In the Australian short-term rental market, the Airbnb commission structure is central to its rapid evolution. The platform’s user-friendly interface, global reach, and transparency have attracted many homeowners to partake in this lucrative venture.
However, to truly profit from this opportunity, understanding the Airbnb commission structure is a must.
How Does the Airbnb Commission Fee Work?
The Airbnb commission fee, also known as the Host Service Fee, is a key aspect of hosting on the platform. The platform charges this to hosts as part of the cost of listing their property on Airbnb. In most cases, the fee is calculated as a percentage of the total booking price, considering details like the number of nights booked and the nightly rate.
Basically, the fee goes towards supporting Airbnb’s infrastructure, which provides a reliable platform for hosts to showcase their properties and connect with guests worldwide.
Types of Airbnb Commission Fees
There are two main categories of the Airbnb commission fee:
Airbnb Service Fees
The Airbnb service fee is the amount they deduct from the host’s earnings for using their platform. It covers the cost of listing your property, including hosting support, customer service, and access to Airbnb’s global network of guests. The service fee also encompasses any additional charges related to reservations, such as cancellation fees or damage deposits.
The service fee is generally calculated based on the booking subtotal (see discussion on pricing models below), which includes the nightly rate and any additional fees the host sets (such as a cleaning, pet, or additional guest fee).
Note: Unlike other platforms, Airbnb doesn’t charge hosts a separate payment processing fee. The service fee covers the costs associated with using the platform, including payment processing services.
Cleaning Fee
Other Airbnb fees can include cleaning. This is an optional Airbnb service fee that hosts can charge guests for the cleaning services after their stay. It covers expenses for cleaning and maintaining the property, including laundering bedding and towels.
While it is tempting as a Host to “pass on” the cleaning charges to the guest, at the end of the day we think you are better off building the cleaning fees into your sell rate for a more streamlined checkout process.
Airbnb Service Fee Structure
Airbnb adopts two primary approaches to charging service fees: the split-fee model and the simplified pricing model.
Split-Fee Pricing Model
This model stems from Airbnb’s original fee construct when it was the only option available.
In this approach, hosts are typically charged around 3% of the booking total, while guests bear a fee of approximately 14.2%.
However, these percentages can vary based on the type of stay, such as Airbnb Plus hosts, who may face slightly higher charges.
This fee structure is widely prevalent among Airbnb hosts and significantly facilitates seamless transactions within the platform.
While this model, on the surface, can seem appealing to hosts (only having to foot the bill for say 3%), it can impact booking demand when potential guests see they are footing the bill for Airbnb. It is just a perception thing, though, because, at the end of the day, it comes down to the total price a guest has to pay which will determine if they book or not.
Simplified Pricing Model (Host-Only Fee)
In December 2020, Airbnb revolutionised its fee system by introducing simplified pricing. Unlike the traditional fee structure, simplified pricing eliminates the guest service fee. Instead, the cost is shifted to the host by deducting a percentage (14% to 16%) from the host payout.
This new fee model is mandatory for traditional hospitality listings, including hotels and serviced apartments, and software-connected hosts across Airbnb’s global platform, with a few exceptions for specific countries.
At GrowHOST, we prefer this model as it provides a simplified booking experience, taking friction out of the booking funnel and allowing guests an easier decision-making process. Plus, again, it really comes down to the total price of the stay anyway.
With no nasty surprises (like guest fees), it’ll help secure more bookings.
Do Airbnb Property Management Companies Charge Commission?
Airbnb property management companies like GrowHOST offer services designed to optimise your listing, enhance the guest experience, and maximise your earnings.
But what exactly are our fees, and how are they structured?
The fees charged by Airbnb property management companies like us can vary widely based on the range of services they offer and the market. Typically, companies in our space charge a percentage of the booking revenue, which can range from 10% to 30%.
Some might have a tiered structure, where hosts pay a lower percentage for fewer services and a higher percentage for a more comprehensive package. Others might charge a flat monthly fee or a combination of both.
The key point to make though, is that property management commission should only be charged on the net revenue amount, meaning after Airbnb commissions are accounted for. That way, you are not paying commission on commission.
Make sure your property manager isn’t doubling down in this area!
When it comes to GrowHOST, though, we provide two distinct packages for property owners:
Grow Only
Our Grow Only package is available at a 14% management fee and includes the following services:
- A dedicated portfolio manager
- Property profile creation (including a review of the photography, profile audit and aligning it with the best online visibility)
- Occupancy maximisation
- Dynamic pricing,
- Hotel data analytics
- Multi-platform marketing and distribution
- Monthly performance reporting
- Enquiries and booking management (including guest vetting and guest communications)
This option is designed for an owner who is willing to manage the cleaning and maintenance themselves.
Grow and Host
Our Grow and Host package provides an end-to-end service geared for maximum performance, starting at a 20% management fee.
It includes all the services in the Grow Only package, plus cleaning and linen coordination, maintenance coordination, inspections, and call-outs.
Note: The Grow and Host package is currently only available to Airbnb hosts based on the Sunshine Coast.
