Sonder will have to see if it can make its pricing competitive while eliminating cleaning fees as a separate guest charge. There could be some reputational upside if the financials work out.
Property manager Sonder did something that Airbnb can’t and most management companies have been loathe to do — the company eliminated cleaning fees for guests.
Until Sonder axed cleaning fees, around three-fourths of the properties Sonder manages, including apartments, condos and hotel rooms everywhere from New York City to Dubai, were tacking on cleaning fees as a separate charge within the total price of the stay. The fee amounts varied by property types and markets, the company said.
Sonder property manager rivals such as Vacasa, Evolve, and Vtrips all typically charge separate cleaning fees.
But Sonder quietly rolled out what it calls “zero cleaning fees” in November, although there was no formal announcement.
“We rolled out zero cleaning fees across our portfolio, to further simplify pricing for our guests,” said Nathan Bacher, Sonder’s vice president, revenue management. “Pricing transparency was already a part of the Sonder experience, and this takes it a step further.”
Bacher added that pricing transparency would help Sonder in its still-small but growing corporate travel business.
Here is a Sonder listing for a studio apartment in New York City. It prominently shows the total price after taxes and including all fees. There is no charge for cleaning.
Previously, Sonder stood out among property managers and online travel agencies in displaying the total price, including taxes, when travelers selected dates and first viewed listings. As it does now with the elimination of cleaning fees, Sonder detailed the nightly rates times the number of nights; discounts or other promotions; any other fees; taxes, and the total rate. The difference now is there are no separate cleaning fees.
Here’s a Vacasa listing for a four-night stay in Intervale, New Hampshire. It shows the total price of the stay, which comes with $371 in fees, including a $220 cleaning fee, after taxes. (Airbnb, for one, details “total price” before taxes.)
Property managers such as Sonder have the power to eliminate cleaning fees because they operate these apartments or hotel rooms on behalf of owners. On the other hand, third-party online travel agencies such as Airbnb have less wherewithal to eliminate or reduce cleaning fees because their terms and conditions allow hosts to establish the price of stays and cleaning fees.
Airbnb recently started showing the price of a listing, including cleaning fees, up-front in many major markets but excluding taxes. Sonder, a vastly smaller company than Airbnb, displays the total price including taxes. Airbnb has stated that its initial pricing displays exclude taxes because that is the way retail outlets in the U.S., for example, typically show prices.
Oh, the Pain of Surprise Cleaning Fees
Cleaning fees have been a sore point throughout the short-term rental sector for years because at times they can be large and exhorbitant, and also a surprise when it comes time to pay, especially when some hosts charge a flat cleaning fee regardless of the duration of the reservation.
Some hosts view cleaning fees as a profit center, a way to earn extra money, because they may be charging guests more than they actually pay to get the unit cleaned. On the other hand, pricing for cleaning services have risen with inflation.
There may be sticker shock regarding cleaning fees on a Booking.com listing for 341 East 62nd Street in Manhattan, which it describes as an “unbeatable one-bedroom with a massive private patio.” Booking lists the price for one week in bold at $2,450, but you’d have to notice that the fine print says there is also a $98 property service charge and a $150 cleaning fee. The host charges the same $150 cleaning fee for a two-night stay, as well.
But at least one has to give Booking.com credit for detailing the fees, albeit in a somewhat diminished manner.
Is Sonder Just Hiding the Cleaning Fee?
One has to wonder if Sonder’s elimination of a separate cleaning fee means the company is just hiding it in the room rate or otherwise absorbing it.
Bacher of Sonder wouldn’t get specific on that front, saying: “We removed cleaning fees to provide greater transparency and a frictionless booking experience for guests, while still offering competitive rates.”
Andrew McConnell, the CEO of revenue management tech company Rented, said the success of Sonder’s elimination of cleaning charges would depend on guest perceptions, including how Airbnb and other online travel agencies show Sonder’s pricing when Sonder markets its rooms through these third parties. (Airbnb and Booking.com show Sonder’s total rate without cleaning charges. However, we found instances where Airbnb and Booking detailed $1 cleaning fees on Sonder properties.)
“A guest really just wants to know what they are going to pay in total,” McConnell said. “Either Sonder really got rid of cleaning fees, and there is a cost advantage (or they are taking more losses per booking), or it is just a bundling thing, and if third party listing sites start listing all-in costs, it will be a wash.”
Steve Milo, founder and CEO of property manager Vtrips, which charges cleaning fees, said he doesn’t believe Sonder’s approach will work.
“I do not believe bundling fees will be successful,” Milo said. “There is a reason airlines unbundled their fees. Google Travel is a powerhouse and it benefits those companies who provide pricing in an unbundled manner.”
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Photo credit: A Sonder property in Chicago. The company stopped making guests pay a distinct cleaning fee. Sonder