Seems we have a fan out there. Interesting odd funny video. Moral of the story is… Go Local!
Oliver Blanchard wrote a great article about how the term “Sharing Economy” is incorrect. Here is an excerpt as it pertains to Uber sytle ride sharing,
Let me make something really clear: that whole “ride-sharing” thing? It isn’t ride-sharing at all. You aren’t sharing. You’re renting. You’re renting out the back seat of your car. You’re renting yourself as a driver. You’re renting your spare bedroom for the night. You’re renting your flat while you’re on vacation. There’s no sharing anywhere near the so-called “sharing economy.”
The same dynamics apply to AirBnB style room rentals.
In December 2015, Expedia bought HomeAway / VRBO for a reported $3.9 billion dollars. Its been just over a year now, and customers are growing in frustration according to a variety of sources, as they appear to be copying Airbnb’s commission model by applying guest and service fees.
Kim Bergstrom writes a great article explaining what is happening with VRBO, HomeAway, Airbnb, FlipKey, TripAdvisor and Expedia Service Fees.
GeekWire also has an excellent article explaining how VRBO/HomeAway now stacks up and competes against Airbnb. An excerpt sums it up well:
One of the biggest changes is the introduction of a traveler’s fee — also referred to as a “service fee.” Travelers who book through the HomeAway checkout process are now charged a fee that averages between 4 percent and 9 percent of the rental amount, not exceeding $499, the company says. Airbnb charges a similar fee.
Here are quotes taken from the Airbnb website pertaining to fees and commissions, and our opinion on what it means.
Guest Service Fee:
Many guests are unaware they are being charged a fee just to book a rental unit using Airbnb. This fee does not go to the rental owner/manager, it goes to Airbnb. If one had to guess at what the average rate is, given the information provided, I think it is reasonable to speculate it at 10%.
“To help cover the costs of running Airbnb, we charge guests a service fee every time a reservation is confirmed. The amount of this service fee varies and is based on a percentage of the reservation subtotal (before fees and taxes).”
“The exact amount of the service fee is displayed before guests confirm a booking. Guest service fees are typically 6-12% but can be higher or lower depending on the specifics of the reservation.”
Host Service Fee:
Not only does the guest pay a fee, but also, so does the host, the rental unit owner/manager. Here is what they say about the Airbnb Host Service Fee:
“To help cover the costs of processing guest payments, we charge hosts a service fee every time a reservation is completed. The amount of this service fee is calculated from the reservation subtotal (before fees and taxes).”.
They do not list a range for what this fee is, they simply say to visit your account transaction history, and check how much was actually taken out.
I did one booking using Airbnb, rented a room, and as a host, I was charged just over a 3% commission, it seems they rounded up to the nearest dollar.
A 3% fee is not bad, so why not just publish that they charge a 3% fee? We will speculate, that the more bookings a host gets using Airbnb, the more this fee will increase. Hosts are less likely to complain about higher fees the more they make. If anyone has information confirming or conflicting with this guess, please let us know?
Therefore, we will speculate this fee is averaged out to be around 5%. But wait, there’s more:
Certain cities, countries and regions will be charged VAT fee’s. Sometimes both the host and the guest are charged.
“Airbnb charges VAT on its service fees for customers from the Albania, European Union, Iceland, New Zealand, Norway, South Africa, and Switzerland. In Japan, JCT applies to the hosts and the guests. Airbnb is also required to collect VAT on its services fees from all users who contract with Airbnb China.”
We won’t speculate on this number, as it is too variable, and it does not appear that any of it goes towards Airbnb’s business. But my guess is, if they are charging a VAT fee, if it pertains to your country, then probably both the guest service and host service fee’s will go up to account for the extra transaction work.
We think a total fee of 15% per booking, paid by both guest and owner, is a pretty fair estimate of how much Airbnb charges. So essentially, if you book a 7 night stay at a rental costing $285 per night, you pay a total of $2000 for that stay… approximately $300 of that transaction will go to Airbnb.
A recent San Francisco law scheduled to go into effect August 1st 2016 requires Airbnb to verify that its hosts have registered with the city before Airbnb is allowed to show ads for their homes online. Airbnb is now suing the city of San Francisco to try and stop this law from going into effect.
Airbnb and tech groups argue the new law violates the Communications Decency Act.
