What are Airbnb fees? Full guide for hosts - Little Hotelier (2024)

What are Airbnb fees?

Airbnb fees are the costs that hosts and guests incur when using the Airbnb platform. These fees are designed to cover the operational costs of the platform and provide services such as customer support, secure payment processing, and the development of new features.

As a host, understanding these fees is crucial as they directly impact your revenue and profitability.

How much does Airbnb charge hosts?

Airbnb charges hosts a service fee for each booking. What percentage Airbnb takes can vary, but it’s typically around 3% for most hosts. However, Airbnb’s commission can go up to 14% or more for hosts who have a Super Strict cancellation policy.

How much do Airbnb hosts make?

Airbnb hosts can make around $10,000 to $50,000 yearly, depending on location, amenities, and other factors. This estimated range is based on the average revenue generated of 1 room for 2 guests per year, assuming that it’s available for all 365 days, and located in the top 5 cities with the most Airbnb listings globally.

Below is a table that generally shows how much Airbnb hosts can make in a year:

Different types of Airbnb fees hosts need to know

Understanding the different types of fees Airbnb charges is essential in managing your small hotel’s revenue. Generally, there are two major ways Airbnb fees can be classified into: fees charged to hosts and fees charged to guests.

Airbnb host fees

Host fees are usually a percentage of each booking that Airbnb charges hosts. They primarily consist of two categories: service fees and taxes.

1. Host service fee

Host service fee is the fee that hosts are required to pay for covering the cost of running the Airbnb platform. It’s generally around 3% to 16%, depending on various factors. Host service fees include services like customer support and secure payment processing. Airbnb service fees are further subdivided into two:

Split-fee: This is the most common fee structure. It’s when the service fee is split between the Host and the guest. Most hosts pay about 3% of the booking subtotal (nightly rate + cleaning fee + additional guest fee, excluding Airbnb fees and taxes). This is automatically taken out of your payout.

Hosts who are in certain countries (such as Italy) and those who have Super Strict cancellation policies may pay more than 3%.

So, how much do your guests pay? Most guest service fees are under 14.2% of the booking subtotal, but varies depending on a few factors, e.g. if they are staying for more than three months.

Host-only fee: The “host-only” fee option means that the entire Airbnb commission is dedicated from your payout. It’s usually about 14% to 16% – but like split-fee, Super Strict cancellation policies may cost more and monthly stays may cost less.

For some Airbnb listings, host-only fee is mandatory – this includes traditional listings like hotels.

For example, if you charged $100 a night, then Airbnb would take $15 of that for their fee.

2. Value-added Tax (VAT) and other taxes

In some locations, Airbnb collects taxes on behalf of hosts and remits them to local authorities. In other places, hosts are responsible for collecting and remitting these taxes themselves. The service fee in these cases are VAT inclusive.

Airbnb guest fees

These are fees that can be charged to your guests in addition to the service fee. There are four main types of fees that guests can be charged on Airbnb:

1. Cleaning fee

The cleaning fee is set by hosts to cover the cost of cleaning their space after guests leave. This fee is not mandatory, and hosts can choose whether or not to include it in their listing.

2. Extra guest fee

Hosts can charge an extra fee for additional guests beyond a certain number. This fee is set by the host and is typically charged on a per-night basis.

3. Security deposit

A security deposit is an amount that hosts can set to cover potential damages to their property. This amount is not charged to guests unless the host makes a claim within 14 days of checkout.

4. Cancellation fees

Cancellation fees apply if a guest cancels a reservation during certain periods. The amount of the fee and the timing depend on the host’s cancellation policy.

Strategies for managing Airbnb fees

Managing Airbnb’s fees and balancing competitive pricing with good profitability can be a difficult juggle. Here are the top five strategies you can use to find the sweet spot:

1. Build fees into your costs

You can only manage what’s measured. Analytics and insights are key to balance Airbnb fees against your costs and avoid losing money in the long run.

Before setting your prices, understand all the costs associated with running your property. This includes Airbnb fees, cleaning costs, maintenance costs, and any other expenses. This will help you set a price that covers your costs and leaves room for profit.

Remember that $100 a night example from earlier? If you lose $15 to fees every time someone books through Airbnb, you must ensure that the difference is made up in your actual price. Suddenly, that $100 room may need to become $115.

2. Stay competitive (even against non-hotels)

Success on Airbnb despite the extra fees tacked on is all about staying competitive. With all hotels needing to switch to the simplified pricing model, you’re working on an even playing field with them – but what about non-hotel Airbnb listings?

Look at what other hosts in your area are charging and consider how your property compares. If your property offers more value, you might be able to charge a higher price. If not, you might need to adjust your prices or find ways to add value to your listing. This is easier said than done, which is why Little Hotelier has a dedicated competitor insights report to help you stay on top.

3. Don’t be afraid to switch things up

The fees that Airbnb charges may be constant for your small hotel, but seasonality means that pricing should always be changing to meet demand and maximise profit. During slow seasons, it may be worthwhile dropping your prices despite the fees for every booking so you can drum up sales and repeat customers during the more popular (and thus more profitable) months.

4. Maximise your add-ons

Airbnb fees are based on nightly rates and any extra fees you charge the guests for things like cleaning and extra guests. But those aren’t the only things you can offer your guests! Make sure that you have the opportunity to charge for add-ons that won’t have the Airbnb slice taken out of it. Think airport pickup, breakfast, guided tours, equipment hire, and so on.

5. Stop relying on Airbnb

Airbnb is just one of the many listing options available for your hotel. Commissions and fees are a fact of life with nearly all online travel agents (OTAs) – but not all of them charge the same amount or the same way as Airbnb.

More to the point, successful hotels are built on a strategy that maximises direct booking, not OTA bookings. This cuts out the middleman and ensures that your business gets the whole slice of the revenue and the profit from every booking.