Airbnb is undoubtedly one of the biggest travel startups to emerge from the sharing economy in recent years. Its unparalleled success is, in large part, due to the fact that anybody can become an Airbnb host via the platform.
Whether your offerings are simply a spare bedroom, a cottage out in the countryside or even a whole fleet of luxury beachfront villas, up to now, Airbnb has helped some 640,000 hosts to find more than 160 million guests for their properties.
Don’t get us wrong – we love Airbnb! It’s a respected channel for diversifying your vacation rental bookings and reaching a wide audience. That’s why we’re partners – our Channel Manager integrates with Airbnb to synchronize your listings and ensure you never experience mix-ups or double bookings.
In this article, we’re going to break down the costs of using Airbnb with real money examples. We’ll crunch these numbers in order to compare them with the costs of using complementary channels, for example, those involved with creating your own professional vacation rental website with Lodgify. This will help owners and managers to determine what route is best for their vacation rental journey.
Figuring out Airbnb fees
There is no denying that Airbnb is a fantastic channel for finding suitable guests to fill your property’s vacancies. It’s global, it’s easy to use, and even better, it requires very little time or effort to set up at a very low cost – or so we believe.
Airbnb’s Service Fees page states that hosts are subject to a charge of 3-5% (automatically deducted from the booking payout amount), every time a booking is finalized. At the same time, guests who reserve accommodation via the Airbnb platform are also required to pay between 5-15% in service fees – on top of their booking total. The exact amount is calculated using different factors such as booking subtotal and length. Additionally, having some specific listing characteristics will require guests to pay a higher service fee.
Often, after initial success on the site, there comes a time when Airbnb hosts will begin to wonder what lies beyond the app.
What other possibilities are out there?
For some Airbnb users, seeing the kinds of results that can so easily be achieved leads them to think more strategically about the potential of their vacation rental business.
They might ask themselves questions such as:
- “How much could I earn if I took Airbnb fees out of the equation?”
- “How can I get bookings coming directly?”
- “What will I do the day I get a repeat guest wanting to book?”
When you look for the answers to these questions online, many search results will arrive at the same conclusion: creating your own vacation rental website can actually complement your existing Airbnb activity and get you more bookings.
Airbnb vs. Lodgify
At this stage, it’s useful to point out that Airbnb and Lodgify are very different services – and that means they do not have to be used exclusively. Many Lodgify users maintain active Airbnb accounts alongside their own vacation rental website.
Airbnb is a distribution channel, meaning it is a great way to create visibility for your rental, as it will be seen by thousands of guests who are already searching for accommodation in your specific area.
Lodgify, on the other hand, is a software which owners and managers use to create their own professional vacation rental website; accept online bookings and payments and manage all reservations and inquiries from one place.
What are the benefits of Lodgify vs. Airbnb?
One of the main advantages of creating your own website via Lodgify is that it allows you to accept your own online bookings and payments for your vacation property.
Aside from this, having your own direct channel is hugely important for creating and maintaining your vacation rental brand, and is an ideal place to showcase your reviews from all external channels in one place.
A vacation rental website made with Lodgify will also allow repeat guests to book directly with you for their next visit – rather than going via listing sites and paying those additional fees mentioned earlier.
Investing in your own channel, such as your own website, is a must for your business’ long-term goals. Not only will it help you to gain independence from OTAs, it will also enable you to build a reputation and credibility, and, it costs a lot less in the long run than solely sticking to sites like Airbnb.
Cost of Airbnb vs. Lodgify
Some owners may think it’s impossible to compare the costs of two different services such as Airbnb and Lodgify – but it’s not.
While Airbnb takes a commission per booking from both the host and the traveler, Lodgify charges a monthly fee which varies depending on how many properties you have, or if you choose to pay monthly, yearly or biennially.
So, putting this into numerical terms: If the average Airbnb booking* had a value of €1.500, the total guest and host fees would come to around €270. With a little more than that €270 (just six euros more, in fact), you could entirely cover your Lodgify software fees for a whole year.
To better explain how Lodgify’s software can save you money, we’ve done some more calculations.
How much the customer pays vs. what you receive
Let’s take a look at some hypothetical sums to help paint a better picture of how the two services’ fees are divided up between guests and hosts – plus, what both services really cost you.