“This legislation ignores the reality that the system is not working and this new approach will harm thousands of everyday San Francisco residents who depend on Airbnb. It also violates federal law,” Airbnb said in a blog post announcing the suit. “This is an unprecedented step for Airbnb, and one we do not take lightly, but we believe it’s the best way to protect our community of hosts and guests.”
Full story at Techcrunch.
Shortly before the 2008 presidential election, Airbnb had a brilliant marketing campaign, pitting ficticious breakfast cereal “Obama O’s” against “Capt’n Mcains”, which they then turned into real cereals, at least for a limited time.
It seemed they lost the plot and gone completely sideways… breakfast cereals? Really?
But it was a phenomenally successful campaign, and we believe, it gave a great boost to their business in the early years and put them on the map.
However, while we may be 8 years late in reporting this… the jingle used for the Obama O’s cereal sure sounds awfully familiar, a bit too familiar.
Brian Chesky, co-founder of Airbnb is valued to be worth $3,300,000,000 according to Wikipedia. Joe Gebbia, the other co-founder is estimated to be worth $1,900,000,000. Airbnb was founded in late 2007.
Brian H. Sharples, founder of HomeAway and VRBO doesn’t have a billion dollar net worth, its more in the $30,000,000 range, but he does pull down a cool $6,000,000 a year in salary and bonus’s by some estimates, HomeAway.com was founded in February 2005.
Jeffrey Hock, CEO of Free-Rentals.com, the leading free vacation rental platform founded in 2004, congratulates the late-coming vacation rental platform founders for their success.
That said, since Free-Rentals is not a publically traded company, Mr. Jeffrey Hock is under no obligation to disclose his net worth.
Yet, one brave investigative journalist managed to obtain a photograph Mr. Hock’s walk-in-closet while lost in the South wing of his mansion looking for a bathroom. This picture is the only known indication of the Free-Rentals founders net worth. Godspeed Mr. Hock.
Free-Rentals.com is against the notion of walled gardens, keeping vacation rental listings locked up in a dungeon and tightly holding the keys to exploit the resulting bottleneck that exists between rental owners seeking guests and guests seeking rental units.
Free-Rentals.com is a site built and managed by vacation rental owners for vacation rental owners. We believe in the sharing economy, we believe in providing value to both vacation rental owners as well as guests seeking a holiday rental, rather than exploiting both parties.
Therefore, all listings on free-rentals.com will be able to post a link to their own personal website that showcases their vacation rental unit or complex. We not only help market and promote your vacation rental, but also your website.
Free doesn’t just mean no money involved, it also means…. Free.
Free-Rentals.com is pleased to announce we have added the ability for vacation rental owners to post videos of their holiday rental into their listing page at free-rentals. All for free of course. Here is a sample of a video from one of our happy members based in Siesta Key Florida, their private website is http://www.siestakeybeachrentals.com/.
Video and Link to website posted with permission of owner.
HomeAway owned VRBO has hit an all time low in customer satisfaction. Consumer Affairs website has given VRBO a 1 star rating, which is the lowest they can go. Customers are certainly not happy, and it shows if you read through the 850 or so reviews. Sitejabber users posted 450 reviews gives both HomeAway and VRBO just 1.5 stars.
This reminds me of the time Netflix tried to raise their prices for mail-in and streaming subscribers. I completely agree with everyone else’s comments on this site… Really, It’s just a terrible business decision from VRBO.
Just awful and THEY PUT YOU AT THE BACK OF THE SEARCH LIST IF YOU DO NOT GO WITH THEIR PLANS, and now that I have signed up, I have not gotten one inquiry and it is over a month. I paid in excess of $2000 for my two homes for 2016 and feel I have just been **.
I join the masses of owners who have expressed their concerns over changes in Homeaway/VRBO. I am happy to see I am not the only one that is saying “What the hell is going on”. I have been happy for 6 years and now went from happy to zero with them. Just got off the phone with them, so far EVERYTHING they told me is not true.
The February 2016 traveler fee is a disingenuous move on the part of HomeAway thus making potential clients suspicious of property owners, creating a loss of business for property owners because it increases the rate by a significant percentage.
Clearly, sentiment has turned sharply negative in the past 6 months, and it will be interesting to see if HomeAway / VRBO can pull out of their nosedive and regain the trust of their core customers.
For those seeking an alternative to VRBO, check out www.free-rentals.com. Free-Rentals.com is 100% FREE! No yearly fees, No commissions, No hidden costs.