Airbnb Fees - Explained!

There are a handful of fees on Airbnb 🛌Some just apply to the host, while others are just on the guest side.

It is important to understand how fees work on Airbnb when pricing your listing. You don't want your fees to end up pushing your price way above your competition. 💵

A big part of running your short term rentals and Airbnb business is taxes. We all want to pay our fair share, but not a penny more ⚖️ I'll uncover the options you have for collecting taxes on your Airbnb.

Specifically, in this week's video 🎥 I uncover:

👉Service Fees

👉Cleaning Fee

👉Extra Guest Fee

👉Pro-hosting Fees

👉Taxes

👉👉Every week I post a few quick Airbnb tips on my Instagram account! 📸📸 Follow me: @airbnbuncovered (https://www.instagram.com/airbnbuncovered)

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TRANSCRIPT

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What fees does Airbnb charge both hosts and guests? 

Officially, They only have one fee and it’s called a service fee. According to their website, they use this fee to maintain the platform and provide support to hosts and guests. It’s basically their way of making money and covering the costs of operating the business.

Airbnb charges the service fee to both the guest and the host and they’re separate items despite being called the same thing… why they did that I’m not sure. It can make things more confusing when you’re just starting out.

So let's start with the host side. Hosts are generally charged 3% of the total cost of the reservation. I say generally because there are some exceptions:

• In Mainland China hosts are charged 10%
• Hosts with a super strict cancelation policy are charged a higher fee, and;
• Airbnb does have some pilot programs going on where hosts charged are a different percentage or fee. 

For all intents and purposes, there’s a good chance you’ll be charged 3% since Airbnb normally discloses when the service fee will be more than 3%, which is rare.

Now let's get over to the guest part of the service fee, which can be as much as 20% of the total cost of the reservation. 

I say as much as 20% because Airbnb doesn’t exactly disclose how they calculate the guest’s service fee. We do know it’s on a sliding scale with the average being about 14.2%. The sliding scale is supposed to compensate for bookings with a high total cost… so after a certain total amount, the guest service fee percentage will start to decrease. 

If you think about it, if you’re booking accommodation for let’s say 3 months the total cost could be pretty high. If Airbnb adds 20% on top of that, it gets even more expensive. And to be honest, Airbnb’s involvement on a 3 month stay would likely be minimal after check in. So to compensate for this, Airbnb lowers its fee as the totals increase over a certain amount. 

Again, we don’t know what that certain amount is because Airbnb doesn’t publicly disclose it.  

To be honest, you don’t really need to be overly concerned about exactly how Airbnb calculates a guest service fee, because it is always calculated automatically and shown to the guest. If you’re asked about it, you can simply say, that Airbnb determines the amount and does not disclose exactly how it’s calculated. You can direct your guest to contact Airbnb for more information since it’s their fee and you have no control over it. But, I think I’ve gotten that question maybe a handful of times over thousands of requests. I’m just explaining it here, so that you know how things work for a guest when they’re considering booking with you.

There are a few other fees that a host can charge and I’ll explain those in a minute.

I think the easiest way to explain these fees with a simple example: Let’s say that you have set your nightly rate at $100 and you get a booking for that rate. After Airbnb’s host service fees you’ll be paid out $97 - so $100-3%. Your guest will likely pay around $114.20 (based on the average service fee of 14.2% as disclosed by Airbnb). Airbnb will earn $17.20 in this example, which is $3 from you and $14.20 from your guest.  

Things get a bit more complicated when you start to layer on the optional host fees.

In your listing setup you can add additional fees that you want to charge your guests. These fees include:

• Cleaning fee
• Extra guest fee
• Resort fee
• Management fee
• Community fee
• Linen fee

The cleaning fee and the extra guest fee are the most common. So let me briefly explain both.  A cleaning fee is as the name implies - a fee to clean your home for guests. When you enable the cleaning fee, it is applied once to every reservation. Unfortunately, if you want to charge this fee more often you have to do it manually through the resolution centre. 

The cleaning fee doesn’t have to exactly equal what you pay to have your home cleaned and you can still charge one if you do the cleaning yourself.

