Airbnb host fees are something that every Airbnb host or prospective host should know like the back of their hand. Airbnb done properly can be one of the best wealth generators on the planet, that is to say, if your Airbnb is in a location in which the municipality or in which you have an Airbnb isn’t cracking down and only allowing Airbnb as a primary residence. For landlords and real estate investors, understanding every nook and cranny of Airbnb fees and how to hedge against them is one of the primary pathways to having a successful Airbnb business.
What are Airbnb host fees?
Airbnb host fees are charges that Airbnb takes from the money a host earns when someone books their property. These fees help Airbnb cover the costs of running the platform, providing customer support, marketing, and offering insurance to hosts. Essentially, it’s the price hosts pay to use Airbnb’s platform to list their properties and reach potential guests.
How much does Airbnb take from host fees?
Airbnb charges hosts a service fee for the ability to list their property and enable booking on the platform. This fee covers the costs of running Airbnb’s services, including customer support, marketing, and secure payment processing. There are two primary fee structures:
Split-fee structure
Under the split-fee structure, Airbnb charges both the host and the guest a service fee. The host’s service fee is typically 3% of the booking subtotal (the nightly rate plus any optional fees like cleaning, excluding Airbnb fees and taxes). The guest fee is around 14% of the book, but can sometimes vary, depending on the property and the listing. The host fee is automatically deducted from the host’s payout.
Let’s say a guest books a property for a total of $1,000 before any fees. Here is how that breaks down.
| Calculation | Amount ($) |
|---|---|
| Host fee (3%) | $30.00 |
| Guest fee (14%) | $140.00 |
| Host payout (Booking subtotal – Host fee) | $970.00 |
| Total cost to guest (Booking subtotal + Guest fee) | $1,140.00 |
Host-only fee structure
In the host-only fee structure, the host pays a higher fee—typically between 14% to 16% of the booking subtotal, and can vary by location and/or type of property. This model is often used by larger property managers and hosts who prefer to display a simpler price to guests by including all fees in the nightly rate. This fee structure is mandatory for hosts using Airbnb’s software integrations (such as channel managers) or for hosts in certain countries.
| Fee Rate | Host Fee Amount ($) | Host Payout ($) |
|---|---|---|
| 14% | $140.00 | $860.00 |
| 16% | $160.00 | $840.00 |
Airbnb host cancellation fees
Airbnb imposes cancellation fees on hosts to discourage them from canceling bookings, which can disrupt guests’ travel plans and damage the platform’s reputation. The cancellation fees vary depending on the timing of the cancellation and how frequently a host cancels:
Less than 7 days before check-in: Hosts are charged a $100 fee.
More than 7 days before check-in: Hosts are charged a $50 fee.
If a host repeatedly cancels bookings, Airbnb may impose additional penalties, including blocking their calendar or removing their listing from search results. As most reading this will have probably been Airbnb guests at some point, they are probably aware of how horrible it is for travelers who get their Airbnbs canceled at the last minute. Frequent cancellations can impact a host’s eligibility for Airbnb’s Superhost program as well as get them booted off the platform once and for all.
Airbnb VAT and other taxes
VAT (Outside US only)
VAT is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to sale. It’s important to note here, that VAT is a phenomenon that only exists outside fo the US, so only applies to readers who have property outside of the US. In the context of Airbnb, VAT can be charged on the service fees that Airbnb collects from hosts. The rate of VAT varies by country and can range from 5% to 25%. For example, in the European Union, VAT rates differ from country to country, with rates typically between 17% and 25%.
| Country | Description | VAT Rate |
|---|---|---|
| Germany | VAT on Airbnb service fees | 19% |
| United Kingdom | VAT on Airbnb service fees | 20% |
| France | VAT on Airbnb service fees | 20% |
Occupancy and tourism taxes
These are taxes levied on short-term rentals by local governments and can include city taxes, county taxes, or state taxes. These are also known as tourist taxes or transient occupancy taxes. These rates can vary significantly depending on the location. In some U.S. cities, the transient occupancy tax can range from 6% to 15% of the booking amount.
| City/Location | Description | Tax Rate |
|---|---|---|
| New York City, USA | Transient occupancy tax (hotel room tax) | 14.75% + $3.50 per night |
| Las Vegas, USA | Transient occupancy tax | 13% to 14% |
| Los Angeles, USA | Transient occupancy tax | 14% |
Goods and Services Tax (GST) or Harmonized Sales Tax (HST) (Outside US Only)
In some countries, like Canada, hosts may need to charge and remit GST or HST on their Airbnb bookings if they earn above a certain threshold. Airbnb collects these taxes on service fees from hosts and remits them to the government. However, hosts may also be required to register for a GST/HST number and charge tax on the accommodations they provide, and the rate typically varies from 5-15%.
| Province/Territory | Description | GST/HST Rate |
|---|---|---|
| Ontario, Canada | HST on Airbnb bookings | 13% |
| British Columbia, Canada | GST on Airbnb bookings | 5% |
| Quebec, Canada | GST + QST on Airbnb bookings | 5% + 9.975% |
How to reduce Airbnb host fees
There is no hidden secret that only Airbnb superhosts are aware of to save on fees. In most cases, it’s just using common sense to ascertain where you can save money and on what bookings. Consider the following below:
Choose the right fee structure for your hosting needs
Selecting the right fee structure is key to maximizing your Airbnb earnings and not doling out too much in host fees. You might already be paying out to other parties, like an Airbnb property management company. With the split-fee structure, both the host and guest pay a portion of the service fees, which often results in lower costs for individual hosts. This can make your listing more attractive with a lower upfront price. In contrast, the host-only fee structure, where the host covers all fees, might be better for property managers looking for simpler pricing.
