Speaker 1: Welcome to brain Stuff production of I Heart Radio. Hey
Speaker 1: brain Stuff, Lauren Vogelbaum here. If you've used a travel
Speaker 1: rental service like Verbo or Airbnb recently, it's possible you
Speaker 1: were hit with a bit of sticker shock at booking time.
Speaker 1: The nightly rental fee is but one part of the equation,
Speaker 1: with cleaning fees, service fees, and occupancy taxes jacking up
Speaker 1: the bill big time by hundreds of dollars per night
Speaker 1: in some cases, and since these other fees aren't added
Speaker 1: until the end of the checkout process, they can come
Speaker 1: as a nasty surprise to renters who feel they were
Speaker 1: lured in by the low nightly rental fee. This change
Speaker 1: is partially due to changes in the way these services
Speaker 1: are being used. Not that long ago, vacation rentals found
Speaker 1: through these services were intended for backpackers, broke college students,
Speaker 1: and people who otherwise needed places cheaper than hotels to
Speaker 1: crash for a few days or months. Often this involved
Speaker 1: a little more than a bedroom bathroom combo and then
Speaker 1: otherwise occupied home or a temporarily unoccupied apartment. Though such
Speaker 1: rentals are certainly still available, the model has changed tremendously.
Speaker 1: Business Insider article reported that Airbnb's average daily rates had
Speaker 1: grown by thirty in the first quarter compared to and
Speaker 1: as we'll see, daily rates affect all the other charges
Speaker 1: down the line. Too. Many the fees are anything but
Speaker 1: clear cut. Here's a breakdown of feeds you can expect
Speaker 1: to pay. First, there are those nightly fees. These are
Speaker 1: set by the rental host, each of whom has a
Speaker 1: slightly different way of setting the price. For the article,
Speaker 1: this episode is based on how Stuff Works spoke with
Speaker 1: Aaron Turner, who uses both Airbnb and Verbo to rent
Speaker 1: her cabin in Tennessee. She said, I know what my
Speaker 1: break even point is for the year, and that gives
Speaker 1: me a base rate I have to charge per night
Speaker 1: at so many nights rented per year. From there, I
Speaker 1: have to determine what portion of the rate will go
Speaker 1: to online booking agents Airbnb, Verbo, trip Advisor, booking dot
Speaker 1: Com per night and account for that when pricing the room.
Speaker 1: She also factors in the costs of maintenance, utilities, booking software,
Speaker 1: insurance permits, and other normal business expenses. Then there are
Speaker 1: cleaning fees. These are also set by hosts and typically
Speaker 1: are the same per length of stay whether you rent
Speaker 1: for one night or seven, so cost efficiency really depends
Speaker 1: on the rental period. Enhanced five step and more expensive
Speaker 1: cleaning protocols necessitated by COVID nineteen have made these more expensive,
Speaker 1: and of course professional cleaning rates vary widely by location
Speaker 1: and the size of the rental. And next, there are
Speaker 1: service fees meant to cover many of the costs of
Speaker 1: operating these services. On its website, Airbnb explains that it
Speaker 1: generally charges guests a fee that's less than fourteen point
Speaker 1: two percent of the total nightly fee plus the cleaning
Speaker 1: fee plus any additional guest fees. That's up dramatically from
Speaker 1: six point six percent as of and it can go
Speaker 1: as high as eighteen percent. The hosts themselves are generally
Speaker 1: charged in additional three to five percent fee as well,
Speaker 1: which mostly discovers the costs of credit card processing. Verbo
Speaker 1: has a similar service fee structure of roughly nine to
Speaker 1: how staff works also spoke with Verbo representative Alison Quong.
Speaker 1: She explained verbos traveler service fee varies depending on the
Speaker 1: cost of the booking. Generally, the higher the reservation amount,
Speaker 1: the lower the percentage of the fee. Additional fees like
Speaker 1: pet fees may apply as well, depending on the specific
Speaker 1: circumstances of your rental. But finally, there are local lodging taxes.
Speaker 1: These are added to the bill where there are laws
Speaker 1: requiring vacation rentals to pay tax. How staff Works also
Speaker 1: spoke via email with vacation rental industry expert T bout
Speaker 1: Mason with rentals ail up dot com. He said, a
Speaker 1: few years ago, a lot of hosts were forgetting to
Speaker 1: pay local taxes. They were supposed to take them out
Speaker 1: of their Airbnb revenues and transfer them to the local
Speaker 1: tax authorities. Under the pressure of municipalities, Airbnb has started
Speaker 1: collecting taxes directly from guests and sending the money to
Speaker 1: tax authorities, So guests may also see an increase in
Speaker 1: the overall cost of their Airbnb as things are done
Speaker 1: more legally these days. These occupancy taxes are not set
Speaker 1: by the service, but by the local government. They are
Speaker 1: often the same rates that apply to hotels in the area.
Speaker 1: So with all of these fees in place, would it
Speaker 1: be cheaper overall to go to a hotel as opposed
Speaker 1: to a vacation rental And that depends a study by
Speaker 1: Inner city bus company Bus bud found that airbnb prices
Speaker 1: were better than hotels in seven of the twelve US
Speaker 1: cities and in eight of the nine European cities it
Speaker 1: looked at. So the short answer there is to do
Speaker 1: your research, take into consideration that the type of hotel
Speaker 1: and the type of rental you're looking at may not
Speaker 1: be directly comparable. Unfortunately, there are some ways to save
Speaker 1: or at least make the most informed choice possible. How
Speaker 1: Stuff Works also spoke with Ann Cross, owner and operator
Speaker 1: of two Airbnb rentals. She said the way to beat
Speaker 1: the system is to essentially ignore the nightly rates posted
Speaker 1: on an Airbnb listing and look instead at the overall rate.
Speaker 1: This is because Airbnb at least gives higher ranking to
Speaker 1: properties that use their recommended pricing format, which is often
Speaker 1: much less than what the market calls for. She says.
Speaker 1: These hosts may then make up for the loss of
Speaker 1: revenue by charging exorbitant cleaning fees. Across said the key
Speaker 1: if you're looking for an affordable Airbnb is to plan
Speaker 1: to spend some time browsing properties and skip to some
Speaker 1: of the properties further in the results. They may be
Speaker 1: a better overall deal, but because they're not playing the
Speaker 1: rate game, you won't necessarily see them in the top
Speaker 1: search results. Another way to save can be by cutting
Speaker 1: out the middleman and booking directly through the rental property,
Speaker 1: although you'll have to seek out its website or phone
Speaker 1: number on your own, and the booking may not come
Speaker 1: with services comparable to what companies like Verbo and Airbnb guarantee. Again,
Speaker 1: be prepared to do some leg work and make sure
Speaker 1: you're comparing apples to apples. Today's episode is based on
Speaker 1: the article why have Airbnb and Verbo prices suddenly skyrocketed?
Speaker 1: On how stuff works dot Com, written by A. Leah Hoyt.
Speaker 1: Brain Stuff is production by Heart Radio and partnership with
Speaker 1: how stuff Works dot Com and is produced by Tyler Clay.
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