Key Takeaways
- Airbnb’s commission is generally based on a flat rate service fee, depending on the pricing model you choose.
- With the split-fee model, you’ll pay 3%, and your guest will be responsible for paying the remaining service fee (usually around 14%)
- With the simplified pricing model, you pay the entire fee of around 14% to 16%, and your guest pays nothing.
- Partnering with a property management company like GrowHOST, can help you maximise earnings while providing an exceptional experience for your guests. But you’ll have to pay them a commission fee too.
Contact us today to find out more about how we can help you run a successful Airbnb.
FAQs
What is the Airbnb Host Service Fee?
The host fee is a percentage of the booking amount that Airbnb charges hosts for using their platform. This fee covers the cost of processing guest payments and comes with the tools, protection, and customer service Airbnb provides to its hosts.
What are Guest Services Fees?
Guest service fees are additional charges guests pay when booking a property on Airbnb. This fee is calculated as a percentage of the reservation subtotal (before fees and taxes) and typically ranges between 5% and 15%. It helps cover the cost of running Airbnb, including services like customer support.
How Much commission Does Airbnb charge in Australia?
Airbnb charges hosts a service fee of around 3% to 5% in Australia, but this can vary depending on the specifics of the booking and the host’s service fee model.
Are Commission Fees the Same as Airbnb Services Fees?
Commission fees and Airbnb service fees are generally considered to be the same thing. But, in most cases, while Airbnb service fees relate to the charges by Airbnb to hosts (and guests) for using the platform, commission fees typically refer to the charges by property management companies or Airbnb managers for their services in managing and optimising a host’s property.
What is the Commission for Airbnb Managers?
The commission for Airbnb managers or property management companies can vary widely. Typically, these companies charge a percentage of the booking revenue, ranging from 10% to 30%. The exact percentage depends on the range of services they offer and the market they operate in.
What Percentage is the Airbnb Service Fee?
Airbnb hosts pay a service fee that ranges from 3% to 5% of the booking amount. However, this can vary based on the specifics of the booking and their service fee model.
How Much Does Airbnb Make in Australia?
The exact earnings of Airbnb in Australia can vary year by year based on market dynamics, tourism trends, and other factors.
Top Tips for Choosing an Airbnb Management Company
To help you make the best choice for your investment property, here are some key considerations to keep in mind during your selection process:
1. Company Reputation and Track Record
When researching potential Airbnb management companies, assess their reputation and track record. Look for companies with positive reviews and testimonials from satisfied property owners. For example, we have plenty of five-star reviews on our Google profile.
Ask for references and contact other owners who have worked with the company’s Airbnb property managers to get firsthand feedback on their experiences.
A reputable company will have a proven track record of delivering professional service and exceptional results.
2. Services Offered
Different Airbnb management companies offer various services, so clarify which services their management package includes.
Some common services provided by the best property management companies include:
- Listing Creation and Optimisation: Professional photography, compelling descriptions, and strategic listing placement.
- Marketing and Advertising: Promoting your vacation rental property through various channels, including social media, online travel platforms, and their own website.
- Dedicated Property Manager for Communication and Support: Handling guest enquiries, bookings, and 24/7 support.
- Professional Cleaning and Maintenance: Coordinating cleaning services, property inspections, and handling maintenance requests.
- Pricing Optimisation: Setting competitive rates based on market analysis and demand.
- Legal and Regulatory Compliance: Ensuring your property meets all local regulations and tax requirements.
Have a clear understanding of the management services offered by each company and choose one that aligns with your specific needs and goals.
3. Property Management Fees and Pricing
Consider the pricing structure and fees of each Airbnb management company. Most management companies charge a percentage of your rental income as their fee, typically 20% to 40%.
Be cautious of companies that offer very low fees, as they may cut corners or provide subpar service. Clarify if there are any additional fees or hidden costs that you need to be aware of. Cheaper is not always better.
4. Local Expertise
If you own a property in a specific location, choose a property management company with local expertise and knowledge.
They should deeply understand the local market, including seasonal trends, local attractions, and regulations.
Local expertise will enable them to optimise your pricing strategy, attract the right guests, and provide valuable recommendations to enhance the guest experience.
5. Technology and Tools
A good Airbnb management company should leverage technology and tools to streamline operations and enhance efficiency.
Enquire about their software and platforms to manage bookings, automate tasks, and provide real-time reporting.
Advanced technology can improve communication, automate pricing adjustments, and provide valuable insights into your property’s performance.
Key Takeaways
- Partnering with a professional Airbnb management company can help maximise your rental income, save time and effort, and ensure a stress-free vacation rental experience.
- When choosing a property management company, consider the company’s reputation, services, pricing and fees, local expertise, and technology and tools.
- Identify your needs and goals, research potential companies, schedule consultations, and evaluate services and fees before deciding.
- Check references and reviews from other clients, review contracts and agreements, and start onboarding once you have selected.
- Maintain regular communication with your management company and evaluate their performance periodically to ensure they deliver on their promises.
Need a hand? Contact us today to learn more about how we can support your short-term rental business.
