46.320 --> 0:04:49.719 Inner city bus company Bus bud found that airbnb prices 0:04:49.800 --> 0:04:52.520 were better than hotels in seven of the twelve US 0:04:52.560 --> 0:04:55.560 cities and in eight of the nine European cities it 0:04:55.640 --> 0:04:58.839 looked at. So the short answer there is to do 0:04:58.960 --> 0:05:02.000 your research, take into consideration that the type of hotel 0:05:02.240 --> 0:05:04.279 and the type of rental you're looking at may not 0:05:04.360 --> 0:05:09.080 be directly comparable. Unfortunately, there are some ways to save 0:05:09.320 --> 0:05:13.040 or at least make the most informed choice possible. How 0:05:13.080 --> 0:05:16.080 Stuff Works also spoke with Ann Cross, owner and operator 0:05:16.120 --> 0:05:19.680 of two Airbnb rentals. She said the way to beat 0:05:19.720 --> 0:05:22.839 the system is to essentially ignore the nightly rates posted 0:05:22.839 --> 0:05:26.200 on an Airbnb listing and look instead at the overall rate. 0:05:27.560 --> 0:05:30.640 This is because Airbnb at least gives higher ranking to 0:05:30.800 --> 0:05:34.799 properties that use their recommended pricing format, which is often 0:05:34.960 --> 0:05:37.479 much less than what the market calls for. She says. 0:05:38.120 --> 0:05:40.240 These hosts may then make up for the loss of 0:05:40.240 --> 0:05:44.920 revenue by charging exorbitant cleaning fees. Across said the key 0:05:45.000 --> 0:05:47.760 if you're looking for an affordable Airbnb is to plan 0:05:47.880 --> 0:05:50.520 to spend some time browsing properties and skip to some 0:05:50.560 --> 0:05:53.440 of the properties further in the results. They may be 0:05:53.520 --> 0:05:56.440 a better overall deal, but because they're not playing the 0:05:56.520 --> 0:05:58.880 rate game, you won't necessarily see them in the top 0:05:58.920 --> 0:06:03.040 search results. Another way to save can be by cutting 0:06:03.040 --> 0:06:06.279 out the middleman and booking directly through the rental property, 0:06:06.520 --> 0:06:08.680 although you'll have to seek out its website or phone 0:06:08.760 --> 0:06:11.440 number on your own, and the booking may not come 0:06:11.440 --> 0:06:17.000 with services comparable to what companies like Verbo and Airbnb guarantee. Again, 0:06:17.200 --> 0:06:19.240 be prepared to do some leg work and make sure 0:06:19.279 --> 0:06:27.360 you're comparing apples to apples. Today's episode is based on 0:06:27.400 --> 0:06:31.080 the article why have Airbnb and Verbo prices suddenly skyrocketed? 0:06:31.160 --> 0:06:33.479 On how stuff works dot Com, written by A. Leah Hoyt. 0:06:33.960 --> 0:06:36.240 Brain Stuff is production by Heart Radio and partnership with 0:06:36.279 --> 0:06:38.720 how stuff Works dot Com and is produced by Tyler Clay. 0:06:39.279 --> 0:06:41.920 For more podcasts my heart Radio, visit the I heart 0:06:41.960 --> 0:06:44.640 Radio app, Apple Podcasts, or wherever you listen to your 0:06:44.680 --> 0:06:45.440 favorite shows.