Airbnb implemented a new service charge structure in December 2020, giving some short-term rental hosts two options. The two alternatives are as follows:
Hosts pay 3% of the total payout, while guests pay a service fee that ranges between 13% and 20%.
There will be no visible service fee to the guest, and the host will pay 15% of the overall payout.
Not everyone, after all, has a choice! Since December 7, 2020, Airbnb has made Simplified Pricing essential for hosts who are connected to third-party software, such as Hostaway in certain categories. If the bulk of your listings are in one of the countries listed below, or if you are not connected to software, you can still choose which structure to use by logging into your Airbnb account.
Simplified pricing is required for software-connected hosts with the majority of listings outside of the countries listed above.
Simplified pricing is also required for hosts that have at least one traditional hospitality listing (aparthotel, hostel, serviced apartment, etc.), regardless of location or connection to third-party software.
When you connect your Airbnb account to Hostaway, the Simplified Pricing host-only cost is instantly applied. While connected, you will not be able to change it to a split fee.
It is imperative that you are aware of this change and modify your rates to preserve parity by raising your base price or adding a fee.
With the current structure of Airbnb, this was an unresolved question. Hosts used to set their own price for the house, and Airbnb would tack on a service fee. The hosts would have no idea how much the guests paid to stay at their homes. Airbnb's guest fees range from 10% to 20% and are likely decided by a variety of factors such as duration of stay, traveler's country, and others.
With the new Simplified Pricing system, the host has complete control over how much the guest will pay in total, and no guest charge will be added on top of the final rate. Booking.com has been using this structure for many years.
Let's look at how much a guest spends and how much a host makes in various scenarios for both the traditional Split-fee and the new Simplified Pricing. For this instance, we will compare a 4-night stay at a nightly fee of $100. Service costs have been taken as 16%.
When you look at the statistics in the chart above, you can see that if you want to keep earning the same amount, you need to boost your rates and cleaning fee by 14%. Alternatively, by utilizing simplified pricing, you can increase your prices by 15%, allowing you to earn 1% more while the guest pays the same. It is your business decision whether to exploit the new structure to get a competitive advantage over similar listings like yours or merely to increase your revenue slightly.
Another thing to keep in mind is that we calculated where some occupancy taxes apply (Florida, USA). When your accommodation cost rises, so does the tax that your guests must pay. However, there is still a margin to pay with the lower service price of simplified pricing. If your government does not levy additional taxes, you have an extra 1% margin to use to your advantage or competitive price advantage.
In the current system, if you host longer stays (28 days or more), Airbnb's service fee lowers to around 10%. In this situation, switching to simplified pricing may be unfavorable for you because the Host Service Fee for the new pricing structure is fixed at 15%. For the time being, it does not adjust to the length of stay.
According to Airbnb, during the simplified pricing test phase, properties with the new price structure received up to 17% more bookings than listings with the conventional service fee.
Some of the additional benefits of simplified pricing are as follows:
On the other hand, you should be aware of the following:
Taking into account all of the information presented above, you must select the best solution for your Airbnb and adapt to the changes. Because Airbnb actively supports the new simplified pricing, there are reasons to believe that converting to the new structure may increase your exposure in search results.