Skift Take

Airbnb's pricing changes will likely have a ripple effect, prompting some hosts to reduce cleaning fees and property management websites to switch to showing total prices.

Series: Dennis' Online Travel Briefing

Dennis' Online Travel Briefing

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In an effort to placate guests upset with sticker shock over surprise fees at checkout, Airbnb rolled out the ability for guests to view the total price of a stay before taxes in initial search results in many parts of the world.

The exceptions would be locations including the European Economic Area, Canada, and South Korea, where authorities already require Airbnb to display up-front the total price of a stay, including host cleaning fees, Airbnb’s service fees and, in some cases, taxes.

In a twist, Airbnb plans to make these new displays of total price before taxes the default view that customers would see starting at an unspecified time in 2023. When Airbnb announced the pending changes last month, the company said users would have to opt in to view total price.

Airbnb app users will see a prompt to activate total price before taxes for ‘early access’ to the feature. Source: Airbnb

Indeed, for now, Airbnb users in its updated mobile app starting to day would see a prompt to “try it now,” for “early access,” and then the total price view would be activated. But total price before taxes become the default view for everyone starting at some point next year.

Until now, in the United States, for example, Airbnb merely showed the nightly rate at first glance, and then when a customer entered dates, it showed the nightly rate and the total price, including cleaning and service fees but without taxes, when initially viewing a listing. Then users had to click through to see the nightly rate, cleaning fee, and service fee to view the fee breakdown.

The Old Way of Showing Airbnb Pricing

Airbnb price display

But starting Wednesdays in regions and countries that didn’t already require displays of the total price, Airbnb will show the total rate, albeit before taxes, at the initial glimpse of a listing.

The New Way of Showing Airbnb Pricing

Airbnb total price before taxes
Airbnb’s new total price before taxes display on the Airbnb app. Source: Airbnb

Users can now see the total price minus taxes on listings pages, on maps, and when using filters to narrow their searches.

The cleaning fees, which are set by hosts, have been a particular pain point because they can greatly inflate the total price. Some hosts charge no or modest cleaning fees, while others view it as a way to generate greater profits, and levy relatively large cleaning charges.

“This new change drives an incentive for hosts to have lower cleaning fees, now that those fees will be included in the initial search results,” said David Jacoby, an Airbnb superhost who is co-founder and President of property manager software firm Hostfully.  “Airbnb has been hammered on social media lately for absurd cleaning fees — not to mention a list of cleaning to-dos before check-out — and any way to decrease cleaning fees in general can only be a plus for Airbnb.”

Hosts using Airbnb to find guests set their own prices, including for the cleaning fees. So Airbnb’s changes in the way it shows the price of a stay didn’t alter any of those host prerogatives.

A Ripple Effect

Jacoby of Hostfully thinks Airbnb’s new total price display will spur changes on many property manager websites. “Many property managers just show nightly price without fees on their own website’s search results,” Jacoby said. ” Airbnb’s changes will set a new level of expectations, and property managers will have to adhere to this on their own website, or run the risk of the guest feeling tricked and disappointed.”

Airbnb chose to implement the “total price” in the rollout that began today in a different way than it has done in Europe since the latter half of 2019. A year earlier, the European Commission and European Union had called on Airbnb to display its prices transparently to comply with Europe’s consumer rules.

People in the European Economic Area have for the last three years been able to view the total price — including taxes — on the initial search results page, and even for U.S. listings. Unlike how Airbnb initially rolled out total prices in the U.S., European users see the total price by default, and don’t need to opt in.

Airbnb announced in early November that it would be introducing total prices in its search results in the U.S. beginning in December. When asked on Twitter why Airbnb wasn’t including taxes in the total price, CEO Brian Chesky replied that it is standard in the U.S. to show prices before taxes.

But that still makes it harder for travelers to figure out how much they would end up paying for a stay.

Airbnb nightly rate
This is one way Airbnb displayed rates prior to the changes starting December 14, 2022. Source: Airbnb

In the U.S., Airbnb customers will have the option to keep viewing the nightly rate alone instead of the total price before taxes in their initial view of listings; that is the default view for now unless the user opts in to view the total price before taxes.

How Competitors Show Prices

It’s unclear at this juncture how Airbnb’s changes in the way it shows prices may impact bookings, or competitive dynamics. In a bow to competition concerns, Airbnb is likely to stick with showing nightly rates and not the total price before taxes in search engine marketing, for example.

Booking.com’s short-term rental listings default to a semblance of total price — including taxes — but they aren’t as transparent as they might be. As is shown in the screenshot below, Booking.com shows the nightly rate in bold in initial search results, and displays “taxes and charges” in a lump sum in a light gray font underneath the nightly rates. However, you would have to do math to figure out the total price.

Source: Booking.com

Expedia’s Vrbo show’s the total price before taxes at a user’s first view of a listing.

Source: Vrbo

“Vrbo has been displaying the total cost (excluding tax) of booking whole homes on our site and app for years and travelers do not have to opt in to see this,” Tim Rosolio, vice president of Partner Success, Vacation Rentals for Expedia Group, said a few weeks ago after Airbnb announced its intent to introduce total price before taxes to much of the world. “We’re happy to see others in the vacation rental industry become more transparent about pricing, too.”

As part of Airbnb’s efforts to reshape pricing, in 2023 it intends to introduce new tools for hosts to help them craft rates and fees that are more competitive. It’s possible that this might convince some hosts to reduce their cleaning fees.

Airbnb is also calling on hosts to abandon the most onerous checkout tasks for guests.

March 29, 2023
London
Limited Early-Bird Tickets Remain

Tags: airbnb, booking.com, cleaning fees, Dennis' Online Travel Briefing, eu, european union, expedia, fees, future of lodging, guests, hostfully, hosts, pricing, property managers, vacation rentals, vrbo

Photo credit: An Airbnb in Utrecht, the Netherlands as seen July 15, 2017. Airbnb revamped how it displays prices, including cleaning fees. Umair Abassi / Flickr.com

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