The extra guest fee is simply that, a fee you charge for extra guests. You can set when the fee is triggered – so you can specify if you want to start charging your extra guest fee after the first, second or whatever number of guests.

The last 4 fees I mentioned, resort, management, community and linen fees are pretty rare. In fact, they’re only available to hosts with 6 or more listings. I’ll just quickly go over them so that you’re aware of them. These are all setup in the same way – either a percentage of the total booking cost or a fixed fee. So either something like 2% of the total cost or a flat fee of $50. To briefly explain each one:

• The resort and community fees are roughly the same thing – they’re a fee you can add if your listing is located in a place that charges for running a short term rental.
• The management fee is a fee you can charge for running your Airbnb.
• The last one, linen fee is a cost for providing towels and linens to your guests.

Like the rest of the optional fees you can set these to whatever you’d like and they don’t necessarily have to exactly match what you’re paying for them. 

When setting up your Airbnb, just be leery of how many fees you add. I can’t imagine your guests will enjoy seeing 6 lines of extra fees added to their reservation.

Depending on where you live, you may also have the option to add sales tax and a hotel or tourist tax to your listing. If you can enable this option it will be shown on your listing page. With this option enabled, Airbnb will add these taxes to the cost of the reservation. Which means your nightly rate, as well as any additional fees, will receive tax. 

The airbnb service fee is not taxed.

The amount of tax charged by the system will be separately listed in your transaction history. By separating the tax out in your transaction history, you can easily calculate how much you need to remit to the government.

I say depending on where you live because Airbnb doesn’t yet provide this option everywhere. And if the option isn’t available in your area, airbnb offers you two ways to collect these taxes; either through:

• A Special offer, or;
• Through the resolution centre

If you need to collect taxes manually, you’ll need to communicate this requirement and the exact amounts or percentage to your guests prior to booking. You can do so by outlining these requirements in the house rules section of your listing. 

Please bear in mind, it is against the Airbnb Terms of Service to add additional, not previously disclosed costs to a reservation after it has started.

Pro tip - If you have to collect tax manually and you don’t want the extra hassle of creating a special offer or using the resolution centre for every booking, you can also just increase your prices by the tax amount and then calculate your taxes owing on the total that you’ve paid out by airbnb. 

To easily get the amount of sales tax you need to pay, multiply what you've been paid by airbnb by the tax rate divided by 1plus the tax rate.  So if your tax rate is 10%, then you divided 10 by 110 and multiply that result by the amount you've been paid out to get the amount of tax you collected.  If you are including the tax in your nightly rates and extra charges remember to only report your pre-tax amount as income, so you don’t pay income tax on the sales tax you collected.

To warp up, let’s go back to our example, which I think will do a nice job of summarizing how fees and taxes are calculated on Airbnb.

Remember we had a 1 night reservation for $100. 

Under that simple example, you, as the host, got $97 and the guest was charged $114.20. Now let’s layer on the two most commonly used additional charges: 

• extra guest fee, and;
• cleaning fee. 

Let’s say you charge $50 for cleaning and $25 for extra guests.

Your new total revenue from this reservation is now $100+50+25 which equals $175.

Airbnb will take 3% of your earnings as their host service fee, and so instead of receiving $175, you’ll get $169.75. Your guests will pay $175 plus 14.2% guest service fee so their total will be $199.85.

If we take this one step further and add sales tax, the only part that will change is the total the guest will pay. So the guest will see a subtotal of $175 – both the sales tax and the Airbnb guest service fee are calculated on this subtotal. Remember sales tax doesn't apply to the guest service fee. If your sales tax rate is 10%, the sales tax is equal to $17.50, the Airbnb guest service fee will be the same as it was before, which was $24.85 and the new guest total is $217.35. 

Again, depending on where you live, Airbnb may end up paying you the sales tax amount collected and you have to remit to the tax authorities or they may remit it on your behalf... which I hope is the case for you because it makes things so much easier. 

I hope this answers the question of what fees Airbnb charges. If it doesn’t please comment below with additional questions you may have.

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