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Self-Defense - Adding Fees to AirBnB, Booking.com & Others

Replies: 5 - Pages: 1 - Last Reply: Sep 11, 2018 3:45 PM by: Sloanish
Ross C
Registered: 6/25/18
Self-Defense - Adding Fees to AirBnB, Booking.com & Others

Hi

I am several weeks away from making my first VR available (taking 6 months to get my 2 townhomes VR-ready)

The cavalier attitude of the OTAs is one of my biggest concerns in the future. So I am considering a few self-defense measures:
-- Cleaning fee (obvious) - I don't allow pets.
-- 3% damage deposit on all bookings PLUS a security deposit.
-- 12-15% fee on Booking.com bookings (to counter their 15% commission)
-- 3% "admin" fee on all bookings to counter chargebacks or the AirBnB "extenuating circumstances"


Thoughts? What do you do or suggest?

Paul W
Registered: 6/9/09
Re: Self-Defense - Adding Fees to AirBnB, Booking.com & Others

Hey Ross,

The channels definitely don't care about your property and will make very little (no?) effort to back you up. They're all about their fee structure and automating as many guests through the funnel as possible. VRBO could have differentiated themselves on that (against Air and B.com) years ago, and with other things, but decided to copy them and now suffers the same reputation and trust issues. Expedia shareholders don't care about that evidently.

The cleaning fee is a good idea - fairly common now so guests are fine with it (like fees when buying airline tickets)

I'd definitely do damage protection, but don't show it to the guest. They should only know that there's a security deposit being held. When their money is on the line, they behave better. But also have a solid low-cost damage protection. In OwnerRez, we have a built in product that covers all bookings automatically for a low cost (spread risk model) and uses AIG/Travel Guard. No statement of fault is required from the guest. The claim process is smooth and simple. Read more about that here:
https://www.ownerreservations.com/support/articles/damage-protection-overview

Most users do inflate their B.com prices by 15% to cover that big commission charge. B.com should lower that amount. I think they'd have better results (fewer cancellations, etc) if they came down a bit on that. They're not absorbing risk as the merchant of record, so I'm not sure why it's that high. Either way, it's pretty common. In OwnerRez, we have a full (2 way) integration with B.com and can add that 15% to your rates automatically.

Adding extra admin fees only works if you're in an area that has high demand and limited supply. In other words, only do that if you can get away with it. Otherwise, a lot of search traffic is going to skip past you when they see all the fees. You can roll that 3% admin fee into your base rent (so it's not seen) but that means your rate might be higher than the market average for your area. That's what it comes down to... what can you get away with while still building your brand, getting lots of business and building a solid reputation.

If you're booking too fast, raise the rent and fees. If you're booking too slow (lot of last minute bookings or unfilled weekends) then get rid of the fees. Dynamic pricing can help with this - Wheelhouse, PriceLabs, etc. and that's something we're adding in the near future.

A biggest thing that will protect you is good communication and clear procedures. Make sure guests know what to expect up front (house rules, emails, etc) and all throughout the booking lifecycle. Make sure your housekeeping crew and maintenance people are well equipped, fill out checklists and follow processes. Good communication and clear procedure lead to predictability.

Good luck with the upcoming turn-on,

-Paul

Ross C
Registered: 6/25/18
Re: Self-Defense - Adding Fees to AirBnB, Booking.com & Others

Thanks for the reply, Paul

My first two VRs (townhomes) will be hard to tell about popularity and how to price. Historically, they are off the charts, as they are 2/3 of a mansion that belonged to one of the most important (yet unknown) men in American history. And it was also the boyhood home of a US congressman. This is a small tourist town.

The "unknown" man invented the roller coaster, designed/built the first significant railroad in the USA, invented/built the world's first wire suspension bridge - such as the Brooklyn or Golden Gate Bridge, is considered by some to be the starter of the American Industrial Revolution, and quite a bit more.

I am just concerned about the "Sorry, your $2000 rent was just yanked because chargeback/Extenuating Circumstances/other stupid/fraudulent purpose" Thus I was considering a small admin fee in an attempt to balance it.

Ross C
Registered: 6/25/18
Re: Self-Defense - Adding Fees to AirBnB, Booking.com & Others

Question - you say "Don't show the guest the damage protection" cost. In other words, I should pay it and they don't?

I am assuming you are telling me if I WANT to charge them, don't let them know what it is by rolling it into the rent, or into a generic fee such as cleaning or admin...

Sloanish
Registered: 6/28/18
Re: Self-Defense - Adding Fees to AirBnB, Booking.com & Others

That's what I think he means. You don't want to nickel and dime people.
I do three things
Rent
Security
Cleaning
All the other costs (credit card, insurance, blah blah blah) I take as a cost of business.
Increasing rent for commission platforms like Airbnb is a great feature.
#bookdirect is the tagline for people who want to avoid these charges.
The only other thing I m thinking of is a discount for the use of cash versus a penalty for the use of a credit card.

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