In a game-changing move to better compete against Booking.com, Airbnb is eliminating guest fees for many property managers and hotels that sign up for its service beginning June 4, Skift has learned.
Under the new business model, property managers that create accounts starting June 4 and connect to Airbnb via software in the Asia Pacific (except Japan), Europe, the Middle East, and Africa will be charged a 14 percent host-only fee by default. Until now, the default was that Airbnb charged hosts a 3 to 5 percent fixed fee, and guests paid a fee of up to 20 percent of the rate for the listing.
Existing and newly enrolled property managers will have the choice to switch to a 14 percent host-only fee “or a shared host and guess fee,” Airbnb has informed hosts in an internal communication.
The fact that the business model change applies to property manager enrollees in Asia Pacific is significant. Speaking at Skift Forum Asia in Singapore Monday, Siew Kum Hong, regional director of Airbnb Asia-Pacific, said the company now has more than 1 million listings in the region, which will be a key growth driver for the company.
Airbnb did not immediately respond to a request for comment.
“Booking has never charged fees for consumers,” said Leslie Cafferty, a spokeswoman for Booking Holdings. “Our mission is to connect customers with great accommodations options all over the world, and at the same time, generate revenue for our partners. Our partners only pay a commission after Booking delivers revenue, in addition to handling customer service and content translation across 40-plus languages.”
In addition, now that Airbnb has acquired HotelTonight and is ramping up its boutique property and hotel business, all such properties around the world (except Japan) will be charged a 15 percent host-only fee. Boutique and traditional hotels previously signed up to list on Airbnb are not impacted by the change.
In a communiqué about the changes that Airbnb sent to hosts about a week ago, Airbnb said that it tested its new fee structure “with a number of hosts globally” and “saw an increase in bookings in certain regions for hosts that adopted it.”
“Many hosts provided feedback that our guest fee made it difficult for them to maintain full control over the price displayed to guests,” Airbnb said. “We created the host-only fee structure to solve for this and give hosts more control.”
Airbnb didn’t cite this as a reason, but the new push for host-only fees puts it on a more level playing field with Booking.com, which has long touted it as an advantage that it doesn’t charge booking fees to guests.
In addition, Marriott has launched its new Homes & Villas homesharing business without charging guest fees.
One property manager told Skift about Airbnb’s changes: “What’s interesting to me is that all professionally managed rentals will default to no service fee unless you override it. That is telling to me about the direction.”
Airbnb’s move would have implications for its expected initial public offering where financial models are closely studied. In some cases, its take rate for some listings could fall from 25 percent, where the host got charged a 5 percent fee and the guest was levied a 20 percent charge, to just a 14 percent host-only fee.
On the other hand, Airbnb could see an increased volume of bookings, as its tests apparently showed would happen, and hosts may raise their rates to compensate for the higher fees they will be charged.
“Well, like Booking.com, the suppliers, or homeowners, will bear the distribution costs in whole,” the property manager said. “They will likely respond by increasing rental rates.”
The Previous Business Model
Until now, Airbnb had two fee models. The default fee structure for Airbnb listings was 3 to 5 percent fixed fees for hosts, and guest fees of up to 20 percent.
“Last year, based on feedback from many of our property managers and hotel hosts, we launched a new fee structure that helps provide hosts with more control over the price displayed to guests,” Airbnb wrote. “This is a host-only fee that removes the guest fee.”
Although property managers still have an option to switch from a 14 percent host-only fee to a host- and guest-fee combination “if that better suits their business,” as Airbnb put it, the trend of Airbnb moving toward host-only fees is clearly now in motion.
This story was updated to include comments from Booking Holdings. We also changed the headline to show that some guest fees are being eliminated because Airbnb states that “most” would be inaccurate at this point.