Airbnb to Move Property Managers to a ‘Single-Fee’ Payment System

Airbnb guests who book a stay at a home operated by a property manager will no longer be charged a roughly 15% service fee, according to a new requirement that goes into effect in late October.

And property managers, who previously paid a 3% fee to Airbnb, will instead pay 14-16% of their nightly rate.

The changes reflect a mandatory shift for property managers from a “split-pay” model to a “single-fee” system that takes effect October 27.

Some individual hosts are already worried they’ll lose out. But Airbnb says the new structure adds transparency, and more importantly, that guests and hosts will ultimately see no change to total cost and payments. Airbnb explains both models here.

Here’s how the new system will work and what the impact will be:

How Does the Current Split-Pay Model Work?

An estimated 95% of Airbnb hosts use the current split-pay model, according to AirDNA.

In a blog post, AirDNA Chief Economist Jamie Lane walked through the split-pay math:

If the host charges a nightly rate of $100 per night, the guest pays $115 because of the 15% guest service charge. The host nets $97 because Airbnb charges a 3% host fee.

How Does the Single-Fee Model Work?

The property manager, who would now be responsible for a roughly 15% fee, would be incentivized to raise the nightly rate to $115 if they want to net the same revenue. Under that scenario, the guest pays $115 and the property manager, who would have to pay a 15% fee, would net around $97.

Under those examples the guest still pays $115 and the host/property manager collects $97.

What if the Property Manager Does Not Raise the Nightly Rate?

If the property manager using the single-fee model seeks a competitive advantage by not raising their nightly rate, they will lose revenue.

For example, if the property manager keeps their nightly rate at $100, they would have to pay the 15% fee, and would net only about $85.

Can Individual Hosts Switch to the Single-Fee Model?

They aren’t required to, but they can choose to, and many likely will. Many guests will favor properties that don’t charge them service fees.

Will Hosts Get Penalized if They Don’t Switch?

AirDNA says no: “Airbnb’s algorithm looks at the total price in search results, which will be the same regardless of your fee model. Guests don’t see the exact breakout until check-out. Switching will not hurt your visibility and could help you stand out by offering a more transparent pricing experience.”

Why Is Airbnb Making the Change?

“We’ve heard from both guests and hosts that Airbnb’s pricing can be complex so we’re simplifying our service fee structure to help make pricing clearer and more transparent for guests while giving hosts full control over the final price displayed and paid by guests, before taxes,” an Airbnb spokesperson said.

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Some Hosts Aren’t Happy About the Change

Several host advocates on LinkedIn criticized the changes, arguing that it favors guests over hosts, and property managers over individual hosts.

“This move hints at Airbnb’s real strategy: They’re tilting their focus from host-centric towards guest-centric. And they’re doing it aggressively,” wrote Amirali Mohajer, founder of a host software company, on LinkedIn.

Revenue management expert John An pointed to the advantages that a property management company might have: “The biggest challenge may be that some of the smaller competition who are not connected to a PMS (property management system) may show a different value proposition to the traveler than the PMS connected operators,” An wrote on LinkedIn.

The Changes Could Lead Competitors to Raise Prices

HomeAway co-founder Carl Shepherd said Airbnb’s changes will alter the misconception among some hosts that they could use Airbnb for “free,” and may prompt competitors such as Booking.com and Vrbo to raise prices.

Airbnb “used to collect 15% of the market price from the traveler at the time of booking and convinced the host that the booking was free because the 3% was just covering credit card processing fees,” Shepherd said. “Host were just able to delude themselves that Airbnb was free.”

While Airbnb’s fees added up to 18%, Booking and Expedia cover credit card processing fees as the cost of doing business, Shepherd said. “Booking and Expedia can raise their rate 3% because they now are under the total cost of a booking on Airbnb.”

Referring to the impact of changes on hosts, Shepherd said the fee update is actually an identity change for Airbnb. “It exposes the limitations of pretending you can be both a tech platform and a community. Community will be tough to maintain.”

Simon Lehmann, former CEO of Interhome, a European property management company, said the disparate pay models will lead to friction and a lack of trust among consumers who will see guest service fees on some properties and none on others.

“In a world where regulation is looming, this might be strategic,” Lehmann said of the changes. “Airbnb can say: ‘We’ve built clear professional standards.’ But at what cost to their original host base?”

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