Say you’re an Airbnb host only who rents out your apartment for two weekends a month, at €50 a night – your monthly Airbnb income is €200. Of that amount, Airbnb will take a combined €36 from you and your guest to cover its fees. If you suddenly decide to rent your apartment for more nights that month, higher fees will be charged. For six nights, the fee would increase to €63; for 10 nights, €90; and for 20 nights, €180.
If you’re a Lodgify user running the same business, for four nights’ of renting, this charge would be around €27 (€23 for your monthly Lodgify subscription, plus credit card processing fees). For a six-night stay, the fee would only increase by €2; for 10 nights, the total fees you would incur would be €29 and for a 20-night rental, just €43 extra would be paid in fees. That’s because, unlike with Airbnb, your Lodgify subscription cost will stay the same, no matter how many nights you rent each calendar month.
Overall, it’s clear using Lodgify for a big chunk of your bookings can help you (and your guest) save plenty of money in the long run. For a monthly revenue of just €200, you will save €25 if your bookings come through your Lodgify website. As this amount increases, so do your savings. For a monthly revenue of €1,000, you’ll save €137; if you’re earning €2,000 per month, you’ll save €297; and for owners who bank €5,000 per month, you’ll save a whopping €777 compared to Airbnb.
How we worked it out
We calculated these figures by choosing some hypothetical monthly earnings: €100, €200, €300, €500, €1,000, €2,000 and €5,000 – to cover hosts at different ends of the spectrum. Of course, some hosts may earn less or even a lot more than our invented numbers here.
We then calculated 15% of the given amounts to cover the “top tier” of the 5-15% guest fees that Airbnb charges. To find the Airbnb host fee, we calculated 3% of the monthly earnings (or the “lower tier” when it comes to host fees). The total Airbnb fees derive from adding these two numbers together.
To find the total Lodgify fee, we used the flat monthly rate that we charge customers with one rental property who are on biennial plans – €23. To this amount, we added the average credit card processing fees charged by external payment gateways such as Stripe and PayPal (around 2%).
As the Lodgify monthly fee never changes, the saving difference constantly grows as monthly revenue increases. That means that with just one or two Airbnb bookings, you could pay for a whole year of Lodgify fees.
What is and isn’t included with Airbnb and Lodgify fees
We’ve already discussed some of the benefits of using Airbnb, but one hugely important asset we haven’t mentioned yet is this: Airbnb does the marketing for you. For this reason, it’s an ideal solution for many busy hosts who want to rent out their home, but do not have enough free time to dedicate to marketing activities. By fully completing a listing, Airbnb’s algorithm will ensure that your property shows up somewhere in the search results for your city or town.
There are things every owner can do to help boost their presence in search results. These include:
- Listing quality
- Ease of booking
- Guest preferences
The full list of factors to improve search ranking on Airbnb can be found here.
On the other hand, with Lodgify, you’re in control of your own marketing. But don’t fret – Lodgify helps owners every step of the way. From building your professional website to receiving direct bookings, there are tools in place to help your marketing efforts from the very first day.
Lodgify websites are:
- Optimized for search engines
- Easily integrated with social media sites and marketing tools.
What’s more, with your own website, you’re truly in charge of your vacation rental brand and we’ll help you to build it. Our vacation rental owners’ blog is a one-stop shop for everything related to marketing, achieving direct bookings and the guest experience. Bursting full of resources like articles and free eBooks, owners can refer back to our content time and time again to help overcome their biggest obstacles.
We’ve already seen the numbers: a vacation rental software like Lodgify works out much more affordable for owners with long-term business goals. And as you’ll be saving hundreds or even thousands, you’ll be able to invest in additional marketing if needed.
What to take away
There are no doubts that using Airbnb is one of the best ways to get your vacation rental booked up quickly. As it is one of the world’s largest vacation rental platforms, it’s a fantastic distribution tool to get your property in front of the right viewers at the right time.
Nevertheless, it’s becoming more important than ever for owners and managers to have – and maintain – control of their own booking channel, such as their own website. This is essential in order to establish a brand identity, cater to repeat guests, and have somewhere to direct inquiries that come in via other channels. In addition to this, a professional website allows owners to stand out from the crowd in an overly competitive industry.
If you’re ready to see how much you could save, start a free 7-day trial of Lodgify. You’ll soon see just how easy it is to build your own vacation rental website, take direct bookings and manage your reservations from one place with our software.