Optimize your pricing to account for service fees
To cover service fees without losing competitiveness, adjust your pricing strategy by looking at the market and acting accordingly. You can include these fees in your nightly rates while keeping your listing attractive. One tip is to use Airbnb’s Smart Pricing tool to help set rates based on demand and local trends, which make sure you remain competitive. This way, you can balance covering your costs with attracting more guests.
Encourage longer stays to minimize fees
Promote longer stays to reduce turnover costs and lessen the impact of service fees, which are applied to the booking subtotal. Many Airbnb hosts and guests are more than familiar with offering discounts for weekly or monthly stays which can encourage guests to book longer, reducing the frequency of bookings and associated fees.
Promote direct bookings where possible
Encourage repeat guests to book directly with you, if allowed by Airbnb’s terms of service. This can help avoid some service fees, making it cheaper for both you and your guests. Direct bookings can build loyalty and reduce costs over time. Here are a few practical ways to promote direct bookings:
- Guest handbook: Include a friendly note in your property’s guest handbook or welcome letter encouraging guests to reach out directly for future stays.
- Email follow-ups: After a guest checks out, send a thank-you email offering a discount for future direct bookings.
- Personal website: If possible, create a simple website where guests can book directly, avoiding platform fees altogether.
Maintain a high response rate and avoid cancellations
Keeping a high response rate and avoiding cancellations is super important for maintaining your listing’s visibility and avoiding penalties. Quick communication and reliable hosting can improve your ranking on Airbnb, resulting in more coveted bookings and reducing the chance of additional fees.
How to maximize your Airbnb income with accelerated depreciation
In the world of rental management, even small cost-saving strategies can make a big difference in the long run. While reducing hosting fees and taxes may provide some savings, the real financial benefits come from more strategic moves. One highly effective method is taking advantage of accelerated depreciation through a cost segregation study. By doing so, you can significantly reduce your tax liability and save a substantial amount on your property over time.
How does a cost segregation study work?
A cost segregation study is a tax strategy that allows property owners to accelerate depreciation on parts of their building, like appliances or fixtures, over shorter periods instead of the standard 27.5 years. It’s the most important tax loophole in real estate that few know about and even fewer are taking advantage of.
This means you can deduct more from your taxes sooner, increasing your immediate cash flow. It’s especially beneficial for property owners, like Airbnb hosts, looking to reduce their tax burden and boost profits. Below is an example of a 1 million dollar property and how much you can save on cost segregation studies vs. straight-line depreciation. In order to understand the process, you can find out more in our guide of Cross Segregation Studies: How It Works
FAQ
How can I increase my Airbnb bookings?
To increase your Airbnb bookings, focus on optimizing your listing’s visibility and appeal Use high-quality photos, write a compelling description, and ensure your pricing is competitive by using Airbnb’s Smart Pricing tool. Additionally, keep your calendar up to date, respond quickly to inquiries, and encourage positive reviews from guests by providing excellent service. If you have strict pet screening requirements, consider loosening those up as pets are as popular as ever. There are also tools available like AirDNA which can give you a better idea of market trends.
What should I know about Airbnb’s occupancy taxes?
Airbnb occupancy taxes are local taxes that you might need to collect from guests and remit to your local government. These taxes, sometimes called tourist or transient occupancy taxes, vary by location and can significantly impact the total cost for guests. In some cities, Airbnb automatically collects and pays these taxes on your behalf, but in others, you might be responsible for managing this yourself.
What are the best ways to boost occupancy rates for an Airbnb listing?
To boost your occupancy rates, you should focus on pricing, guest experience, and visibility. Use competitive pricing strategies and consider Airbnb’s Smart Pricing tool to adjust rates based on demand. Improve the guest experience by offering clean, well-maintained properties with thoughtful amenities. Also, respond quickly to inquiries and provide excellent customer service to encourage positive reviews, which will help your listing stand out.
Can Airbnb hosts avoid paying service fees?
Airbnb hosts cannot completely avoid paying service fees, as these fees cover the platform’s operational costs like customer support, marketing, and insurance. However, hosts can reduce the impact of these fees by choosing the right fee structure, promoting longer stays (to reduce turnover and associated fees), and encouraging repeat guests to book directly, if permitted by Airbnb’s terms. It’s all about smart management and maximizing efficiency to keep more of your earnings, and you might also want to consider landlord insurance, in case you need to be ensured of income.
